Question 1

The financial statement that identifies where a company's cash came from and where it went during the period is the:

Accepted Answer

A)  Statement of financial position.
B)  Statement of cash flows.
C)  Balance sheet.
D)  Income statement.
E)  Statement of changes in owner's equity.F) All of the above
G) B) and D)

Question 2

The monetary unit assumption means that all international transactions must be expressed in dollars.

Accepted Answer

A) True 
 B)False

Question 3

Rent expense that is paid with cash appears on which of the following statements?

Accepted Answer

A)  Balance sheet.
B)  Income statement.
C)  Statement of owner's equity.
D)  Income statement and statement of cash flows.
E)  Statement of cash flows only.F) B) and E)
G) D) and E)

Question 4

Increases in equity from a company's earnings activities are:

Accepted Answer

A)  Assets.
B)  Revenues.
C)  Liabilities.
D)  Owner's Equity.
E)  Expenses.F) A) and D)
G) C) and E)

Question 5

The description of the relation between a company's assets,liabilities,and equity,which is expressed as Assets = Liabilities + Equity,is known as the:

Accepted Answer

A)  Income statement equation.
B)  Accounting equation.
C)  Business equation.
D)  Return on equity ratio.
E)  Net income.F) A) and C)
G) C) and E)

Question 6

Specific accounting principles are basic assumptions,concepts,and guidelines for preparing financial statements and arise out of long-used accounting practice.

Accepted Answer

A) True 
 B)False

Question 7

Net Income:

Accepted Answer

A)  Decreases equity.
B)  Represents the amount of assets owners put into a business.
C)  Equals assets minus liabilities.
D)  Is the excess of revenues over expenses.
E)  Represents owners' claims against assets.F) A) and D)
G) A) and B)

Question 8

A sole proprietorship is a business owned by one or more persons.

Accepted Answer

A) True 
 B)False

Question 9

A payment to an owner is called a(n) :

Accepted Answer

A)  Liability.
B)  Withdrawal.
C)  Expense.
D)  Contribution.
E)  Investment.F) C) and D)
G) B) and E)

Question 10

The statement of owner's equity:

Accepted Answer

A)  Reports how equity changes at a point in time.
B)  Reports how equity changes over a period of time.
C)  Reports on cash flows for operating, financing, and investing activities over a period of time.
D)  Reports on cash flows for operating, financing, and investing activities at a point in time.
E)  Reports on amounts for assets, liabilities, and equity at a point in time.F) None of the above
G) A) and C)

Question 11

General accounting principles arise from long-used accounting practices.

Accepted Answer

A) True 
 B)False

Question 12

If equity is $300,000 and liabilities are $192,000,then assets equal:

Accepted Answer

A)  $108,000.
B)  $192,000.
C)  $300,000.
D)  $492,000.
E)  $792,000.F) B) and C)
G) B) and D)

Question 13

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Accepted Answer

A) True 
 B)False

Question 14

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n) :

Accepted Answer

A)  Revenue activity.
B)  Operating activity.
C)  Expense activity.
D)  Investing activity.
E)  Financing activity.F) D) and E)
G) A) and C)

Question 15

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net incomes and withdrawals.

Accepted Answer

A) True 
 B)False

Question 16

If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000,is assessed for tax purposes at $95,000,is recognized by its purchasers as easily being worth $140,000,and is sold for $137,000.At the time of the sale,assume that the seller still owed $30,000 to TrustOne Bank on the land that was purchased for $85,000.Immediately after the sale,the seller paid off the loan to TrustOne Bank.What is the effect of the sale and the payoff of the loan on the accounting equation?

Accepted Answer

A)  Assets increase $52,000; owner's equity increases $22,000; liabilities decrease $30,000
B)  Assets increase $52,000; owner's equity increases $30,000; liabilities decrease $30,000
C)  Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000
D)  Assets decrease $30,000; owner's equity decreases $30,000; liabilities decrease $30,000
E)  Assets decrease $55,000; owner's equity decreases $55,000; liabilities decrease $30,000F) C) and E)
G) A) and D)

Question 17

Ethical behavior requires:

Accepted Answer

A)  That auditors' pay not depend on the success of the client's business.
B)  Auditors to invest in businesses they audit.
C)  Analysts to report information favorable to their companies.
D)  Managers to use accounting information to benefit themselves.
E)  That auditors' pay depend on the success of the client's business.F) None of the above
G) B) and D)

Question 18

Internal users include lenders,shareholders,brokers and managers.

Accepted Answer

A) True 
 B)False

Question 19

Assets are the resources of a company and are expected to yield future benefits.

Accepted Answer

A) True 
 B)False

Question 20

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

If equity is $300,000 and liabilities are $192,000,then assets equal:

Correct Answer
verified

Specific accounting principles are basic assumptions,concepts,and guidelines for preparing financial statements and arise out of long-used accounting practice.

Correct Answer
verified

The financial statement that identifies where a company's cash came from and where it went during the period is the:

Correct Answer
verified

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Correct Answer
verified

A sole proprietorship is a business owned by one or more persons.

Correct Answer
verified

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n) :

Correct Answer
verified

Increases in equity from a company's earnings activities are:

Correct Answer
verified

The statement of owner's equity:

Correct Answer
verified

General accounting principles arise from long-used accounting practices.

Correct Answer
verified

Rent expense that is paid with cash appears on which of the following statements?

Correct Answer
verified

Correct Answer
verified

A payment to an owner is called a(n) :

Correct Answer
verified

Assets are the resources of a company and are expected to yield future benefits.

Correct Answer
verified

The description of the relation between a company's assets,liabilities,and equity,which is expressed as Assets = Liabilities + Equity,is known as the:

Correct Answer
verified

Internal users include lenders,shareholders,brokers and managers.

Correct Answer
verified

The monetary unit assumption means that all international transactions must be expressed in dollars.

Correct Answer
verified

Net Income:

Correct Answer
verified

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net incomes and withdrawals.

Correct Answer
verified

Ethical behavior requires:

Correct Answer
verified

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Correct Answer
verified

Exam 1: Accounting in Business

If equity is $300,000 and liabilities are $192,000,then assets equal:

Correct AnswerverifiedShow Answer

Specific accounting principles are basic assumptions,concepts,and guidelines for preparing financial statements and arise out of long-used accounting practice.

Correct AnswerverifiedShow Answer

The financial statement that identifies where a company's cash came from and where it went during the period is the:

Correct AnswerverifiedShow Answer

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Correct AnswerverifiedShow Answer

A sole proprietorship is a business owned by one or more persons.

Correct AnswerverifiedShow Answer

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n) :

Correct AnswerverifiedShow Answer

Increases in equity from a company's earnings activities are:

Correct AnswerverifiedShow Answer

The statement of owner's equity:

Correct AnswerverifiedShow Answer

General accounting principles arise from long-used accounting practices.

Correct AnswerverifiedShow Answer

Rent expense that is paid with cash appears on which of the following statements?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A payment to an owner is called a(n) :

Correct AnswerverifiedShow Answer

Assets are the resources of a company and are expected to yield future benefits.

Correct AnswerverifiedShow Answer

The description of the relation between a company's assets,liabilities,and equity,which is expressed as Assets = Liabilities + Equity,is known as the:

Correct AnswerverifiedShow Answer

Internal users include lenders,shareholders,brokers and managers.

Correct AnswerverifiedShow Answer

The monetary unit assumption means that all international transactions must be expressed in dollars.

Correct AnswerverifiedShow Answer

Net Income:

Correct AnswerverifiedShow Answer

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net incomes and withdrawals.

Correct AnswerverifiedShow Answer

Ethical behavior requires:

Correct AnswerverifiedShow Answer

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Correct AnswerverifiedShow Answer

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