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Exam 1: Accounting in Business

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Question 1

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The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

A) Balance sheet.
B) Statement of owner's equity.
C) Statement of cash flows.
D) Income statement.
E) Statement of financial position.

F) B) and D)
G) A) and B)

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Question 2

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Owner's investments are increases in equity from a company's earnings activities.

A) True
B) False

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Question 3

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Identify each of the following business activities 1 through 6 into the appropriate category a,b,and c. a.Operating b.Investing c.Financing ____ 1.Paid utilities expenses. ____ 2.Withdrawal of funds by owners. ____ 3.Purchase of land. ____ 4.Sale of used equipment. ____ 5.Borrowed money from a bank on a long-term note. ____ 6.Paid employee wages.

Return on assets is also known as return on investment.

FastForward has the following beginning cash balance and cash transactions for the month of January.Using this information prepare a statement of cash flows.

The accounting equation is ______________________________.

The private group that currently has the authority to establish generally accepted accounting principles in the United States is the:

How does the going-concern principle affect reporting asset values of a business?

A net loss occurs when revenues exceed expenses.

The business entity principle means that a business will continue operating for an indefinite period of time.

The following schedule reflects shows the first month's transactions of the Bill Blue Real Estate Company: Provide descriptions for each transaction.

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

If a company paid $38,000 of its accounts payable in cash,what was the effect on the assets,liabilities,and equity?

Match each of the following terms with the most appropriate definition.

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

A partnership:

____________ are the increases in equity from a company's earnings activities.

Data for Madison Realty are as follows: The owner,Mary Madison,withdrew a total of $30,000 for personal use during the year.Using the above data,prepare Madison Realty's Statement of Owner's Equity for the year ended December 31.

The accounting equation implies that: Assets + Liabilities = Equity.

Accounts payable appear on which of the following statements?