Question 1

Cash investments by stockholders are listed on which of the following statements?

Accepted Answer

A)  Statement of retained earnings and income statement.
B)  Income statement only.
C)  Retained earnings only.
D)  Statement of retained earnings and statement of cash flows.
E)  Statement of cash flows only.F) A) and B)
G) A) and D)

Question 2

Net income occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 3

Regulators often have legal authority over certain activities of organizations.

Accepted Answer

A) True 
 B)False

Question 4

The revenue recognition principle:

Accepted Answer

A)  Prescribes that accounting information is based on actual cost.
B)  Provides guidance on when a company must recognize revenue.
C)  Prescribes that a company report the details behind financial statements that would impact users' decisions.
D)  Prescribes that a company record the expenses it incurred to generate the revenue reported.
E)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.F) A) and B)
G) A) and D)

Question 5

A company's balance sheet shows: cash $24,000,accounts receivable $30,000,equipment $50,000,and equity $72,000.What is the amount of liabilities?

Accepted Answer

A)  $104,000.
B)  $76,000.
C)  $32,000.
D)  $68,000.
E)  $176,000.F) A) and B)
G) A) and D)

Question 6

U.S.treasury bonds are:

Accepted Answer

A)  High-risk and high-return investments.
B)  Low-risk and low-return investments.
C)  High-risk and low-return investments.
D)  Low-risk and high-return investments.
E)  High risk and no-return investments.F) C) and E)
G) A) and B)

Question 7

If a company purchases equipment costing $4,500 on credit,the effect on the accounting equation would be:

Accepted Answer

A)  Assets increase $4,500 and liabilities decrease $4,500.
B)  Equity decreases $4,500 and liabilities increase $4,500.
C)  One asset increases $4,500 and another asset decreases $4,500.
D)  Assets increase $4,500 and liabilities increase $4,500.
E)  Equity increases $4,500 and liabilities decrease $4,500.F) B) and C)
G) None of the above

Question 8

Revenue is properly recognized:

Accepted Answer

A)  When the customer makes an order.
B)  Only if the transaction creates an account receivable.
C)  At the end of the accounting period.
D)  When goods or services are provided to customers and at the amount expected to be received from the customer.
E)  When cash from a sale is received.F) A) and E)
G) B) and C)

Question 9

The financial statement that identifies a company's cash receipts and cash payments over a period of time 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 stockholders' equity.F) All of the above
G) C) and E)

Question 10

The income statement reports on operating activities at a point in time.

Accepted Answer

A) True 
 B)False

Question 11

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000,expenses of $65,000,and dividends to stockholders of $9,000; there were no stock issuances.Calculate the ending equity.

Accepted Answer

A)  $88,000.
B)  $25,000.
C)  $97,000.
D)  $38,000.
E)  $47,000.F) B) and E)
G) All of the above

Question 12

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period,what was the effect on the assets?

Accepted Answer

A)  Assets would have increased $55,000.
B)  Assets would have decreased $55,000.
C)  Assets would have increased $93,000.
D)  Assets would have decreased $93,000.
E)  None of the above.F) B) and E)
G) A) and B)

Question 13

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

Accepted Answer

A)  Going-concern assumption.
B)  Expense recognition (Matching) principle.
C)  Measurement (Cost) principle.
D)  Business entity assumption.
E)  Consideration assumption.F) A) and C)
G) A) and B)

Question 14

In accounting,the rule that requires that assets,services,and liabilities be recorded initially at the cash or cash-equivalent value of what was given up or of the item received is called the ________.

Accepted Answer

Measuremen...

Question 15

The ________ assumption states that transactions and events are expressed in money units.

Accepted Answer

The answer of The ________ assumption states that transactions and...

Question 16

General principles are the basic assumptions,concepts,and guidelines for preparing financial statements.GAAP aims to make information relevant and representationally faithful.

Accepted Answer

A) True 
 B)False

Question 17

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit.How does this transaction affect the accounting equation for Atkins?

Accepted Answer

A)  Assets would decrease $1,750 and liabilities would decrease $1,750.
B)  One asset would increase $1,750 and a different asset would decrease $1,750,causing no net change in the accounting equation.
C)  Assets would increase $1,750 and equity would increase $1,750.
D)  Assets would increase $1,750 and liabilities would increase $1,750.
E)  Liabilities would decrease $1,750 and equity would increase $1,750.F) A) and B)
G) B) and D)

Question 18

Use the following information for Meeker Corp.to determine the amount of equity to report.

Accepted Answer

A)  $390,000.
B)  $140,000.
C)  $20,000.
D)  $530,000.
E)  $270,000.F) D) and E)
G) None of the above

Question 19

The three major types of business activities are operating,financing,and investing.

Accepted Answer

A) True 
 B)False

Question 20

The difference between a company's assets and its liabilities,or net assets is:

Accepted Answer

A)  Net income.
B)  Expense.
C)  Equity.
D)  Revenue.
E)  Net loss.F) A) and B)
G) B) and E)

Exam 1: Accounting in Business

In accounting,the rule that requires that assets,services,and liabilities be recorded initially at the cash or cash-equivalent value of what was given up or of the item received is called the ________.

Correct AnswerverifiedMeasuremen...View AnswerShow Answer

The income statement reports on operating activities at a point in time.

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The three major types of business activities are operating,financing,and investing.

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The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Correct AnswerverifiedShow Answer

The difference between a company's assets and its liabilities,or net assets is:

Correct AnswerverifiedShow Answer

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit.How does this transaction affect the accounting equation for Atkins?

Correct AnswerverifiedShow Answer

The ________ assumption states that transactions and events are expressed in money units.

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If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period,what was the effect on the assets?

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Net income occurs when revenues exceed expenses.

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Cash investments by stockholders are listed on which of the following statements?

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Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000,expenses of $65,000,and dividends to stockholders of $9,000; there were no stock issuances.Calculate the ending equity.

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U.S.treasury bonds are:

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A company's balance sheet shows: cash $24,000,accounts receivable $30,000,equipment $50,000,and equity $72,000.What is the amount of liabilities?

Correct AnswerverifiedShow Answer

General principles are the basic assumptions,concepts,and guidelines for preparing financial statements.GAAP aims to make information relevant and representationally faithful.

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Use the following information for Meeker Corp.to determine the amount of equity to report.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Revenue is properly recognized:

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The revenue recognition principle:

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If a company purchases equipment costing $4,500 on credit,the effect on the accounting equation would be:

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Regulators often have legal authority over certain activities of organizations.

Correct AnswerverifiedShow Answer

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