Question 1

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

Accepted Answer

The going-concern principle means that f...

Question 2

Resources such as cash distributed to the owners of a corporation are called ________.

Accepted Answer

The answer of Resources such as cash distributed to the...

Question 3

________ explains changes in the stockholders' claim on the business's assets from net income or loss,and dividends over a period of time.

Accepted Answer

The statem...

Question 4

The records of Roadmaster Auto Rentals show the following information as of December 31.The sole stockholder,Rob Fletcher received dividends of $52,000 during the year.Prepare a December income statement,a December statement of retained earnings,and a December 31 balance sheet.

Accepted Answer

The answer of The records of Roadmaster Auto Rentals show...

Question 5

After each business transaction is recorded,the accounting equation remains in balance.

Accepted Answer

A) True 
 B)False

Question 6

Risk is:

Accepted Answer

A)  Net income divided by average total assets.
B)  The reward for investment.
C)  The uncertainty about the return expected to be earned.
D)  Unrelated to return expected.
E)  Derived from the idea of getting something back from an investment.F) D) and E)
G) C) and D)

Question 7

Define risk and return and discuss the relation between them.

Accepted Answer

Net income is often related to return,wh...

Question 8

When expenses exceed revenues,the resulting change in equity is called:

Accepted Answer

A)  Net assets.
B)  Negative equity.
C)  Net loss.
D)  Net income.
E)  A liability.F) C) and D)
G) A) and B)

Question 9

What is the balance sheet? What is its purpose?

Accepted Answer

The balance sheet is one of the four req...

Question 10

A partnership is a business owned by two or more people.

Accepted Answer

A) True 
 B)False

Question 11

To include the personal assets and transactions of a business's stockholders in the records and reports of the business would be in conflict with the:

Accepted Answer

A)  Objectivity principle.
B)  Monetary unit assumption.
C)  Business entity assumption.
D)  Going-concern assumption.
E)  Revenue recognition principle.F) A) and E)
G) A) and C)

Question 12

The four common forms of business ownership include sole proprietorship,partnership,corporation,and non-profit.

Accepted Answer

A) True 
 B)False

Question 13

Billington Corp borrows $80,000 cash from Second National Bank.How does this transaction affect the accounting equation for Billington?

Accepted Answer

A)  Assets would decrease $80,000 and liabilities would decrease $80,000.
B)  Assets would decrease $80,000 and equity would increase $80,000.
C)  Assets would increase $80,000 and equity would decrease $80,000.
D)  Assets would increase $80,000 and liabilities would increase $80,000.
E)  Liabilities would decrease $80,000 and equity would increase $80,000.F) A) and B)
G) B) and C)

Question 14

There are three major types of business activities.________activities involve using resources to research,develop,purchase,produce,distribute,and market products and services and receiving amounts from selling products and services.

Accepted Answer

The answer of There are three major types of business...

Question 15

________,which is one part of accounting,is the recording of transactions and events,either manually or electronically.

Accepted Answer

Record-kee...

Question 16

A net loss occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 17

The expense recognition principle is also known as the cost principle.

Accepted Answer

A) True 
 B)False

Question 18

Owners of a corporation are called shareholders or stockholders.

Accepted Answer

A) True 
 B)False

Question 19

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity.Which of the following transactions could have caused that effect?

Accepted Answer

A)  Cash was received from providing services to a customer.
B)  The company paid an amount due on credit.
C)  Equipment was purchased for cash.
D)  A utility bill was received for the current month,to be paid in the following month.
E)  Advertising expense for the month was paid in cash.F) None of the above
G) A) and B)

Question 20

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) All of the above
G) B) and D)

Exam 1: Introducing Financial Statements

Owners of a corporation are called shareholders or stockholders.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe going-concern principle means that f...View AnswerShow Answer

The expense recognition principle is also known as the cost principle.

Correct AnswerverifiedShow Answer

A net loss occurs when revenues exceed expenses.

Correct AnswerverifiedShow Answer

Billington Corp borrows $80,000 cash from Second National Bank.How does this transaction affect the accounting equation for Billington?

Correct AnswerverifiedShow Answer

The records of Roadmaster Auto Rentals show the following information as of December 31.The sole stockholder,Rob Fletcher received dividends of $52,000 during the year.Prepare a December income statement,a December statement of retained earnings,and a December 31 balance sheet.

Correct AnswerverifiedShow Answer

Risk is:

Correct AnswerverifiedShow Answer

A partnership is a business owned by two or more people.

Correct AnswerverifiedShow Answer

To include the personal assets and transactions of a business's stockholders in the records and reports of the business would be in conflict with the:

Correct AnswerverifiedShow Answer

Define risk and return and discuss the relation between them.

Correct AnswerverifiedNet income is often related to return,wh...View AnswerShow Answer

The revenue recognition principle:

Correct AnswerverifiedShow Answer

Resources such as cash distributed to the owners of a corporation are called ________.

Correct AnswerverifiedShow Answer

What is the balance sheet? What is its purpose?

Correct AnswerverifiedThe balance sheet is one of the four req...View AnswerShow Answer

There are three major types of business activities.________activities involve using resources to research,develop,purchase,produce,distribute,and market products and services and receiving amounts from selling products and services.

Correct AnswerverifiedShow Answer

________ explains changes in the stockholders' claim on the business's assets from net income or loss,and dividends over a period of time.

Correct AnswerverifiedThe statem...View AnswerShow Answer

When expenses exceed revenues,the resulting change in equity is called:

Correct AnswerverifiedShow Answer

________,which is one part of accounting,is the recording of transactions and events,either manually or electronically.

Correct AnswerverifiedRecord-kee...View AnswerShow Answer

The four common forms of business ownership include sole proprietorship,partnership,corporation,and non-profit.

Correct AnswerverifiedShow Answer

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity.Which of the following transactions could have caused that effect?

Correct AnswerverifiedShow Answer

After each business transaction is recorded,the accounting equation remains in balance.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The going-concern principle means that f...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Net income is often related to return,wh...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The balance sheet is one of the four req...
View Answer

Correct Answer
verified

Correct Answer
verified
The statem...
View Answer

Correct Answer
verified

Correct Answer
verified
Record-kee...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified