Question 1

Another name for equity is:

Accepted Answer

A)  Net income.
B)  Expenses.
C)  Net assets.
D)  Revenue.
E)  Net loss.F) B) and D)
G) A) and E)

Question 2

A net loss occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not true regarding ethics:

Accepted Answer

A)  Ethics are beliefs that distinguish right from wrong.
B)  Good ethics are good business.
C)  Ethics do not affect the operations or outcome of a company.
D)  Are critical in accounting.
E)  Ethics are accepted standards of good and bad behavior.F) D) and E)
G) B) and D)

Question 4

An example of a financing activity is:

Accepted Answer

A)  Buying office supplies.
B)  Obtaining a long-term loan.
C)  Buying office equipment.
D)  Selling inventory.
E)  Buying land.F) A) and C)
G) B) and C)

Question 5

At the beginning of the year,a company had $120,000 worth of liabilities.During the year,assets increased by $160,000 and at year-end they equaled $360,000.Liabilities decreased $20,000 during the year.Calculate the beginning and ending values of equity.

Accepted Answer

Beginning equity = $80,000; Ending equit...

Question 6

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it,need be disclosed.

Accepted Answer

A) True 
 B)False

Question 7

Increases in equity from a company's sales of products or services are:

Accepted Answer

A)  Assets.
B)  Revenues.
C)  Liabilities.
D)  Stockholders' Equity.
E)  Expenses.F) B) and C)
G) None of the above

Question 8

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities.Which of the following transactions could have caused that effect?

Accepted Answer

A)  Cash was received from providing services to a customer.
B)  Cash was received as a stockholder investment.
C)  Equipment was purchased on credit.
D)  Supplies were purchased for cash.
E)  Advertising expense for the month was paid in cash.F) D) and E)
G) A) and D)

Question 9

Stock issuances are increases in equity from the sale of products or services.

Accepted Answer

A) True 
 B)False

Question 10

When expenses exceed revenues,the result is called:

Accepted Answer

A)  Net assets.
B)  Negative equity.
C)  Net loss.
D)  Net income.
E)  A liability.F) None of the above
G) B) and E)

Question 11

What distinguishes liabilities from equity?

Accepted Answer

Liabilities are creditors' claims on ass...

Question 12

If a company receives $12,000 from a stockholder,the effect on the accounting equation would be:

Accepted Answer

A)  Assets decrease $12,000 and equity decreases $12,000.
B)  Assets increase $12,000 and liabilities decrease $12,000.
C)  Assets increase $12,000 and liabilities increase $12,000.
D)  Liabilities increase $12,000 and equity decreases $12,000.
E)  Assets increase $12,000 and equity increases $12,000.F) A) and B)
G) A) and C)

Question 13

The expense recognition principle,also called the matching 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) C) and D)
G) A) and B)

Question 14

A financial statement providing information that helps users understand a company's financial status,and which lists the types and amounts of assets,liabilities,and equity as of a specific date,is called a(n) :

Accepted Answer

A)  Balance sheet.
B)  Income statement.
C)  Statement of cash flows.
D)  Statement of retained earnings.
E)  Financial Status Statement.F) All of the above
G) A) and B)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

Accepted Answer

A) True 
 B)False

Question 17

________ users of accounting information are not directly involved in running the organization.

Accepted Answer

The answer of ________ users of accounting information are not...

Question 18

Return on assets is useful in evaluating management,analyzing and forecasting profits,and planning activities.

Accepted Answer

A) True 
 B)False

Question 19

________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Accepted Answer

Financial ...

Question 20

If a company uses $1,300 of its cash to purchase supplies,the effect on the accounting equation would be:

Accepted Answer

A)  Assets increase $1,300 and liabilities decrease $1,300.
B)  One asset increases $1,300 and another asset decreases $1,300,causing no effect.
C)  Assets decrease $1,300 and equity decreases $1,300.
D)  Assets decrease $1,300 and equity increases $1,300.
E)  Assets increase $1,300 and liabilities increase $1,300.F) A) and B)
G) A) and C)

Exam 1: Accounting in Business

Which of the following is not true regarding ethics:

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________ users of accounting information are not directly involved in running the organization.

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When expenses exceed revenues,the result is called:

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At the beginning of the year,a company had $120,000 worth of liabilities.During the year,assets increased by $160,000 and at year-end they equaled $360,000.Liabilities decreased $20,000 during the year.Calculate the beginning and ending values of equity.

Correct AnswerverifiedBeginning equity = $80,000; Ending equit...View AnswerShow Answer

A net loss occurs when revenues exceed expenses.

Correct AnswerverifiedShow Answer

If a company receives $12,000 from a stockholder,the effect on the accounting equation would be:

Correct AnswerverifiedShow Answer

Another name for equity is:

Correct AnswerverifiedShow Answer

A financial statement providing information that helps users understand a company's financial status,and which lists the types and amounts of assets,liabilities,and equity as of a specific date,is called a(n) :

Correct AnswerverifiedShow Answer

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities.Which of the following transactions could have caused that effect?

Correct AnswerverifiedShow Answer

If a company uses $1,300 of its cash to purchase supplies,the effect on the accounting equation would be:

Correct AnswerverifiedShow Answer

An example of a financing activity is:

Correct AnswerverifiedShow Answer

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it,need be disclosed.

Correct AnswerverifiedShow Answer

What distinguishes liabilities from equity?

Correct AnswerverifiedLiabilities are creditors' claims on ass...View AnswerShow Answer

Stock issuances are increases in equity from the sale of products or services.

Correct AnswerverifiedShow Answer

________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Correct AnswerverifiedFinancial ...View AnswerShow Answer

The expense recognition principle,also called the matching principle:

Correct AnswerverifiedShow Answer

Return on assets is useful in evaluating management,analyzing and forecasting profits,and planning activities.

Correct AnswerverifiedShow Answer

Increases in equity from a company's sales of products or services are:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

Correct AnswerverifiedShow Answer

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Beginning equity = $80,000; Ending equit...
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Liabilities are creditors' claims on ass...
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Financial ...
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