Question 1

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 2

Creditors' claims on the assets of a company are called:

Accepted Answer

A)  Net losses.
B)  Expenses.
C)  Revenues.
D)  Equity.
E)  Liabilities.F) B) and E)
G) B) and C)

Question 3

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Accepted Answer

A) True 
 B)False

Question 4

Investing activities are the means an organization uses to pay for resources like land, buildings, and equipment to carry out its plans.

Accepted Answer

A) True 
 B)False

Question 5

Identify and describe the four basic financial statements.

Accepted Answer

The four basic financial statements are ...

Question 6

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 E)
G) None of the above

Question 7

In recent years, the FASB and IASB have pursued a process aimed at reducing inconsistencies and improving comparability between U.S. GAAP and IFRS. This process is known as:

Accepted Answer

A)  Consistency
B)  Matching
C)  Quantifying
D)  Convergence
E)  GlobalizationF) C) and D)
G) A) and E)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The monetary unit assumption means that all companies doing business in the United States must express transactions and events in U.S. dollars.

Accepted Answer

A) True 
 B)False

Question 10

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

The answer of In accounting, the rule that requires that...

Question 11

U.S. government 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) A) and B)
G) A) and C)

Question 12

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Accepted Answer

A)  Accounting equation.
B)  Cost principle.
C)  Going-concern assumption.
D)  Realization principle.
E)  Business entity assumption.F) A) and B)
G) B) and D)

Question 13

The characteristics below apply to at least one of the forms of business organization.
a. Is a separate legal entity.
b. Is allowed to be owned by one person only.
c. Individual owners are personally liable for debts of the business.
d. Is a separately taxable entity.
e. Is a business entity.
f. May have a contract specifying the division of profits among the partners.
g. Has an unlimited life.
Use the following format to indicate (with a "yes" or "no") whether or not a characteristic applies to each type of business organization.

Accepted Answer

The answer of The characteristics below apply to at least...

Question 14

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

Accepted Answer

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

Question 15

The income statement shows the financial position of a business on a specific date.

Accepted Answer

A) True 
 B)False  False

Question 16

Determine the net income (net loss)  of a company for which the following information is available for the month of September.

Accepted Answer

A)  $404,000.
B)  ($4,000) .
C)  $162,000.
D)  $4,000.
E)  ($204,000) .F) B) and C)
G) B) and E)

Question 17

Revenues are:

Accepted Answer

A)  The same as net income.
B)  The excess of expenses over assets.
C)  Resources owned or controlled by a company.
D)  The increase in equity from a company's sales of products and services.
E)  The costs of assets or services used.F) B) and E)
G) A) and C)

Question 18

On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Accepted Answer

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

Question 19

Every business transaction leaves the accounting equation in balance.

Accepted Answer

A) True 
 B)False

Question 20

Technology:

Accepted Answer

A)  Has replaced accounting.
B)  Has not improved the clerical accuracy of accounting.
C)  Reduces the time, effort and cost of recordkeeping.
D)  In accounting has replaced the need for decision makers.
E)  In accounting is only available to large corporations.F) A) and B)
G) A) and E) C

Exam 1: Introducing Financial Accounting

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Correct Answer
verified

Creditors' claims on the assets of a company are called:

Correct Answer
verified

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Correct Answer
verified

Investing activities are the means an organization uses to pay for resources like land, buildings, and equipment to carry out its plans.

Correct Answer
verified

Identify and describe the four basic financial statements.

Correct Answer
verified
The four basic financial statements are ...
View Answer

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

Correct Answer
verified

In recent years, the FASB and IASB have pursued a process aimed at reducing inconsistencies and improving comparability between U.S. GAAP and IFRS. This process is known as:

Correct Answer
verified

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

Correct Answer
verified

The monetary unit assumption means that all companies doing business in the United States must express transactions and events in U.S. dollars.

Correct Answer
verified

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 Answer
verified

U.S. government bonds are:

Correct Answer
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The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

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

Correct Answer
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The income statement shows the financial position of a business on a specific date.

Correct Answer
verified
False

Determine the net income (net loss) of a company for which the following information is available for the month of September.

Correct Answer
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Revenues are:

Correct Answer
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Correct Answer
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Every business transaction leaves the accounting equation in balance.

Correct Answer
verified

Technology:

Correct Answer
verified
C

Exam 1: Introducing Financial Accounting

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Correct AnswerverifiedShow Answer

Creditors' claims on the assets of a company are called:

Correct AnswerverifiedShow Answer

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Correct AnswerverifiedShow Answer

Investing activities are the means an organization uses to pay for resources like land, buildings, and equipment to carry out its plans.

Correct AnswerverifiedShow Answer

Identify and describe the four basic financial statements.

Correct AnswerverifiedThe four basic financial statements are ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In recent years, the FASB and IASB have pursued a process aimed at reducing inconsistencies and improving comparability between U.S. GAAP and IFRS. This process is known as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The monetary unit assumption means that all companies doing business in the United States must express transactions and events in U.S. dollars.

Correct AnswerverifiedShow Answer

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 AnswerverifiedShow Answer

U.S. government bonds are:

Correct AnswerverifiedShow Answer

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The income statement shows the financial position of a business on a specific date.

Correct AnswerverifiedFalse

Determine the net income (net loss) of a company for which the following information is available for the month of September.

Correct AnswerverifiedShow Answer

Revenues are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Every business transaction leaves the accounting equation in balance.

Correct AnswerverifiedShow Answer

Technology:

Correct AnswerverifiedC

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The four basic financial statements are ...
View Answer

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C