Question 1

All of the following are classified as liabilities except:

Accepted Answer

A)  Accounts Receivable.
B)  Notes Payable.
C)  Wages Payable.
D)  Accounts Payable.
E)  Taxes Payable.F) All of the above
G) A) and D)

Question 2

From an accounting perspective,an event is a happening that affects the accounting equation,but cannot be measured.

Accepted Answer

A) True 
 B)False

Question 3

A company acquires equipment for $75,000 cash.This represents a(n) :

Accepted Answer

A)  Operating activity.
B)  Investing activity.
C)  Financing activity.
D)  Revenue activity.
E)  Expense activity.F) A) and E)
G) B) and D)

Question 4

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Accepted Answer

A) True 
 B)False

Question 5

If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period,the assets of the business must have:

Accepted Answer

A)  Decreased $105,000.
B)  Decreased $45,000.
C)  Increased $30,000.
D)  Increased $45,000.
E)  Increased $105,000.F) C) and E)
G) All of the above

Question 6

Prepare a April 30 balance sheet in proper form for Two Rivers Vending Service from the following alphabetical list of the accounts at April 30:

Accepted Answer

The answer of Prepare a April 30 balance sheet in...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

The rule that (1) requires revenue to be recognized when goods or services are provided to the customer and (2) at the amount expected to be received from the customer is called the:

Accepted Answer

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

Question 9

If a company receives $12,000 from its sole stockholder to establish a corporation,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) D) and E)

Question 10

Which of the following accounts is not included in the calculation of a company's ending equity?

Accepted Answer

A)  Revenues.
B)  Expenses.
C)  Dividends.
D)  Stockholder investments.
E)  Cash.F) A) and D)
G) C) and E)

Question 11

Chou Co.has a net income of $43,000,assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000.Compute its return on assets.

Accepted Answer

A)  8.4%.
B)  17.2%.
C)  14.3%.
D)  15.6%.
E)  1.5%.F) All of the above
G) None of the above

Question 12

A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

Accepted Answer

A) True 
 B)False

Question 13

Rent expense appears on which of the following statements?

Accepted Answer

A)  Balance sheet.
B)  Income statement.
C)  Statement of retained earnings.
D)  Statement of periodic expenses.
E)  Statement of cash flows only.F) B) and E)
G) B) and D)

Question 14

If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period,did the assets of the company increase or decrease? By what amount?

Accepted Answer

Assets inc...

Question 15

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 D)

Question 16

Data for Kennedy Realty are as follows:
  Cash dividends of $30,000 were paid to its sole stockholder,Finn Kennedy,during the year.No stock was issued during the year.Using the above data,prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

Accepted Answer

The answer of Data for Kennedy Realty are as follows:
...

Question 17

A corporation is:

Accepted Answer

A)  A business legally separate from its owners.
B)  Controlled by the FASB.
C)  Not responsible for its own acts and own debts.
D)  The same as a limited liability partnership.
E)  Not subject to double taxation.F) B) and C)
G) A) and E)

Question 18

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 D)
G) A) and B)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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) A) and B)
G) D) and E)

Exam 1: Introducing Financial Statements

A company acquires equipment for $75,000 cash.This represents a(n) :

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Data for Kennedy Realty are as follows: Cash dividends of $30,000 were paid to its sole stockholder,Finn Kennedy,during the year.No stock was issued during the year.Using the above data,prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

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If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period,the assets of the business must have:

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From an accounting perspective,an event is a happening that affects the accounting equation,but cannot be measured.

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A corporation is:

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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?

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Chou Co.has a net income of $43,000,assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000.Compute its return on assets.

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A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

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Which of the following accounts is not included in the calculation of a company's ending equity?

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If a company receives $12,000 from its sole stockholder to establish a corporation,the effect on the accounting equation would be:

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

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Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

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

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If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period,did the assets of the company increase or decrease? By what amount?

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All of the following are classified as liabilities except:

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Prepare a April 30 balance sheet in proper form for Two Rivers Vending Service from the following alphabetical list of the accounts at April 30:

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Rent expense appears on which of the following statements?

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Revenues are:

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

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The rule that (1) requires revenue to be recognized when goods or services are provided to the customer and (2) at the amount expected to be received from the customer is called the:

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Assets inc...
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