Question 1

A sole proprietorship is a business owned by one or more persons.

Accepted Answer

A) True 
 B)False

Question 2

Using the accounting equation, equity is equal to ________________________.

Accepted Answer

assets min...

Question 3

Assets are the resources a company owns or controls that are expected to yield future benefits.

Accepted Answer

A) True 
 B)False

Question 4

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) C) and D)

Question 5

In a business decision where there are ethical concerns, the preferred course of action should be one that:

Accepted Answer

A)  Is agreed upon by the most managers.
B)  Maximizes the company's profits.
C)  Results in maintaining operations at the current level.
D)  Costs the least to implement.
E)  Avoids casting doubt on the decision maker and upholds trust.F) B) and C)
G) C) and D) E

Question 6

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) B) and C)

Question 7

How does the objectivity principle support ethical behavior?

Accepted Answer

The objectivity principle supports ethic...

Question 8

If assets are $99,000 and liabilities are $32,000, then equity equals:

Accepted Answer

A)  $32,000.
B)  $67,000.
C)  $99,000.
D)  $131,000.
E)  $198,000.F) All of the above
G) B) and E)

Question 9

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) B) and E)
G) B) and C)

Question 10

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

Accepted Answer

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

Question 11

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) A) and C)
G) C) and E)

Question 12

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) A) and C)
G) A) and B)

Question 13

A stockholder's investment in a business normally creates an asset (cash), a liability (note payable), and stockholders' equity (investment.)

Accepted Answer

A) True 
 B)False  False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Dividends are expenses.

Accepted Answer

A) True 
 B)False

Question 16

Strategic management is the process of determining the right mix of operating activities for the type of organization, its plans, and its market.

Accepted Answer

A) True 
 B)False  True

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The private-sector group that currently has the authority to establish generally accepted accounting principles in the United States is the:

Accepted Answer

A)  APB.
B)  FASB.
C)  AAA.
D)  AICPA.
E)  SEC.F) A) and B)
G) None of the above

Question 19

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholders' equity?

Accepted Answer

A)  $17,000.
B)  $29,000.
C)  $71,000.
D)  $88,000.
E)  $105,000.F) D) and E)
G) A) and C)

Question 20

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) A) and E)
G) C) and E)

Exam 1: Accounting in Business

A sole proprietorship is a business owned by one or more persons.

Correct AnswerverifiedShow Answer

Using the accounting equation, equity is equal to ________________________.

Correct Answerverifiedassets min...View AnswerShow Answer

Assets are the resources a company owns or controls that are expected to yield future benefits.

Correct AnswerverifiedShow Answer

Revenues are:

Correct AnswerverifiedShow Answer

In a business decision where there are ethical concerns, the preferred course of action should be one that:

Correct AnswerverifiedE

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

How does the objectivity principle support ethical behavior?

Correct AnswerverifiedThe objectivity principle supports ethic...View AnswerShow Answer

If assets are $99,000 and liabilities are $32,000, then equity equals:

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

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Risk is:

Correct AnswerverifiedShow Answer

A stockholder's investment in a business normally creates an asset (cash), a liability (note payable), and stockholders' equity (investment.)

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

Dividends are expenses.

Correct AnswerverifiedShow Answer

Strategic management is the process of determining the right mix of operating activities for the type of organization, its plans, and its market.

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

The private-sector group that currently has the authority to establish generally accepted accounting principles in the United States is the:

Correct AnswerverifiedShow Answer

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholders' equity?

Correct AnswerverifiedShow Answer

Rent expense appears on which of the following statements?

Correct AnswerverifiedShow Answer

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assets min...
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E

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The objectivity principle supports ethic...
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False

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True

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