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Exam 1: Accounting in Business

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Question 1

Multiple Choice

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The independent group that is attempting to harmonize accounting practices of different countries is the:

A) AICPA.
B) IASB.
C) CAP.
D) SEC.
E) FASB.

F) B) and D)
G) A) and B)

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Question 2

Multiple Choice

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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?

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

F) A) and B)
G) C) and D)

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Question 3

Multiple Choice

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An exchange of value between two entities that yields a change in the accounting equation is called:

Identify each of the following business activities into the appropriate category

A balance sheet lists:

Opportunities in accounting include auditing, consulting, market research, and tax planning.

How does the objectivity principle support ethical behavior?

The idea that a business will continue to operate instead of being closed or sold underlies the going-concern assumption.

The _______________ principle requires that financial information is supported by independent, unbiased evidence.

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:

Bookkeeping is the recording of transactions and events and is only part of accounting.

The accounts of Mason Company at the end of the past year report the following amounts: $\begin{array}{llcc} \text { Accounts } &\text {Amount } \\ \hline\text { Dividends..................} &\$15,500\\ \text {Revenues............................ } &\$79,000\\ \text {Expenses.................................. } &\$43,800\\ \text { Common stock.............. } &2,000\\\end{array}$ If the beginning equity for the year was $173,000, calculate the ending equity for Mason Company.

The financial statement that shows the beginning balance of retained earnings; the changes in retained earnings that resulted from , net income (or net loss) ; dividends; and the ending balance, is the:

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

A limited partnership:

Risk is the uncertainty about the return we will earn.

In the partnership form of business, the owners are called stockholders.

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

Flitter reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets: