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Exam 1: Accounting in Business

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Question 61

Multiple Choice

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Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

A) Expense recognition (Matching) principle..
B) Measurement (Cost) principle.
C) Consideration assumption.
D) Going-concern assumption.
E) Business entity assumption.

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

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Question 62

Multiple Choice

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The business entity assumption:

A) Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.
B) Means that we can express transactions and events in monetary, or money, units.
C) Means that a business is accounted for separately from other business entities, including its owner.
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 E)
G) All of the above

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Question 63

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Net income is sometimes called earnings or profit.

Cage Company had income of $350 million and average invested assets of $2,000 million. Its return on assets (ROA) is:

Cash investments by owners are listed on which of the following statements?

If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:

The first section of the income statement reports cash flows from operating activities.

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

Congress passed the ________ to help curb financial abuses at companies that issue their stock to the public.

There are three major types of business activities. ________ activities are the means organizations use to pay for resources such as land, building, and equipment to carry out plans.

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?

________ is an information and measurement system that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

The ________ assumption states that transactions and events are expressed in money units.

Risk is:

Ethical behavior requires that:

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) :

Accounts payable appear on which of the following statements?

Technology:

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

Jet Styling has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows. $\begin{array}{|l|l|l|}\text { a. } & \text { Beginning cash balance } & \$ 3,200 \\\hline \text { b. } & \text { Cash investment by owner } & 15,000 \\\hline \text { c. } & \text { Cash payment toward long-term loan } & 1,000 \\\hline \text { d. } & \text { Cash payment of rent } & 1,800 \\\hline \text { e. } & \text { Purchased equipment for cash } & 7,500 \\\hline \text { f. } & \text { Purchased store supplies for cash } & 1,500 \\\hline \text { g. } & \text { Cash collected from customers } & 7,750 \\\hline \text { h. } & \text { Cash withdrawal by owner } & 2,000 \\\hline \text { i. } & \text { Cash payment of wages } & 4,000\end{array}$