Question 1

Objectivity means that financial information is supported by independent, unbiased evidence.

Accepted Answer

A) True 
 B)False

Question 2

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

Accepted Answer

A)  Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000.
B)  Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000.
C)  Assets would decrease $38,000 and liabilities would decrease $38,000.
D)  There would be no effect on the accounts because the accounts are affected by the same amount.
E)  Assets would increase $38,000 and liabilities would decrease $38,000.F) A) and D)
G) A) and B)

Question 3

Common stock is an increase in equity from a company's earnings activities.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

The answer of Congress passed the ______________________ to help curb...

Question 5

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

Accepted Answer

A) True 
 B)False

Question 6

What distinguishes liabilities from equity?

Accepted Answer

Liabilities are creditors' claims on ass...

Question 7

Return on assets reflects a company's ability to generate profit through productive use of its assets.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following purposes would financial statements serve for external users?

Accepted Answer

A)  To find information about projected costs and revenues of proposed products.
B)  To assess employee performance and compensation.
C)  To assist in monitoring consumer needs and price concerns.
D)  To fulfill regulatory requirements for companies whose stock is sold to the public.
E)  To determine purchasing needs.F) A) and E)
G) A) and D)

Question 9

A resource that the stockholder receives from the company is called a(n) :

Accepted Answer

A)  Liability.
B)  Dividend.
C)  Expense.
D)  Common stock.
E)  Investment.F) None of the above
G) B) and D)

Question 10

Owner financing refers to resources contributed by creditors or lenders.

Accepted Answer

A) True 
 B)False

Question 11

Risk is the _________________ about the return an investor expects to earn.

Accepted Answer

The answer of Risk is the _________________ about the return...

Question 12

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 E)
G) B) and E)

Question 13

Planning involves defining an organization's ideas, goals, and actions.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

At the beginning of the year, a company had $120,000 worth of liabilities. During the year, assets increased by $160,000 and at year-end they equaled $360,000. Liabilities decreased $20,000 during the year. Calculate the beginning and ending values of equity.

Accepted Answer

Beginning equity = $...

Question 16

A balance sheet lists:

Accepted Answer

A)  The types and amounts of the revenues and expenses of a business.
B)  Only the information about what happened to equity during a time period.
C)  The types and amounts of assets, liabilities, and equity of a business as of a specific date.
D)  The inflows and outflows of cash during the period.
E)  The assets and liabilities of a company but not the retained earnings.F) A) and B)
G) A) and C)

Question 17

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:

Accepted Answer

A)  8.8%
B)  7.0%
C)  5.8%
D)  35.0%
E)  23.3%F) A) and D)
G) A) and C)

Question 18

Prevor Corporation reports the following account balances at the end of its first year of operation:  Prevor's total liabilities equal:

Accepted Answer

A)  $46,500.
B)  $42,500.
C)  $50,000.
D)  $72,500.
E)  $30,000.F) C) and D)
G) A) and B)

Question 19

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?

Accepted Answer

A)  Assets would decrease $2,000 and liabilities would decrease $2,000.
B)  Assets would decrease $2,000 and equity would decrease $2,000.
C)  Assets would increase $2,000 and equity would increase $2,000.
D)  Assets would increase $2,000 and liabilities would increase $2,000.
E)  Liabilities would decrease $2,000 and equity would increase $2,000.F) B) and E)
G) C) and D)

Question 20

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

Accepted Answer

A)  Assets increase $1,300 and liabilities decrease $1,300.
B)  One asset increases $1,300 and another asset decreases $1,300, causing no effect.
C)  Assets decrease $1,300 and equity decreases $1,300.
D)  Assets decrease $1,300 and equity increases $1,300.
E)  Assets increase $1,300 and liabilities increase $1,300.F) B) and D)
G) B) and C)

Exam 1: Introducing Financial Accounting

Prevor Corporation reports the following account balances at the end of its first year of operation: Prevor's total liabilities equal:

Correct AnswerverifiedShow Answer

A resource that the stockholder receives from the company is called a(n) :

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A balance sheet lists:

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What distinguishes liabilities from equity?

Correct AnswerverifiedLiabilities are creditors' claims on ass...View AnswerShow Answer

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

Correct AnswerverifiedShow Answer

Which of the following purposes would financial statements serve for external users?

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Planning involves defining an organization's ideas, goals, and actions.

Correct AnswerverifiedShow Answer

Return on assets reflects a company's ability to generate profit through productive use of its assets.

Correct AnswerverifiedShow Answer

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

Correct AnswerverifiedShow Answer

Common stock is an increase in equity from a company's earnings activities.

Correct AnswerverifiedShow Answer

Risk is the _________________ about the return an investor expects to earn.

Correct AnswerverifiedShow Answer

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

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

At the beginning of the year, a company had $120,000 worth of liabilities. During the year, assets increased by $160,000 and at year-end they equaled $360,000. Liabilities decreased $20,000 during the year. Calculate the beginning and ending values of equity.

Correct AnswerverifiedBeginning equity = $...View AnswerShow Answer

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:

Correct AnswerverifiedShow Answer

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?

Correct AnswerverifiedShow Answer

Objectivity means that financial information is supported by independent, unbiased evidence.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Owner financing refers to resources contributed by creditors or lenders.

Correct AnswerverifiedShow Answer

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Liabilities are creditors' claims on ass...
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Beginning equity = $...
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