Question 1

General accounting principles arise from long-used accounting practices.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Owner's investments are increases in equity from a company's earnings activities.

Accepted Answer

A) True 
 B)False

Question 4

Harris 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) B) and C)
G) A) and E)

Question 5

U. S. government bonds are:

Accepted Answer

A)   High-risk and high-return investments.
B)   Low-risk and low-return investments.
C)   High-risk and low-return investments.
D)   Low-risk and high-return investments.
E)   High risk and no-return investments.F) A) and E)
G) A) and D)

Question 6

The financial statement that identifies where a company's cash came from and where it went during the period 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 owner's equity.F) A) and D)
G) A) and C)

Question 7

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Accepted Answer

A)   Accounting equation.
B)   Cost principle.
C)   Going-concern assumption.
D)   Realization principle.
E)   Business entity assumption.F) None of the above
G) B) and D)

Question 8

The International Accounting Standards Board (IASB) is the government group that establishes reporting requirements for companies that issue shares to the public.

Accepted Answer

A) True 
 B)False

Question 9

Operating activities:

Accepted Answer

A)   Are the means organizations use to pay for resources like land, buildings and equipment.
B)   Involve using resources to research, develop, purchase, produce, distribute and market products and services.
C)   Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
D)   Are also called asset management.
E)   Are also called strategic management.F) A) and B)
G) A) and D)

Question 10

Explain why ethics are an integral part of accounting.

Accepted Answer

The purpose of accounting is to provide ...

Question 11

Risk is:

Accepted Answer

A)   Net income divided by average total assets.
B)   The reward for investment.
C)   The uncertainty about the expected return to be earned.
D)   Unrelated to expected return.
E)   Derived from the idea of getting something back from an investment.F) A) and B)
G) A) and E)

Question 12

Explain the accounting equation, and define its terms.

Accepted Answer

The accounting equation is stated as: As...

Question 13

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Accepted Answer

A) True 
 B)False

Question 14

The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

Accepted Answer

A) True 
 B)False

Question 15

Cool Tours had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and withdrawals by owners of $9,000. Calculate the ending equity.

Accepted Answer

A)   $88,000.
B)   $25,000.
C)   $97,000.
D)   $38,000.
E)   $47,000.F) B) and E)
G) C) and E)

Question 16

The accountant of Magic Video Games prepared a balance sheet immediately after each transaction was recorded. During September, the first month of operation, the following balance sheets were prepared:
    Required: Describe the nature of each of these five transactions for the month of September.

Accepted Answer

The answer of The accountant of Magic Video Games prepared...

Question 17

How does the going-concern principle affect reporting asset values of a business?

Accepted Answer

The going-concern principle means that f...

Question 18

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

Accepted Answer

A) True 
 B)False

Question 19

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Accepted Answer

A) True 
 B)False

Question 20

Creditors claims on assets that reflect obligations to transfer assets are called ____________.

Accepted Answer

The answer of Creditors claims on assets that reflect obligations...

Exam 1: Accounting in Business

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

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Explain why ethics are an integral part of accounting.

Correct AnswerverifiedThe purpose of accounting is to provide ...View AnswerShow Answer

How does the going-concern principle affect reporting asset values of a business?

Correct AnswerverifiedThe going-concern principle means that f...View AnswerShow Answer

Owner's investments are increases in equity from a company's earnings activities.

Correct AnswerverifiedShow Answer

Harris 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.

Correct AnswerverifiedShow Answer

The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

Correct AnswerverifiedShow Answer

General accounting principles arise from long-used accounting practices.

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Creditors claims on assets that reflect obligations to transfer assets are called ____________.

Correct AnswerverifiedShow Answer

Explain the accounting equation, and define its terms.

Correct AnswerverifiedThe accounting equation is stated as: As...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Correct AnswerverifiedShow Answer

The financial statement that identifies where a company's cash came from and where it went during the period is the:

Correct AnswerverifiedShow Answer

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Correct AnswerverifiedShow Answer

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

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Risk is:

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The accountant of Magic Video Games prepared a balance sheet immediately after each transaction was recorded. During September, the first month of operation, the following balance sheets were prepared: Required: Describe the nature of each of these five transactions for the month of September.

Correct AnswerverifiedShow Answer

U. S. government bonds are:

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Operating activities:

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Cool Tours had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and withdrawals by owners of $9,000. Calculate the ending equity.

Correct AnswerverifiedShow Answer

The International Accounting Standards Board (IASB) is the government group that establishes reporting requirements for companies that issue shares to the public.

Correct AnswerverifiedShow Answer

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The purpose of accounting is to provide ...
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The going-concern principle means that f...
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The accounting equation is stated as: As...
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