Question 1

Simpson Auto Body Repair purchased $20,000 of machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly installments.
a) How will the purchase affect the accounting equation?
b) How will the payment of the first monthly installment affect the accounting equation ignore interest)?

Accepted Answer

a) Increase total assets by a net amount...

Question 2

For each of the following companies, identify whether they are a service, merchandising, or manufacturing business. $$\begin{array} { | l | l | } 
\hline \text { A. } & \text { Dillard's } \
\hline \text { B. } & \text { Time Warner Cable } \
\hline \text { C. } & \text { General Motors } \
\hline \text { D. } & \text { Blockbuster } \
\hline \text { E. } & \text { Applebee's } \
\hline \text { F. } & \text { Sony } \
\hline \text { G. } & \text { Best Buy } \
\hline \text { H. } & \text { Banana Republic } \
\hline \text { I. } & \text { H\&R Block } \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following companies, identify...

Question 3

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Offers tax and legal liability advantages for owners

Accepted Answer

A)  Proprietorship
B)  Partnership
C)  Corporation
D)  Limited liability company LL
C)  E) C) and D)
F) B) and C)

Question 4

Match each transaction with its effect on the accounting equation. Each letter may be used more than once.
-Provided a service to a customer on account

Accepted Answer

A)  Increase assets, increase liabilities
B)  Increase liabilities, decrease stockholders' equity
C)  Increase assets, increase stockholders' equity
D)  No effect
E)  Decrease assets, decrease liabilitiesF) Decrease assets, decrease stockholders' equityG) A) and B)
H) D) and F) C

Question 5

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

Accepted Answer

A)   income statement
B)   balance sheet
C)   statement of cash flows
D)   statement of retained earningsE) A) and B)
F) All of the above

Question 6

About 90% of the businesses in the United States are organized as corporations.

Accepted Answer

A) True 
 B)False  False

Question 7

If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.

Accepted Answer

A) True 
 B)False

Question 8

Expenses are recorded when

Accepted Answer

A)   cash is paid for services rendered
B)   a bill is received in advance of services rendered
C)   assets are used in the process of earning revenue
D)   assets are purchasedE) B) and C)
F) A) and D)

Question 9

Which of the following best describes accounting?

Accepted Answer

A)   records economic data but does not communicate the data to users according to any specific rules
B)   is an information system that provides reports to users regarding economic activities and condition of a business
C)   is of no use by individuals outside of the business
D)   is used only for filling out tax returns and for financial statements for various type of governmental reporting requirementsE) A) and B)
F) B) and C)

Question 10

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The retained earnings statement RES) , the balance sheet B) , and the income statement I)  are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

Accepted Answer

A)   I, RES, B
B)   B, I, RES
C)   RES, I, B
D)   B, RES, IE) A) and B)
F) All of the above

Question 11

The year-end balance of the retained earnings account appears in

Accepted Answer

A)   both the retained earnings statement and the income statement
B)   only the retained earnings statement
C)   both the retained earnings statement and the balance sheet
D)   both the retained earnings statement and the statement of cash flowsE) B) and C)
F) A) and D)

Question 12

Which of the following is a business transaction?

Accepted Answer

A)   purchase inventory on account
B)   plan advertising for upcoming sale
C)   give employees a raise beginning next month
D)   submit estimate for construction projectE) A) and B)
F) None of the above

Question 13

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

Accepted Answer

Internal users of accounting information include managers and employees. The area of accounting that provides internal users with information is called managerial accounting or management accounting. An example of a report that might be used internally is a customer profitability report.
External users of accounting information include customers, creditors, banks, and government entities. These users are not directly involved in managing or operating the business. The area of accounting that provides external users with information is called financial accounting. General-purpose financial statements are one type of financial accounting report that is distributed to external users.

Question 14

Match each transaction with its effect on the accounting equation. Each letter may be used more than once.
-Borrowed money from a bank

Accepted Answer

A)  Increase assets, increase liabilities
B)  Increase liabilities, decrease stockholders' equity
C)  Increase assets, increase stockholders' equity
D)  No effect
E)  Decrease assets, decrease liabilitiesF) Decrease assets, decrease stockholders' equityG) All of the above
H) B) and C)

Question 15

The asset created by a business when it makes a sale on account is termed

Accepted Answer

A)   accounts payable
B)   prepaid expense
C)   unearned revenue
D)   accounts receivableE) A) and D)
F) All of the above

Question 16

Match between columns
                        Premises: Operating activities
Wages expense
Accounts receivable
Supplies
Accounts payable
Cash
Dividends
Land
Net income
Revenues

Accepted Answer

The Answer of Statement of cash flows and Balance sheet is...

Question 17

Within the United States, the dominant body in the primary development of accounting principles is the

Accepted Answer

A)   American Institute of Certified Public Accountants AICP
A)  
B)   American Accounting Association AA
A)  
C)   Financial Accounting Standards Board FAS
B)  
D)   Institute of Management Accountants IM
A)  E) A) and B)
F) None of the above

Question 18

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $$\begin{array} { l r l } 
\text { Fees earned } & \$ 165,000 & \text { Cash } \
\text { Accounts receivable } & 14,000 & \text { Selling expenses } \
\text { Equipment } & 64,000 & \text { Common stock } \
\text { Accounts payable } & 12,000 & \text { Interest income } \
\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \
\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \
\text { Notes payable } & 20,000 & \text { Rent expense }
\end{array}$$
-Determine the total liabilities at the end of the current year for Scott Industries.

Accepted Answer

$37,000
$12,000 Acco...

Question 19

Match the following business types with each business listed below. Each may be used more than once.
-A law firm

Accepted Answer

A)  Service firm
B)  Manufacturing firm
C)  Merchandising firmD) B) and C)
E) A) and C)

Question 20

Explain the meaning of the business entity concept.

Accepted Answer

The business entity concept limits the e...

Exam 1: Introduction to Accounting and Business

Correct Answer
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a) Increase total assets by a net amount...
View Answer

Correct Answer
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Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Offers tax and legal liability advantages for owners

Correct Answer
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Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Provided a service to a customer on account

Correct Answer
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C

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

Correct Answer
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About 90% of the businesses in the United States are organized as corporations.

Correct Answer
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False

If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.

Correct Answer
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Expenses are recorded when

Correct Answer
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Which of the following best describes accounting?

Correct Answer
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The year-end balance of the retained earnings account appears in

Correct Answer
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Which of the following is a business transaction?

Correct Answer
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Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Borrowed money from a bank

Correct Answer
verified

The asset created by a business when it makes a sale on account is termed

Correct Answer
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Match the following items to the financial statement where they can be found. Hint: Some of the items can be found on more than one financial statement.

Within the United States, the dominant body in the primary development of accounting principles is the

Correct Answer
verified

Correct Answer
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$37,000
$12,000 Acco...
View Answer

Match the following business types with each business listed below. Each may be used more than once. -A law firm

Correct Answer
verified

Explain the meaning of the business entity concept.

Correct Answer
verified
The business entity concept limits the e...
View Answer

Exam 1: Introduction to Accounting and Business

Correct Answerverifieda) Increase total assets by a net amount...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Offers tax and legal liability advantages for owners

Correct AnswerverifiedShow Answer

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Provided a service to a customer on account

Correct AnswerverifiedC

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

Correct AnswerverifiedShow Answer

About 90% of the businesses in the United States are organized as corporations.

Correct AnswerverifiedFalse

If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.

Correct AnswerverifiedShow Answer

Expenses are recorded when

Correct AnswerverifiedShow Answer

Which of the following best describes accounting?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The year-end balance of the retained earnings account appears in

Correct AnswerverifiedShow Answer

Which of the following is a business transaction?

Correct AnswerverifiedShow Answer

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Borrowed money from a bank

Correct AnswerverifiedShow Answer

The asset created by a business when it makes a sale on account is termed

Correct AnswerverifiedShow Answer

Match the following items to the financial statement where they can be found. Hint: Some of the items can be found on more than one financial statement.

Within the United States, the dominant body in the primary development of accounting principles is the

Correct AnswerverifiedShow Answer

Correct Answerverified$37,000$12,000 Acco...View AnswerShow Answer

Match the following business types with each business listed below. Each may be used more than once. -A law firm

Correct AnswerverifiedShow Answer

Explain the meaning of the business entity concept.

Correct AnswerverifiedThe business entity concept limits the e...View AnswerShow Answer

Correct Answer
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a) Increase total assets by a net amount...
View Answer

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C

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False

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Correct Answer
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Correct Answer
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$37,000
$12,000 Acco...
View Answer

Correct Answer
verified

Correct Answer
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The business entity concept limits the e...
View Answer