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Exam 1: Accounting in Business

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Question 121

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________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

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Question 122

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________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

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Question 123

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A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Identifying the proper ethical path is usually easy.

Match each of the following items 1 through 8 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement. a. Income statement b. Statement of owner's equity c. Balance sheet d. Statement of cash flows _____1. Assets. _____2. Withdrawals. _____3. Revenues. _____4. Cash from investing activities. _____5. Expenses. _____6. Liabilities. 7. Cash from operating activities. 8. Cash from financing activities.

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net income and withdrawals.

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

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?

A balance sheet covers activities over a period of time such as a month or year.

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

The area of accounting aimed at serving the decision making needs of internal users is:

Risk is the uncertainty about the return we will earn.

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information. a. Suppliers b. Lenders c. Shareholders d. Purchasing Managers e. Regulators ____ 1. Know what, when, and how much to purchase. ____ 2. Judge the soundness of a customer before making sales on credit. ____ 3. Assess whether a company has paid all required taxes and complied with securities rules. ____ 4. Assess whether an organization is likely to repay its loans with interest. ____ 5. Decide whether to buy, hold, or sell a company's stock.

Net income occurs when revenues exceed expenses.

All of the following are classified as assets except:

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

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?

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and withdrawals by the owner of $12,000. The owner made no investments during the year. Calculate the ending equity.

The balance sheet is based on the accounting equation.