Question 1

Explain the role of accounting in the information age.

Accepted Answer

Accounting is an information and measure...

Question 2

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.

Accepted Answer

The answer of There are three major types of business...

Question 3

Identify and describe the two main groups involved in establishing generally accepted accounting principles.

Accepted Answer

The Financial Accounting Standards Board...

Question 4

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

Accepted Answer

A)   Going-concern assumption.
B)   Expense recognition (Matching)  principle.
C)   Measurement (Cost)  principle.
D)   Business entity assumption.
E)   Consideration assumption.F) C) and D)
G) None of the above

Question 5

Return on assets is often stated in ratio form as the amount of average total assets divided by income.

Accepted Answer

A) True 
 B)False

Question 6

A stockholder's investment increases equity via net income.

Accepted Answer

A) True 
 B)False

Question 7

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period,equity in the business must have:

Accepted Answer

A)   Increased $22,000.
B)   Decreased $22,000.
C)   Increased $89,000.
D)   Decreased $156,000.
E)   Increased $156,000.F) C) and D)
G) B) and C)

Question 8

Ending retained earnings reported on the statement of retained earnings is calculated by adding stockholder investments and net losses and subtracting net income and dividends.

Accepted Answer

A) True 
 B)False

Question 9

An income statement reports on investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 10

Internal operating activities include research and development,distribution,and human resources.

Accepted Answer

A) True 
 B)False

Question 11

________ is net income divided by average total assets.

Accepted Answer

The answer of ________ is net income divided by average...

Question 12

The materiality constraint looks at both the importance and relative size of an amount.

Accepted Answer

A) True 
 B)False

Question 13

Match the following terms with the appropriate definition.
-Measurement (Cost) principle

Accepted Answer

A)  The governmental agency that has the legal authority to establish accounting rules.
B)  Prescribes that assets and services to be recorded initially on a cash or equal-to-cash basis.
C)  A report that describes a company's financial position at a point in time.
D)  A financial statement that reports the changes in equity over the reporting period; including increases from net income and decreases from dividends or net losses.
E)  The concepts and rules that govern financial accounting.F) A report that identifies cash receipts and cash payments over a period of time.G) A principle that requires the information in financial statements to be supported by independent unbiased evidence.H) An independent group consisting of individuals from many countries that identify preferred accounting practices.I) Presumes that the life of a company can be divided into periods for reporting purposes.J) Prescribes that a company report the details behind financial statements that would impact user decisions.K) C) and I)
L) All of the above

Question 14

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

Accepted Answer

A)   Assets increase $4,500 and liabilities decrease $4,500.
B)   Equity decreases $4,500 and liabilities increase $4,500.
C)   Liabilities decrease $4,500 and assets increase $4,500.
D)   Assets increase $4,500 and liabilities increase $4,500.
E)   Equity increases $4,500 and liabilities decrease $4,500.F) C) and D)
G) None of the above

Question 15

Resources a company owns or controls that are expected to yield future benefits are:

Accepted Answer

A)   Assets.
B)   Revenues.
C)   Liabilities.
D)   Stockholders' Equity.
E)   Expenses.F) D) and E)
G) C) and E) A

Question 16

Match the following terms with the appropriate definition.
-Statement of cash flows

Accepted Answer

A)  The governmental agency that has the legal authority to establish accounting rules.
B)  Prescribes that assets and services to be recorded initially on a cash or equal-to-cash basis.
C)  A report that describes a company's financial position at a point in time.
D)  A financial statement that reports the changes in equity over the reporting period; including increases from net income and decreases from dividends or net losses.
E)  The concepts and rules that govern financial accounting.F) A report that identifies cash receipts and cash payments over a period of time.G) A principle that requires the information in financial statements to be supported by independent unbiased evidence.H) An independent group consisting of individuals from many countries that identify preferred accounting practices.I) Presumes that the life of a company can be divided into periods for reporting purposes.J) Prescribes that a company report the details behind financial statements that would impact user decisions.K) A) and I)
L) C) and E)

Question 17

Use the following information as of December 31 to determine equity.
  Cash $57,000 Building 175,000 Equipment 206,000 Liabilities 141,000\begin{array} { l c } 	ext { Cash } & \$ 57,000 \	ext { Building } & 175,000 \	ext { Equipment } & 206,000 \	ext { Liabilities } & 141,000\end{array} Cash  Building  Equipment  Liabilities ​$57,000175,000206,000141,000​

Accepted Answer

A)   $57,000.
B)   $141,000.
C)   $297,000.
D)   $438,000.
E)   $579,000. F) All of the above
G) B) and C)

Question 18

The cost-benefit constraint prescribes that only information with benefits of disclosure greater than the costs of providing it need be disclosed.

Accepted Answer

A) True 
 B)False

Question 19

The business entity assumption means that a business is accounted for separately from other business entities,including its owner or owners.

Accepted Answer

A) True 
 B)False  True

Question 20

According to the measurement (cost)principle,it is necessary for managers to report an approximation of an asset's market value upon purchase.

Accepted Answer

A) True 
 B)False  False

Exam 1: Accounting in Business

Explain the role of accounting in the information age.

Correct AnswerverifiedAccounting is an information and measure...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

Identify and describe the two main groups involved in establishing generally accepted accounting principles.

Correct AnswerverifiedThe Financial Accounting Standards Board...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Return on assets is often stated in ratio form as the amount of average total assets divided by income.

Correct AnswerverifiedShow Answer

A stockholder's investment increases equity via net income.

Correct AnswerverifiedShow Answer

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period,equity in the business must have:

Correct AnswerverifiedShow Answer

Ending retained earnings reported on the statement of retained earnings is calculated by adding stockholder investments and net losses and subtracting net income and dividends.

Correct AnswerverifiedShow Answer

An income statement reports on investing and financing activities.

Correct AnswerverifiedShow Answer

Internal operating activities include research and development,distribution,and human resources.

Correct AnswerverifiedShow Answer

________ is net income divided by average total assets.

Correct AnswerverifiedShow Answer

The materiality constraint looks at both the importance and relative size of an amount.

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definition. -Measurement (Cost) principle

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Resources a company owns or controls that are expected to yield future benefits are:

Correct AnswerverifiedA

Match the following terms with the appropriate definition. -Statement of cash flows

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The cost-benefit constraint prescribes that only information with benefits of disclosure greater than the costs of providing it need be disclosed.

Correct AnswerverifiedShow Answer

The business entity assumption means that a business is accounted for separately from other business entities,including its owner or owners.

Correct AnswerverifiedTrue

According to the measurement (cost)principle,it is necessary for managers to report an approximation of an asset's market value upon purchase.

Correct AnswerverifiedFalse

Correct Answer
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Accounting is an information and measure...
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The Financial Accounting Standards Board...
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