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Exam 1: Introduction to Accounting and Business

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Question 121

Multiple Choice

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Most businesses in the United States are

A) proprietorships
B) partnerships
C) corporations
D) cooperatives

E) None of the above
F) B) and C)

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Question 122

Multiple Choice

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Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -A formal presentation of the accounting equation

A) Income statement
B) Balance sheet
C) Statement of owner's equity
D) Statement of cash flows

E) C) and D)
F) A) and B)

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Question 123

Multiple Choice

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Ramon Ramos has withdrawn $750 from Ramos Repair Company's cash account to deposit in his personal account. How does this transaction affect Ramos Repair Company's accounting equation?

The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.

Companies like Enron, WorldCom, and Tyco International, Ltd. have been caught in the midst of ethical lapses that led to fines, firings, and criminal and/or civil prosecution. List and briefly describe three factors that are responsible for what went wrong in these companies.

Goods purchased on account for future use in the business, such as supplies, are called

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Often used as an alternative to a partnership

On March 1, the amount of Richard Cook's capital in Richard's Catering Company was $150,000. During March, he withdrew $31,000 from the business. The amounts of the various assets, liabilities, revenues, and expenses are as follows:​ $\begin{array} { l r } \text { Accounts payable } & \$ 10,250 \\\text { Accounts receivable } & 45,950 \\\text { Cash } & 23,840 \\\text { Fees earned } & 64,950 \\\text { Insurance expense } & 1,275 \\\text { Land } & 85,400 \\\text { Miscellaneous expense } & 1,210 \\\text { Prepaid insurance } & 3,000 \\\text { Rent expense } & 9,000 \\\text { Salary expense } & 20,300 \\\text { Supplies } & 900 \\\text { Supplies expense } & 525 \\\text { Utilities expense } & 2,800\end{array}$ Present, in good form, (a) an income statement for March, (b) a statement of owner's equity for March, and (c) a balance sheet as of March 31.

Some of the major fraudulent acts committed by senior executives started as what they considered to be small ethical lapses that grew out of control.

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

Managerial accounting information is used by external and internal users equally.

Which of the following is the authoritative body in the United States that has the primary responsibility for developing accounting principles?

A merchandising business buys products from other businesses to sell to customers.

Accounting information users need reports about the economic activities and condition of businesses.

Which of the following groups of companies includes examples of merchandising businesses?