Question 1

All of the following are classified as liabilities except:

Accepted Answer

A)  Wages Payable.
B)  Accounts Payable.
C)  Taxes Payable.
D)  Notes Payable.
E)  Accounts Receivable.F) A) and E)
G) C) and D) E

Question 2

Internal users include lenders, shareholders, brokers and nonexecutive employees.

Accepted Answer

A) True 
 B)False  False

Question 3

If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:

Accepted Answer

A)  Decreased $105,000.
B)  Decreased $45,000.
C)  Increased $105,000.
D)  Increased $45,000.
E)  Increased $30,000.F) B) and E)
G) A) and D)

Question 4

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Accepted Answer

A)  Assets, $30,000 decrease; liabilities, $30,000 increase.
B)  Assets, $30,000 decrease; equity $30,000 decrease.
C)  Assets, $30,000 increase; equity, $30,000 increase.
D)  Liabilities, $30,000 decrease; equity, $30,000 increase.
E)  Assets, $30,000 decrease; liabilities, $30,000 decrease.F) B) and C)
G) All of the above

Question 5

Explain the role of accounting in the information age.

Accepted Answer

Accounting is an information and measure...

Question 6

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

Accepted Answer

A)  A decrease of $80,000.
B)  An increase of $25,000.
C)  An increase of $30,000.
D)  A decrease of $30,000.
E)  An increase of $80,000.F) B) and E)
G) A) and D)

Question 7

A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

Accepted Answer

$570,000. The Measurement (Cos...

Question 8

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)  Assets increase $4,500 and liabilities increase $4,500.
C)  Equity decreases $4,500 and liabilities increase $4,500.
D)  Equity increases $4,500 and liabilities decrease $4,500.
E)  Liabilities decrease $4,500 and assets increase $4,500.F) A) and D)
G) A) and C)

Question 9

An example of an investing activity is:

Accepted Answer

A)  Selling inventory.
B)  Paying wages of employees.
C)  Withdrawals by the owner.
D)  Contribution from owner.
E)  Purchase of land.F) None of the above
G) D) and E) E

Question 10

A resource that the owner takes from the company is called a(n) :

Accepted Answer

A)  Investment.
B)  Liability.
C)  Contribution.
D)  Withdrawal.
E)  Expense.F) C) and D)
G) A) and B)

Question 11

Identify the users and uses of accounting information.

Accepted Answer

There are two general types of users of ...

Question 12

External users include lenders, shareholders, customers, and regulators.

Accepted Answer

A) True 
 B)False

Question 13

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Accepted Answer

A)  Total assets increase and equity decreases.
B)  Total assets decrease and equity increases.
C)  Total assets, total liabilities, and total equity are unchanged.
D)  Both total assets and equity are unchanged and liabilities increase.
E)  Both total assets and total liabilities decrease.F) A) and D)
G) A) and B)

Question 14

An income statement reports on investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 15

Generally, the lower the risk, the higher the return that can be expected.

Accepted Answer

A) True 
 B)False

Question 16

The conceptual framework that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are attempting to converge and enhance includes the following broad areas to guide standard setting except:

Accepted Answer

A)  Uniformity
B)  Recognition and measurement
C)  Objectives
D)  Qualitative characteristics
E)  ElementsF) B) and D)
G) C) and E)

Question 17

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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

Question 19

From an accounting perspective, an event is a happening that affects the accounting equation, but cannot be measured.

Accepted Answer

A) True 
 B)False

Question 20

A balance sheet lists:

Accepted Answer

A)  The inflows and outflows of cash during the period.
B)  The types and amounts of assets, liabilities, and equity of a business as of a specific date.
C)  Only the information about what happened to equity during a time period.
D)  The assets and liabilities of a company but not the owner's equity.
E)  The types and amounts of the revenues and expenses of a business.F) D) and E)
G) A) and C)

Exam 1: Accounting in Business

All of the following are classified as liabilities except:

Correct AnswerverifiedE

Internal users include lenders, shareholders, brokers and nonexecutive employees.

Correct AnswerverifiedFalse

If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:

Correct AnswerverifiedShow Answer

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Correct AnswerverifiedShow Answer

Explain the role of accounting in the information age.

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

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

Correct AnswerverifiedShow Answer

A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

Correct Answerverified$570,000. The Measurement (Cos...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

An example of an investing activity is:

Correct AnswerverifiedE

A resource that the owner takes from the company is called a(n) :

Correct AnswerverifiedShow Answer

Identify the users and uses of accounting information.

Correct AnswerverifiedThere are two general types of users of ...View AnswerShow Answer

External users include lenders, shareholders, customers, and regulators.

Correct AnswerverifiedShow Answer

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Correct AnswerverifiedShow Answer

An income statement reports on investing and financing activities.

Correct AnswerverifiedShow Answer

Generally, the lower the risk, the higher the return that can be expected.

Correct AnswerverifiedShow Answer

The conceptual framework that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are attempting to converge and enhance includes the following broad areas to guide standard setting except:

Correct AnswerverifiedShow Answer

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

From an accounting perspective, an event is a happening that affects the accounting equation, but cannot be measured.

Correct AnswerverifiedShow Answer

A balance sheet lists:

Correct AnswerverifiedShow Answer

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E

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False

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Accounting is an information and measure...
View Answer

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$570,000. The Measurement (Cos...
View Answer

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E

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There are two general types of users of ...
View Answer

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