Question 1

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

Accepted Answer

A)   FASB
B)   IRS
C)   SEC
D)   AICPAE) C) and D)
F) B) and D)

Question 2

An account receivable is typically classified as a revenue.

Accepted Answer

A) True 
 B)False

Question 3

Liabilities are reported on the

Accepted Answer

A)   income statement
B)   statement of owner's equity
C)   statement of cash flows
D)   balance sheetE) A) and B)
F) B) and D)

Question 4

An account receivable is a claim against a customer arising from a sale on account.

Accepted Answer

A) True 
 B)False

Question 5

For accounting purposes, the business entity should be considered separate from its owners if the entity is

Accepted Answer

A)   a corporation
B)   a proprietorship
C)   a partnership
D)   all of the aboveE) A) and C)
F) All of the above

Question 6

The Austin Land Company sold land for $85,000 in cash. The land was originally purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank. After the sale, The Austin Land Company paid off the loan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

Accepted Answer

Total assets decrease $20,000 (Cash incr...

Question 7

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)   none of theseE) C) and D)
F) A) and C)

Question 8

Explain the meaning of the business entity concept.

Accepted Answer

The business entity concept limits the e...

Question 9

An income statement is a summary of the revenues and expenses of a business as of a specific date.

Accepted Answer

A) True 
 B)False

Question 10

How does receiving a bill to be paid next month for services received affect the accounting equation?

Accepted Answer

A)   assets decrease; owner's equity decreases
B)   assets increase; liabilities increase
C)   liabilities increase; owner's equity increases
D)   liabilities increase; owner's equity decreasesE) None of the above
F) A) and B)

Question 11

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a role of accounting in business?

Accepted Answer

A)   To provide reports to users about the economic activities and conditions of a business.
B)   To personally guarantee loans of the business.
C)   To provide information to other users to determine the economic performance and condition of the business.
D)   To assess the various informational needs of users and design its accounting system to meet those needs.E) A) and D)
F) B) and C)

Question 13

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

Accepted Answer

A)   the Income Statement.
B)   the Balance Sheet.
C)   the Statement of Cash Flows.
D)   cannot be determined.E) A) and B)
F) B) and D)

Question 14

The unit of measure concept:

Accepted Answer

A)   is only used in the financial statements of manufacturing companies.
B)   is not important when applying the cost concept.
C)   requires that different units be used for assets and liabilities.
D)   requires that economic data be reported in yen in Japan or dollars in the U.S.E) A) and B)
F) A) and D)

Question 15

Which of the following financial statements reports information as of a specific date?

Accepted Answer

A)   income statement
B)   statement of owner's equity
C)   statement of cash flows
D)   balance sheetE) B) and D)
F) B) and C)

Question 16

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Accepted Answer

A) True 
 B)False

Question 17

The owner's rights to the assets rank ahead of the creditors' rights to the assets.

Accepted Answer

A) True 
 B)False

Question 18

Paying an account payable increases liabilities and decreases assets.

Accepted Answer

A) True 
 B)False

Question 19

Proprietorships are owned by one owner and provide only services to their customers.

Accepted Answer

A) True 
 B)False

Question 20

On May 7, Carpet Barn Company offered to pay $83,000 for land that had a selling price of $105,000. On May 15, Carpet Barn accepted a counteroffer of $95,000. On June 5, the land was assessed at a value of $115,000 for property tax purposes. On December 10, Carpet Barn Company was offered $135,000 for the land by another company. At what value should the land be recorded in Carpet Barn Company's records?

Accepted Answer

The answer of On May 7, Carpet Barn Company offered...

Exam 1: Introduction to Accounting and Business

An account receivable is a claim against a customer arising from a sale on account.

Correct Answer
verified

An account receivable is typically classified as a revenue.

Correct Answer
verified

How does receiving a bill to be paid next month for services received affect the accounting equation?

Correct Answer
verified

The unit of measure concept:

Correct Answer
verified

Correct Answer
verified
Total assets decrease $20,000 (Cash incr...
View Answer

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

Correct Answer
verified

Expenses are recorded when

Correct Answer
verified

Proprietorships are owned by one owner and provide only services to their customers.

Correct Answer
verified

Paying an account payable increases liabilities and decreases assets.

Correct Answer
verified

Explain the meaning of the business entity concept.

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

An income statement is a summary of the revenues and expenses of a business as of a specific date.

Correct Answer
verified

Correct Answer
verified

Which of the following is not a role of accounting in business?

Correct Answer
verified

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

Correct Answer
verified

For accounting purposes, the business entity should be considered separate from its owners if the entity is

Correct Answer
verified

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

Correct Answer
verified

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Correct Answer
verified

Which of the following financial statements reports information as of a specific date?

Correct Answer
verified

The owner's rights to the assets rank ahead of the creditors' rights to the assets.

Correct Answer
verified

Liabilities are reported on the

Correct Answer
verified

Exam 1: Introduction to Accounting and Business

An account receivable is a claim against a customer arising from a sale on account.

Correct AnswerverifiedShow Answer

An account receivable is typically classified as a revenue.

Correct AnswerverifiedShow Answer

How does receiving a bill to be paid next month for services received affect the accounting equation?

Correct AnswerverifiedShow Answer

The unit of measure concept:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTotal assets decrease $20,000 (Cash incr...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Expenses are recorded when

Correct AnswerverifiedShow Answer

Proprietorships are owned by one owner and provide only services to their customers.

Correct AnswerverifiedShow Answer

Paying an account payable increases liabilities and decreases assets.

Correct AnswerverifiedShow Answer

Explain the meaning of the business entity concept.

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

An income statement is a summary of the revenues and expenses of a business as of a specific date.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a role of accounting in business?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For accounting purposes, the business entity should be considered separate from its owners if the entity is

Correct AnswerverifiedShow Answer

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

Correct AnswerverifiedShow Answer

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Correct AnswerverifiedShow Answer

Which of the following financial statements reports information as of a specific date?

Correct AnswerverifiedShow Answer

The owner's rights to the assets rank ahead of the creditors' rights to the assets.

Correct AnswerverifiedShow Answer

Liabilities are reported on the

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Total assets decrease $20,000 (Cash incr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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