Question 1

Liabilities are defined as:

Accepted Answer

A)  earnings retained in the business.
B)  amounts owed to lenders.
C)  stockholders' claims to assets.
D)  future economic benefits of a company.

Question 2

Which of the following events would be recorded in the financial accounting records of Acme Lawn Service,Inc.?

Accepted Answer

A)  Acme mows 125 lawns.
B)  Acme buys 5 new lawn mowers from Lawn Equipment,Inc.
C)  Lawn Equipment,Inc.sells 2 mowers to Acme's competitor,Best Lawns,Inc.
D)  Events A and B should both be recorded in the financial accounting records of Acme.

Question 3

Which of the following financial statements illustrates the accounting equation?

Accepted Answer

A)  Statement of Retained Earnings
B)  Income Statement
C)  Balance Sheet
D)  Statement of Cash Flows

Question 4

Cash and Accounts Receivable are both a part of:

Accepted Answer

A)  Assets.
B)  Retained Earnings.
C)  Liabilities.
D)  Common Stock.

Question 5

The correct order for the preparation of financial statements is:
1) Statement of Cash Flows
2) Income Statement
3) Balance Sheet
4) Statement of Retained Earnings

Accepted Answer

A)  4,3,2,1.
B)  1,2,3,4.
C)  2,3,4,1.
D)  2,4,3,1.

Question 6

A business may be either a for-profit business or a not-for-profit business.

Accepted Answer

A) True 
 B)False

Question 7

Liabilities are obligations owed to third parties.

Accepted Answer

A) True 
 B)False

Question 8

How would the purchase of a computer on account affect the accounting equation?

Accepted Answer

A)  Assets increase;Liabilities decrease.
B)  Assets increase;Stockholder Equity increases.
C)  Assets increase;Liabilities increase.
D)  Assets decrease;Liabilities increase.

Question 9

Which type of business organization is owned by its stockholders?

Accepted Answer

A)  Corporation
B)  Partnership
C)  Limited liability company
D)  Sole proprietorship

Question 10

What do we call amounts of money borrowed from lenders?

Accepted Answer

A)  Asset
B)  Liability
C)  Expense
D)  Revenue

Question 11

To manage a business effectively,an owner or manager would benefit greatly from having some knowledge of accounting.

Accepted Answer

A) True 
 B)False

Question 12

Amounts owed to a company by its customers are classified as:

Accepted Answer

A)  payables.
B)  dividends.
C)  cash.
D)  receivables.

Question 13

Liabilities represent:

Accepted Answer

A)  items owned by the company.
B)  economic resources of the company.
C)  earnings kept in the business.
D)  amounts owed to third parties.

Question 14

According to the textbook,in order for an organization to be called a business it must:

Accepted Answer

A)  exchange a product with a customer.
B)  make money.
C)  be a corporation.
D)  provide a service.

Question 15

Beginning Retained Earnings are $65,000;sales are $29,500;expenses are $33,000;and dividends paid are $3,500.How much is the amount in ending Retained Earnings?

Accepted Answer

A)  $58,000
B)  $61,500
C)  $68,500
D)  $65,000

Question 16

Consider Accounts Receivable and Accounts Payable.Which of the following statements is TRUE?

Accepted Answer

A)  Accounts Receivable is a liability and Accounts Payable is an asset.
B)  Accounts Receivable is an asset and Accounts Payable is an asset.
C)  Accounts Receivable is an asset and Accounts Payable is a liability.
D)  Accounts Receivable is a liability and Accounts Payable is a liability.

Question 17

Payment of expenses would have which of the following effects on the accounting equation?

Accepted Answer

A)  Increase Liabilities
B)  Decrease Stockholders' Equity
C)  Increase Assets
D)  Increase Stockholders' Equity

Question 18

An increase in revenues would have which of the following effects on the accounting equation?

Accepted Answer

A)  Decrease Stockholders' Equity
B)  Increase Common Stock
C)  Increase Liabilities
D)  Increase Stockholders' Equity

Question 19

The owner of Good Dog Daycare wrote a company check to pay her personal credit card bill.What accounting principle did she violate?

Accepted Answer

A)  Cost
B)  Reliability
C)  Business entity
D)  No principle is violated-the bank account belongs to her,so it's okay to write checks.

Question 20

Taking an inventory of goods on hand would be representative of what accounting concept or principle?

Accepted Answer

A)  Going concern
B)  Objectivity
C)  Business entity
D)  Cost

Exam 1: Business, Accounting, and You

Which of the following financial statements illustrates the accounting equation?

Correct AnswerverifiedShow Answer

Which of the following events would be recorded in the financial accounting records of Acme Lawn Service,Inc.?

Correct AnswerverifiedShow Answer

What do we call amounts of money borrowed from lenders?

Correct AnswerverifiedShow Answer

Taking an inventory of goods on hand would be representative of what accounting concept or principle?

Correct AnswerverifiedShow Answer

An increase in revenues would have which of the following effects on the accounting equation?

Correct AnswerverifiedShow Answer

Payment of expenses would have which of the following effects on the accounting equation?

Correct AnswerverifiedShow Answer

According to the textbook,in order for an organization to be called a business it must:

Correct AnswerverifiedShow Answer

Consider Accounts Receivable and Accounts Payable.Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

The correct order for the preparation of financial statements is: 1) Statement of Cash Flows 2) Income Statement 3) Balance Sheet 4) Statement of Retained Earnings

Correct AnswerverifiedShow Answer

Amounts owed to a company by its customers are classified as:

Correct AnswerverifiedShow Answer

How would the purchase of a computer on account affect the accounting equation?

Correct AnswerverifiedShow Answer

Cash and Accounts Receivable are both a part of:

Correct AnswerverifiedShow Answer

Liabilities are defined as:

Correct AnswerverifiedShow Answer

Beginning Retained Earnings are $65,000;sales are $29,500;expenses are $33,000;and dividends paid are $3,500.How much is the amount in ending Retained Earnings?

Correct AnswerverifiedShow Answer

Which type of business organization is owned by its stockholders?

Correct AnswerverifiedShow Answer

To manage a business effectively,an owner or manager would benefit greatly from having some knowledge of accounting.

Correct AnswerverifiedShow Answer

Liabilities represent:

Correct AnswerverifiedShow Answer

Liabilities are obligations owed to third parties.

Correct AnswerverifiedShow Answer

The owner of Good Dog Daycare wrote a company check to pay her personal credit card bill.What accounting principle did she violate?

Correct AnswerverifiedShow Answer

A business may be either a for-profit business or a not-for-profit business.

Correct AnswerverifiedShow Answer

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