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Exam 1: Introduction to Accounting and Business

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Question 61

True/False

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The cost principle is the basis for entering the purchase price into the accounting records.

A) True
B) False

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Question 62

Multiple Choice

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Financial reports are used by

A) management
B) creditors
C) investors
D) all are correct

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

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Question 63

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Match the following business types with each business listed below. Each may be used more than once. -A law firm A)Service business B)Manufacturing business C)Retail business

Indicate how the following transactions affect the accounting equation.​ (a) The purchase of supplies on account (b) The purchase of supplies for cash (c) Payment of cash dividends to stockholders (d) Revenues received in cash (e) Sale made on account

Relevant and faithful representation of accounting data is enhanced when financial reports are clear and concise. Such reports demonstrate

Ramirez Company received its first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

From the following list of items taken from Lamar's accounting records, identify those that would appear on the income statement.(a)Rent expense (b)Land (c)Common stock (d)Fees earned (e)Dividends (f)Wages expense (g)Investment

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Organized as a separate legal taxable entity A)Proprietorship B)Partnership C)Corporation D)Limited liability company (LLC)

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

Prepare a balance sheet for the current year ended March 31.

All companies must use a calendar year as their fiscal year.

An example of an external user of accounting information is the federal government.

The majority of businesses end their fiscal year on December 31.

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

Managerial accountants would be responsible for providing information regarding

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -Reports only revenues and expenses A)Income statement B)Balance sheet C)Statement of stockholder's equity D)Statement of cash flows

A summary of cash flows for Evelyn's Event Planning for the year ended December 31 is shown below.Cash receipts: Cash received from customers $57,360 Cash received from bank loan 15,000 Cash payments: Cash paid for operating expenses $12,120 Cash paid for equipment 18,070 Cash paid for party supplies 9,480 Dividends 12,000 The cash balance as of January 1 $15,580 Prepare a statement of cash flows for Evelyn's Event Planning for the year ended December 31.

Land, originally purchased for $30,000, is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?

Assets are

Prepare a statement of stockholders' equity for the current year ended March 31.