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Exam 1: Introduction to Accounting and Business

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Question 101

Multiple Choice

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Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Investment of land by owner

A) Increase assets, increase liabilities
B) Increase liabilities, decrease owner's equity
C) Increase assets, increase owner's equity
D) No effect
E) Decrease assets, decrease liabilities
F) Decrease assets, decrease owner's equity

G) B) and E)
H) A) and B)

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Question 102

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. -Reports as of a specific date

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

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

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Question 103

Multiple Choice

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Match the following business types with each business listed below. Each may be used more than once. -A law firm

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.

Which of the following is not a business transaction?

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

Which of the following groups is considered to be internal users of accounting information?

Donner Company is selling a piece of land adjacent to its business.An appraisal reported the market value of the land to be $120,000.Focus Company initially offered to buy the land for $107,000.The companies settled on a purchase price of $115,000.On the same day,another piece of land on the same block sold for $122,000.Under the cost concept,what amount will be used to record this transaction in the accounting records?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for services provided

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Offers tax and legal liability advantages for owners

Which of the following asset accounts is increased when a receivable is collected?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for providing services to customers

The accountant for Scott Industries prepared the following list of accounting equation element balances from the company's records for the year ended December 31: ​ -Determine the total liabilities at the end of the current year for Scott Industries.

The assets and liabilities of Rocky's Day Spa on December 31 and its revenue and expenses for the year are listed below.The capital of the owner was $68,000 on January 1.The owner invested an additional $10,000 during the year.​ Prepare a balance sheet for the year ended December 31.​

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

The main objective for all business is to maximize unrealized profits.

Two common areas of accounting that respectively provide information to internal and external users are

If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period,the period's change in total owner's equity was a $200,000 increase.

The monetary value charged to customers for the performance of services sold is called a (n)