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Exam 1: Introduction to Accounting and Business

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Question 91

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Michael Anderson is starting a computer programming business and has deposited an initial investment of $15,000 into the business cash account.Identify how the accounting equation will be affected.

A) increase in assets (Cash) and increase in liabilities (Accounts Payable)
B) increase in assets (Cash) and increase in owner's equity (Michael Anderson, Capital)
C) increase in assets (Accounts Receivable) and decrease in liabilities (Accounts Payable)
D) increase in assets (Cash) and increase in assets (Accounts Receivable)

E) A) and D)
F) A) and B)

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Question 92

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The Financial Accounting Standards Board (FASB)is the authoritative body that has primary responsibility for developing accounting principles.

A) True
B) False

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Question 93

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On March 1,the amount of Richard Cook's capital in Richard's Catering Company was $150,000.During March,he withdrew $31,000 from the business.The amounts of the various assets,liabilities,revenues,and expenses are as follows:​ Present,in good form, (a)an income statement for March, (b)a statement of owner's equity for March,and (c)a balance sheet as of March 31.

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

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

Which of the following is true regarding a limited liability company?

All of the following statements regarding the ratio of liabilities to owner's equity are true except

Given the following:​Beginning capital $58,000Ending capital 30,000Owner withdrawal 25,000​Calculate net income or net loss.

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

List the five steps in the process by which accounting provides information to users.

Expenses are recorded when

Discuss the characteristics of a limited liability company (LLC).

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

Accounting information users need reports about the economic activities and condition of businesses.

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

The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below. The capital of the owner was $180,000 at April 1, the beginning of the current year. Mr. Thompson invested an additional $25,000 in the business during the year. ​ -Prepare a statement of owner's equity for Thompson Computer Services for the current year ended March 31.

The role of accounting is to provide many different users with financial information to make economic decisions.

Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity,an investing activity,or a financing activity,or if it does not appear on the cash flow statement.

If total assets decreased by $88,000 during a period of time and owner's equity increased by $71,000 during the same period,then the amount and direction (increase or decrease) of the period's change in total liabilities would be a (n)

Assets that are used up during the process of earning revenue are called expenses.