Question 1

Cragmont has beginning equity of $277,000, net income of $63,000, withdrawals of $25,000 and no additional investments by owners during the period. Its ending equity is:

Accepted Answer

A)  $189,000.
B)  $315,000.
C)  $365,000.
D)  $239,000.
E)  $277,000.F) A) and C)
G) A) and E)

Question 2

The income statement reports on operating activities at a point in time.

Accepted Answer

A) True 
 B)False

Question 3

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Accepted Answer

A)  Liabilities increase $12,000 and equity decreases $12,000.
B)  Assets increase $12,000 and liabilities increase $12,000.
C)  Assets decrease $12,000 and equity decreases $12,000.
D)  Assets increase $12,000 and equity increases $12,000.
E)  Assets increase $12,000 and liabilities decrease $12,000.F) A) and B)
G) A) and C)

Question 4

Which of the following accounts is not included in the liability section of the balance sheet?

Accepted Answer

A)  Accounts receivable.
B)  Notes payable.
C)  Wages payable.
D)  Accounts payable.
E)  Taxes payable.F) All of the above
G) C) and D)

Question 5

At the beginning of the period, a company had $350,000 worth of assets, $110,000 worth of liabilities, and $240,000 worth of equity. Assume the only change during the period was a $30,000 purchase of equipment by issuing a note payable. Show the accounting equation with the appropriate amounts at the end of the period.

Accepted Answer

$380,000 =...

Question 6

Regulators often have legal authority over certain activities of organizations.

Accepted Answer

A) True 
 B)False

Question 7

A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.

Accepted Answer

A) True 
 B)False

Question 8

The area of accounting aimed at serving the decision making needs of internal users is:

Accepted Answer

A)  Financial accounting.
B)  SEC reporting.
C)  External auditing.
D)  Managerial accounting.
E)  Bookkeeping.F) A) and D)
G) B) and C)

Question 9

All of the following regarding a Certified Public Accountant are true except:

Accepted Answer

A)  Must meet education and experience requirements.
B)  Must pass an examination.
C)  May also be a Certified Management Accountant.
D)  Must exhibit ethical character.
E)  Cannot hold any certificate other than a CPA.F) All of the above
G) B) and C)

Question 10

An exchange of value between two entities that yields a change in the accounting equation is called:

Accepted Answer

A)  An external transaction.
B)  The accounting equation.
C)  Net Income.
D)  Recordkeeping or bookkeeping.
E)  An asset.F) A) and B)
G) C) and E)

Question 11

A sole proprietorship is a business owned by one or more persons.

Accepted Answer

A) True 
 B)False

Question 12

When expenses exceed revenues, the resulting change in equity is called:

Accepted Answer

A)  Net assets.
B)  Net loss.
C)  Net income.
D)  Negative equity.
E)  A liability.F) D) and E)
G) A) and B)

Question 13

The measurement principle, also called the cost principle:

Accepted Answer

A)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
B)  Prescribes that a company record the expenses it incurred to generate the revenue reported.
C)  Prescribes that a company report the details behind financial statements that would impact users' decisions.
D)  Provides guidance on when a company must recognize revenue.
E)  Prescribes that accounting information is based on actual cost.F) A) and E)
G) C) and E)

Question 14

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Accepted Answer

A)  Return on equity ratio.
B)  Accounting equation.
C)  Net income.
D)  Business equation.
E)  Income statement equation.F) A) and E)
G) A) and B)

Question 15

The primary objective of financial accounting is to:

Accepted Answer

A)  Provide accounting information that serves external users.
B)  Serve the decision-making needs of internal users.
C)  Monitor and control company activities.
D)  Provide information on both the costs and benefits of looking after products and services.
E)  Know what, when, and how much product to produce.F) B) and E)
G) A) and B)

Question 16

The three major types of business activities are operating, financing, and investing.

Accepted Answer

A) True 
 B)False

Question 17

Revenues are:

Accepted Answer

A)  The excess of expenses over assets.
B)  Resources owned or controlled by a company.
C)  The same as net income.
D)  The increase in equity from a company's sales of products and services.
E)  The costs of assets or services used.F) None of the above
G) A) and C)

Question 18

Identifying the proper ethical path is usually easy.

Accepted Answer

A) True 
 B)False

Question 19

Owner withdrawals are subtracted in the calculation of net income, as expenses.

Accepted Answer

A) True 
 B)False

Question 20

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

Identifying the proper ethical path is usually easy.

Correct Answer
verified

All of the following regarding a Certified Public Accountant are true except:

Correct Answer
verified

Owner withdrawals are subtracted in the calculation of net income, as expenses.

Correct Answer
verified

When expenses exceed revenues, the resulting change in equity is called:

Correct Answer
verified

Revenues are:

Correct Answer
verified

Cragmont has beginning equity of $277,000, net income of $63,000, withdrawals of $25,000 and no additional investments by owners during the period. Its ending equity is:

Correct Answer
verified

Regulators often have legal authority over certain activities of organizations.

Correct Answer
verified

The income statement reports on operating activities at a point in time.

Correct Answer
verified

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Correct Answer
verified

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Correct Answer
verified

Which of the following accounts is not included in the liability section of the balance sheet?

Correct Answer
verified

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Correct Answer
verified

Correct Answer
verified
$380,000 =...
View Answer

An exchange of value between two entities that yields a change in the accounting equation is called:

Correct Answer
verified

The three major types of business activities are operating, financing, and investing.

Correct Answer
verified

The primary objective of financial accounting is to:

Correct Answer
verified

The area of accounting aimed at serving the decision making needs of internal users is:

Correct Answer
verified

A sole proprietorship is a business owned by one or more persons.

Correct Answer
verified

A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.

Correct Answer
verified

The measurement principle, also called the cost principle:

Correct Answer
verified

Exam 1: Accounting in Business

Identifying the proper ethical path is usually easy.

Correct AnswerverifiedShow Answer

All of the following regarding a Certified Public Accountant are true except:

Correct AnswerverifiedShow Answer

Owner withdrawals are subtracted in the calculation of net income, as expenses.

Correct AnswerverifiedShow Answer

When expenses exceed revenues, the resulting change in equity is called:

Correct AnswerverifiedShow Answer

Revenues are:

Correct AnswerverifiedShow Answer

Cragmont has beginning equity of $277,000, net income of $63,000, withdrawals of $25,000 and no additional investments by owners during the period. Its ending equity is:

Correct AnswerverifiedShow Answer

Regulators often have legal authority over certain activities of organizations.

Correct AnswerverifiedShow Answer

The income statement reports on operating activities at a point in time.

Correct AnswerverifiedShow Answer

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Correct AnswerverifiedShow Answer

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Correct AnswerverifiedShow Answer

Which of the following accounts is not included in the liability section of the balance sheet?

Correct AnswerverifiedShow Answer

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Correct AnswerverifiedShow Answer

Correct Answerverified$380,000 =...View AnswerShow Answer

An exchange of value between two entities that yields a change in the accounting equation is called:

Correct AnswerverifiedShow Answer

The three major types of business activities are operating, financing, and investing.

Correct AnswerverifiedShow Answer

The primary objective of financial accounting is to:

Correct AnswerverifiedShow Answer

The area of accounting aimed at serving the decision making needs of internal users is:

Correct AnswerverifiedShow Answer

A sole proprietorship is a business owned by one or more persons.

Correct AnswerverifiedShow Answer

A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.

Correct AnswerverifiedShow Answer

The measurement principle, also called the cost principle:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$380,000 =...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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