Question 1

If a company is considering the purchase of a parcel of land that was acquired by the seller for $85,000,is offered for sale at $150,000,is assessed for tax purposes at $95,000,is recognized by the purchaser as easily being worth $140,000,and is purchased for $137,000,the land should be recorded in the purchaser's books at:

Accepted Answer

A)  $95,000.
B)  $137,000.
C)  $138,500.
D)  $140,000.
E)  $150,000.F) All of the above
G) None of the above

Question 2

Identify the three basic forms of business organizations and their key attributes.

Accepted Answer

The three basic forms of business organi...

Question 3

Flitter reported net income of $17,500 for the past year.At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities.By the end of the year,assets had increased to $300,000 and liabilities were $75,000.Calculate its return on assets:

Accepted Answer

A)  8.8%.
B)  7.0%.
C)  5.8%.
D)  35.0%.
E)  23.3%.F) B) and E)
G) C) and E)

Question 4

Identify and describe the four basic financial statements:

Accepted Answer

The four basic financial statements are ...

Question 5

Which of the following combinations does not result in the same amount of net income reported on the income statement?

Accepted Answer

A)  Total revenues of $80,000 and total expenses of $60,000.
B)  Total revenues of $170,000 and total expenses of $150,000.
C)  Total revenues of $60,000 and total expenses of $40,000.
D)  Total revenues of $70,000 and total expenses of $60,000.
E)  Total revenues of $40,000 and total expenses of $20,000.F) D) and E)
G) C) and D)

Question 6

Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

Accepted Answer

A)  Going-concern assumption.
B)  Expense recognition (Matching) principle.
C)  Measurement (Cost) principle.
D)  Business entity assumption.
E)  Consideration assumption.F) A) and D)
G) A) and C)

Question 7

The Superior Company acquired a building for $500,000.The building was appraised at a value of $575,000.The seller had paid $300,000 for the building 6 years ago.Which accounting principle would require Superior to record the building on its records at $500,000?

Accepted Answer

A)  Monetary unit assumption.
B)  Going-concern assumption.
C)  Measurement (Cost) principle.
D)  Business entity assumption.
E)  Revenue recognition principle.F) B) and C)
G) None of the above

Question 8

If a company paid $38,000 of its accounts payable in cash,what was the effect on the accounting equation?

Accepted Answer

A)  Assets would decrease $38,000,liabilities would decrease $38,000,and equity would decrease $38,000.
B)  Assets would decrease $38,000,liabilities would decrease $38,000,and equity would increase $38,000.
C)  Assets would decrease $38,000,liabilities would decrease $38,000,and equity remains unchanged.
D)  There would be no effect on the accounts because the accounts are affected by the same amount.
E)  Assets would increase $38,000 and liabilities would decrease $38,000.F) All of the above
G) A) and B)

Question 9

Rushing had income of $144 million and average invested assets of $1,800 million.Its return on assets is:

Accepted Answer

A)  8.0%.
B)  80%.
C)  12%.
D)  120%.
E)  16.7%.F) A) and B)
G) A) and D)

Question 10

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank) to:

Accepted Answer

A)  Promote accountability and transparency in the financial system.
B)  Put an end to the notion of "too big to fail."
C)  Protect the taxpayer by ending bailouts.
D)  Protect consumers from abusive financial services.
E)  All of the choices are correct.F) B) and D)
G) A) and C)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold,unless evidence shows that it will not continue,is the:

Accepted Answer

A)  Going-concern assumption.
B)  Business entity assumption.
C)  Objectivity principle.
D)  Measurement (Cost) Principle.
E)  Monetary unit assumption.F) A) and D)
G) A) and E)

Question 13

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located.How does this transaction affect the accounting equation for Grandmark?

Accepted Answer

A)  Assets would decrease $2,000 and liabilities would decrease $2,000.
B)  Assets would decrease $2,000 and equity would decrease $2,000.
C)  Assets would increase $2,000 and equity would increase $2,000.
D)  Assets would increase $2,000 and liabilities would increase $2,000.
E)  Liabilities would decrease $2,000 and equity would increase $2,000.F) All of the above
G) None of the above

Question 14

Identify the users and uses of accounting information.

Accepted Answer

There are two general types of users of ...

Question 15

Creditors' claims on assets that reflect company obligations to provide assets,products,or services to others are called ________.

Accepted Answer

The answer of Creditors' claims on assets that reflect company...

Question 16

Net income occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 17

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Accepted Answer

A)  Statement of financial position.
B)  Statement of cash flows.
C)  Balance sheet.
D)  Income statement.
E)  Statement of retained earnings.F) C) and E)
G) C) and D)

Question 18

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

Accepted Answer

A)  Going-concern assumption.
B)  Expense recognition (Matching) principle.
C)  Measurement (Cost) principle.
D)  Business entity assumption.
E)  Consideration assumption.F) A) and E)
G) A) and D)

Question 19

The statement of cash flows reports all of the following except:

Accepted Answer

A)  Cash flows from operating activities.
B)  Cash flows from investing activities.
C)  Cash flows from financing activities.
D)  The net increase or decrease in assets for the period reported.
E)  The net increase or decrease in cash for the period reported.F) A) and C)
G) A) and B)

Question 20

The measurement principle is also known as the cost principle.

Accepted Answer

A) True 
 B)False

Exam 1: Introducing Financial Statements

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank) to:

Correct Answer
verified

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

Correct Answer
verified

If a company paid $38,000 of its accounts payable in cash,what was the effect on the accounting equation?

Correct Answer
verified

Rushing had income of $144 million and average invested assets of $1,800 million.Its return on assets is:

Correct Answer
verified

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Correct Answer
verified

The measurement principle is also known as the cost principle.

Correct Answer
verified

Correct Answer
verified

Identify and describe the four basic financial statements:

Correct Answer
verified
The four basic financial statements are ...
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The Superior Company acquired a building for $500,000.The building was appraised at a value of $575,000.The seller had paid $300,000 for the building 6 years ago.Which accounting principle would require Superior to record the building on its records at $500,000?

Correct Answer
verified

Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

Correct Answer
verified

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

Correct Answer
verified

Flitter reported net income of $17,500 for the past year.At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities.By the end of the year,assets had increased to $300,000 and liabilities were $75,000.Calculate its return on assets:

Correct Answer
verified

Creditors' claims on assets that reflect company obligations to provide assets,products,or services to others are called ________.

Correct Answer
verified

Identify the three basic forms of business organizations and their key attributes.

Correct Answer
verified
The three basic forms of business organi...
View Answer

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold,unless evidence shows that it will not continue,is the:

Correct Answer
verified

The statement of cash flows reports all of the following except:

Correct Answer
verified

Which of the following combinations does not result in the same amount of net income reported on the income statement?

Correct Answer
verified

Net income occurs when revenues exceed expenses.

Correct Answer
verified

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located.How does this transaction affect the accounting equation for Grandmark?

Correct Answer
verified

Identify the users and uses of accounting information.

Correct Answer
verified
There are two general types of users of ...
View Answer

Exam 1: Introducing Financial Statements

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank) to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a company paid $38,000 of its accounts payable in cash,what was the effect on the accounting equation?

Correct AnswerverifiedShow Answer

Rushing had income of $144 million and average invested assets of $1,800 million.Its return on assets is:

Correct AnswerverifiedShow Answer

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Correct AnswerverifiedShow Answer

The measurement principle is also known as the cost principle.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Identify and describe the four basic financial statements:

Correct AnswerverifiedThe four basic financial statements are ...View AnswerShow Answer

The Superior Company acquired a building for $500,000.The building was appraised at a value of $575,000.The seller had paid $300,000 for the building 6 years ago.Which accounting principle would require Superior to record the building on its records at $500,000?

Correct AnswerverifiedShow Answer

Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

Correct AnswerverifiedShow Answer

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

Correct AnswerverifiedShow Answer

Flitter reported net income of $17,500 for the past year.At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities.By the end of the year,assets had increased to $300,000 and liabilities were $75,000.Calculate its return on assets:

Correct AnswerverifiedShow Answer

Creditors' claims on assets that reflect company obligations to provide assets,products,or services to others are called ________.

Correct AnswerverifiedShow Answer

Identify the three basic forms of business organizations and their key attributes.

Correct AnswerverifiedThe three basic forms of business organi...View AnswerShow Answer

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold,unless evidence shows that it will not continue,is the:

Correct AnswerverifiedShow Answer

The statement of cash flows reports all of the following except:

Correct AnswerverifiedShow Answer

Which of the following combinations does not result in the same amount of net income reported on the income statement?

Correct AnswerverifiedShow Answer

Net income occurs when revenues exceed expenses.

Correct AnswerverifiedShow Answer

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located.How does this transaction affect the accounting equation for Grandmark?

Correct AnswerverifiedShow Answer

Identify the users and uses of accounting information.

Correct AnswerverifiedThere are two general types of users of ...View AnswerShow Answer

Correct Answer
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The four basic financial statements are ...
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The three basic forms of business organi...
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There are two general types of users of ...
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