Accounting 1 exam questions & answers
What is the primary purpose of financial accounting? - ANSWER-Measure business transactions and
communicate those measures to external users to make decisions.
Which statement below best describes the accounting equation? - ANSWER-Resources of the company
equal creditors' and owners' claims to those resources.
Johnson had the following final balances after the first year of operations: Assets, $26,000; Stockholders
equity, $10,000; dividends, $2,000; and net income, $6000. What is the amount of Johnson's liabilities? -
ANSWER-$16,000.
Transactions related to the primary business activities of the company, such as selling goods and services
to customers, are referred to as: - ANSWER-Operating activities.
Which business form has the advantage of limited liability? - ANSWER-Corporation.
The cost of providing goods and services to customers are referred to as: - ANSWER-Expenses.
The owners interest in a corporation is called: - ANSWER-Stockholders equity.
Liabilities are best defined as: - ANSWER-Debts or obligations the company owes resulting from past
transactions.
Use the following amounts to calculate net income. Revenues, $14,000; Liabilities, $6,000; Expenses,
$5,800; Assets, $21,000; Dividends, $1,200. - ANSWER-$8,000.
Which of the following accounts appears in the statement of stockholders equity? - ANSWER-Retained
earnings.
Which of the following is the correct order for preparing the financial statements? - ANSWER-Income
statement, statement of stockholders equity, and balance sheet.
What is the primary purpose of financial accounting? - ANSWER-Measure business transactions and
communicate those measures to external users to make decisions.
Which statement below best describes the accounting equation? - ANSWER-Resources of the company
equal creditors' and owners' claims to those resources.
Johnson had the following final balances after the first year of operations: Assets, $26,000; Stockholders
equity, $10,000; dividends, $2,000; and net income, $6000. What is the amount of Johnson's liabilities? -
ANSWER-$16,000.
Transactions related to the primary business activities of the company, such as selling goods and services
to customers, are referred to as: - ANSWER-Operating activities.
Which business form has the advantage of limited liability? - ANSWER-Corporation.
The cost of providing goods and services to customers are referred to as: - ANSWER-Expenses.
The owners interest in a corporation is called: - ANSWER-Stockholders equity.
Liabilities are best defined as: - ANSWER-Debts or obligations the company owes resulting from past
transactions.
Use the following amounts to calculate net income. Revenues, $14,000; Liabilities, $6,000; Expenses,
$5,800; Assets, $21,000; Dividends, $1,200. - ANSWER-$8,000.
Which of the following accounts appears in the statement of stockholders equity? - ANSWER-Retained
earnings.
Which of the following is the correct order for preparing the financial statements? - ANSWER-Income
statement, statement of stockholders equity, and balance sheet.
