Accounting 2200 - Exam 1 with answers graded A+ 2023 100% verified

Financial accounting provides: A. budgets and forecasts of future business operations B. detailed management reports designed to control and manage company assets C. information to investors and creditors D. all of the above are true E. none of the above are true - C. information to investors and creditors Which of the following financial statements reflect activity for a period of time? A. both the income statement and the balance sheet B. only the balance sheet C. only the income statement D. neither the income statement nor the balance sheet - C. only the income statement The following information is provided at the end of the year: Liabilities ...................................... $10,000 Retained Earnings ............................ 5,000 Contributed Capital ........................... 7,000 The amount of total assets at the end of the year would be equal to: A. $5,000 B. $12,000 C. $17,000 D. $22,000 E. none of the above are correct - D. 22,000 Assets = Liabilities = Equity = 10,000 + 5,000 + 7,000 = 22,000 Which of the following events causes a net decrease in total assets? A. the sale of inventory to a customer at an amount larger than cost B. payment of utilities bills not previously recorded as an obligation C. cash purchase of equipment D. credit purchase of equipment E. none of the above are correct - B. payment of utilities bills not previously recorded as an obligation The nature of an asset is best described as: A. something with physical form which is valued at cost in the accounting records B. an economic resource owned by a business and expected to benefit future operations C. an economic resource representing cash or the right to receive cash in the near future D. something owned by a business that has a ready market value E. property, plant, and equipment - B. an economic resource owned by a business and expected to benefit future operations The purchase of inventory with cash: A. increases assets and owners' equity B. decreases assets and owners' equity C. increases assets and liabilities D. has no net effect on total assets E. none of the above are correct - D. has no net effect on total assets If assets decreased by $12,000 during a year and owners' equity increased by $4,000, then liabilities must have: A. increased by $8,000 during the year B. decreased by $16,000 during the year C. increased by $16,000 during the year D. decreased by $12,000 during the year E. none of the above are correct - B. decreased by $16,000 during the year Assets = Liabilites + Equity -12,000 = X + 4,000 X = -16,000