Exam
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) Financial statements are documents that report on a business in monetary amounts. 1) _______
2) Nonprofit organizations have no need for accounting information as do profit-oriented 2) _______
organizations.
3) Managers use accounting information to set goals for their organizations. 3) _______
4) A Certified Management Accountant is a licensed accountant who serves the general public 4) _______
rather than one particular company.
5) The cost principle states that acquired assets and services should be recorded at their actual cost. 5) _______
6) The reliability principle is also referred to as the going-concern principle. 6) _______
7) The accounting equation can be stated as assets + liabilities = owner's equity. 7) _______
8) Liabilities are economic resources of a business expected to be of benefit in the future. 8) _______
9) Owner's equity is often referred to as capital and represents the residual amount of business 9) _______
assets that can be claimed by the creditors.
10) An owner investment would increase the assets and decrease the equity of the firm. 10) ______
11) The purchase of supplies on account would have an affect on the liabilities of the firm. 11) ______
12) One way of decreasing the equity of a business is to increase an asset. 12) ______
13) The purchase of supplies on account will decrease equity. 13) ______
14) When revenue is recorded, the asset account cash is always increased along with owner's equity. 14) ______
15) The income statement lists all the entity's assets, liabilities, and owner's equity as of a specific 15) ______
date.
, 16) Increases in owner's equity result from revenues and owner investments while decreases result 16) ______
from expenses and owner withdrawals.
17) income statement is dated for the last day in the period of time such as "December 31, 20X4." 17) ______
18) The income statement must be prepared before the statement of owner's equity since net income 18) ______
or net loss is added to or subtracted from the beginning balance in the owner's capital account.
19) The income statement presents a summary of an entity's assets and liabilities over a period of 19) ______
time.
20) The income statement shows how much liabilities either increased or decreased during the 20) ______
period.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
21) Accounting guidelines are formulated by: 21) ______
A) the Securities and Exchange Commission
B) the American Accounting Association
C) the American Institute of Certified Public Accountants
D) the Financial Accounting Standards Board
22) All of the following are forms of business organizations except: 22) ______
A) corporation B) proprietorship
C) partnership D) governmental unit
23) An entity where ownership is divided into shares of stock is a: 23) ______
A) mutual agency B) proprietorship
C) corporation D) trade agreement
24) According to the FASB, the primary objective of financial reporting is to provide information: 24) ______
A) regarding the assets and liabilities of a business
B) useful for making investing and lending decisions
C) to the Securities and Exchange Commission
D) regarding the revenues and expenses of a business
25) GAAP stands for: 25) ______
A) generally accrued auditing procedures B) generally accepted accounting principles
C) generally accrued accounting principles D) generally accepted auditing practices
26) The business entity concept means that: 26) ______
A) the owner of the business entity and the business entity are treated the same from a legal
,and accounting viewpoint
B) the business entity is considered a separate entity apart from the owner or owners
C) the business entity is organized according to the rules determined by the IRS
D) the business entity is organized according to the rules determined by the FASB
27) Which of the following statements is false? 27) ______
A) Reliable data may be supported by objective evidence.
B) Owner opinions are one source of objective evidence.
C) An independent appraisal is usually considered reliable.
D) Reliable data are verifiable.
28) The principle which states that assets acquired by the business should be recorded at their 28) ______
exchange price is the:
A) matching principle B) objectivity principle
C) revenue recognition principle D) cost principle
29) The relevant measure of value of the assets of a company that is going out of business is their: 29) ______
A) higher of historical cost or current market value
B) current market value
C) historical cost
D) book value
30) Which of the following statements is true? 30) ______
A) The stable-monetary-unit concept requires adjustments to the accounting records for the
effects of inflation.
B) The value of a dollar changes over time.
C) High inflation rates indicate a dollar's purchasing power is stable.
D) The value of a dollar remains stable over time.
31) The accounting equation can be stated as: 31) ______
A) Liabilities = Revenue + Owner's Equity B) Owner's Equity = Assets + Liabilities
C) Assets - Liabilities = Owner's Equity D) Expenses = Liabilities - Owner's Equity
32) Liabilities are: 32) ______
A) Economic resources of a business
B) Outsider claims to the business's assets
C) Expenses incurred by the business
D) Increases in owner's equity earned by delivering goods or services
33) All of the following are assets except: 33) ______
A) Equipment B) Accounts Receivable
C) Accounts Payable D) Cash
34) All of the following describe a liability except: 34) ______
, A) investments by owners B) debts to creditors
C) economic obligations to creditors D) outsider claims
35) A written promise for future collections of cash is a: 35) ______
A) owner withdrawal B) revenue
C) note receivable D) account receivable
36) If owner's equity is $150,000 and total liabilities are $90,000, then total assets would be: 36) ______
A) $240,000 B) $60,000 C) $135,000 D) $225,000
37) Owner's equity and total assets were $32,000 and $79,000 at the beginning of the period. Assets 37) ______
increased 50% and liabilities decreased 60% during the period. What is owner's equity at the end
of the period?
A) $43,300 B) $105,700 C) $99,700 D) $47,000
38) A business paid $15,500 to a creditor. The effect of this transaction is to: 38) ______
A) Decrease assets and decrease liabilities
B) Increase assets and decrease owner's equity
C) Increase assets and decrease liabilities
D) Decrease liabilities and owner's equity
39) If total liabilities decrease by $30,000 and owner's equity increases by $8,000 during the period, 39) ______
then assets must have:
A) increased $22,000 B) decreased $38,000
C) increased $38,000 D) decreased $22,000
40) If total liabilities are $98,000 and owner's equity is $150,000, total assets would be: 40) ______
A) $52,000 B) $300,000 C) $98,000 D) $248,000
41) If total liabilities are $200,000 and total assets are $325,000, owner's equity would be: 41) ______
A) $125,000
B) $200,000
C) $525,000
D) impossible to determine from the given data
42) Earning revenue on account: 42) ______
A) decreases owner's equity B) increases assets
C) increases liabilities D) decreases liabilities
43) The amount owed by an entity when it makes a purchase on account is termed a(n): 43) ______
A) accounts payable B) expense
C) note receivable D) accounts receivable
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) Financial statements are documents that report on a business in monetary amounts. 1) _______
2) Nonprofit organizations have no need for accounting information as do profit-oriented 2) _______
organizations.
3) Managers use accounting information to set goals for their organizations. 3) _______
4) A Certified Management Accountant is a licensed accountant who serves the general public 4) _______
rather than one particular company.
5) The cost principle states that acquired assets and services should be recorded at their actual cost. 5) _______
6) The reliability principle is also referred to as the going-concern principle. 6) _______
7) The accounting equation can be stated as assets + liabilities = owner's equity. 7) _______
8) Liabilities are economic resources of a business expected to be of benefit in the future. 8) _______
9) Owner's equity is often referred to as capital and represents the residual amount of business 9) _______
assets that can be claimed by the creditors.
10) An owner investment would increase the assets and decrease the equity of the firm. 10) ______
11) The purchase of supplies on account would have an affect on the liabilities of the firm. 11) ______
12) One way of decreasing the equity of a business is to increase an asset. 12) ______
13) The purchase of supplies on account will decrease equity. 13) ______
14) When revenue is recorded, the asset account cash is always increased along with owner's equity. 14) ______
15) The income statement lists all the entity's assets, liabilities, and owner's equity as of a specific 15) ______
date.
, 16) Increases in owner's equity result from revenues and owner investments while decreases result 16) ______
from expenses and owner withdrawals.
17) income statement is dated for the last day in the period of time such as "December 31, 20X4." 17) ______
18) The income statement must be prepared before the statement of owner's equity since net income 18) ______
or net loss is added to or subtracted from the beginning balance in the owner's capital account.
19) The income statement presents a summary of an entity's assets and liabilities over a period of 19) ______
time.
20) The income statement shows how much liabilities either increased or decreased during the 20) ______
period.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
21) Accounting guidelines are formulated by: 21) ______
A) the Securities and Exchange Commission
B) the American Accounting Association
C) the American Institute of Certified Public Accountants
D) the Financial Accounting Standards Board
22) All of the following are forms of business organizations except: 22) ______
A) corporation B) proprietorship
C) partnership D) governmental unit
23) An entity where ownership is divided into shares of stock is a: 23) ______
A) mutual agency B) proprietorship
C) corporation D) trade agreement
24) According to the FASB, the primary objective of financial reporting is to provide information: 24) ______
A) regarding the assets and liabilities of a business
B) useful for making investing and lending decisions
C) to the Securities and Exchange Commission
D) regarding the revenues and expenses of a business
25) GAAP stands for: 25) ______
A) generally accrued auditing procedures B) generally accepted accounting principles
C) generally accrued accounting principles D) generally accepted auditing practices
26) The business entity concept means that: 26) ______
A) the owner of the business entity and the business entity are treated the same from a legal
,and accounting viewpoint
B) the business entity is considered a separate entity apart from the owner or owners
C) the business entity is organized according to the rules determined by the IRS
D) the business entity is organized according to the rules determined by the FASB
27) Which of the following statements is false? 27) ______
A) Reliable data may be supported by objective evidence.
B) Owner opinions are one source of objective evidence.
C) An independent appraisal is usually considered reliable.
D) Reliable data are verifiable.
28) The principle which states that assets acquired by the business should be recorded at their 28) ______
exchange price is the:
A) matching principle B) objectivity principle
C) revenue recognition principle D) cost principle
29) The relevant measure of value of the assets of a company that is going out of business is their: 29) ______
A) higher of historical cost or current market value
B) current market value
C) historical cost
D) book value
30) Which of the following statements is true? 30) ______
A) The stable-monetary-unit concept requires adjustments to the accounting records for the
effects of inflation.
B) The value of a dollar changes over time.
C) High inflation rates indicate a dollar's purchasing power is stable.
D) The value of a dollar remains stable over time.
31) The accounting equation can be stated as: 31) ______
A) Liabilities = Revenue + Owner's Equity B) Owner's Equity = Assets + Liabilities
C) Assets - Liabilities = Owner's Equity D) Expenses = Liabilities - Owner's Equity
32) Liabilities are: 32) ______
A) Economic resources of a business
B) Outsider claims to the business's assets
C) Expenses incurred by the business
D) Increases in owner's equity earned by delivering goods or services
33) All of the following are assets except: 33) ______
A) Equipment B) Accounts Receivable
C) Accounts Payable D) Cash
34) All of the following describe a liability except: 34) ______
, A) investments by owners B) debts to creditors
C) economic obligations to creditors D) outsider claims
35) A written promise for future collections of cash is a: 35) ______
A) owner withdrawal B) revenue
C) note receivable D) account receivable
36) If owner's equity is $150,000 and total liabilities are $90,000, then total assets would be: 36) ______
A) $240,000 B) $60,000 C) $135,000 D) $225,000
37) Owner's equity and total assets were $32,000 and $79,000 at the beginning of the period. Assets 37) ______
increased 50% and liabilities decreased 60% during the period. What is owner's equity at the end
of the period?
A) $43,300 B) $105,700 C) $99,700 D) $47,000
38) A business paid $15,500 to a creditor. The effect of this transaction is to: 38) ______
A) Decrease assets and decrease liabilities
B) Increase assets and decrease owner's equity
C) Increase assets and decrease liabilities
D) Decrease liabilities and owner's equity
39) If total liabilities decrease by $30,000 and owner's equity increases by $8,000 during the period, 39) ______
then assets must have:
A) increased $22,000 B) decreased $38,000
C) increased $38,000 D) decreased $22,000
40) If total liabilities are $98,000 and owner's equity is $150,000, total assets would be: 40) ______
A) $52,000 B) $300,000 C) $98,000 D) $248,000
41) If total liabilities are $200,000 and total assets are $325,000, owner's equity would be: 41) ______
A) $125,000
B) $200,000
C) $525,000
D) impossible to determine from the given data
42) Earning revenue on account: 42) ______
A) decreases owner's equity B) increases assets
C) increases liabilities D) decreases liabilities
43) The amount owed by an entity when it makes a purchase on account is termed a(n): 43) ______
A) accounts payable B) expense
C) note receivable D) accounts receivable
