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The process of recording transactions has become more efficient because b. computers are used in processing business events. Communication of economic events is the part of the accounting process that involves c. preparing accounting reports. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The appointment of a new CPA firm to perform an audit. The use of computers in recording business events a. has made the recording process more efficient. The accounting process involves all of the following except c. recording nonquantifiable economic events. The accounting process is correctly sequenced as c. identification, recording, communication. Which of the following techniques are not used by accountants to interpret and report financial information? b. Special memos for each class of external users Which of the following would not be considered an internal user of accounting data for the XYZ Company? d. President of the employees' labor union Which of the following would not be considered an external user of accounting data for the XYZ Company? b. Management Which of the following would not be considered internal users of accounting data for a company? c. Creditors of a company Which of the following is an other external user of accounting information? a. Labor unions Which one of the following is an external user with a financial interest? c. Investors Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? c. Recording
45. 46. 47. 48.
52. 53. 54.
55.All of the following are services offered by public accountants except a. budgeting. 56. Which list below best describes the major services performed by public accountants? c. Auditing, taxation, management consulting
The cost of an asset and its fair market value are d. Generally accepted accounting principles are b. 65. The origins of accounting are generally attributed to the work of c. 72. standards that indicate how to report economic events. 61. The private sector organization involved in developing accounting principles is the c. Financial Accounting Standards Board. Luca Pacioli. honest or dishonest. 68.57. a. 66. 64. physical laws of nature. The body of theory underlying accounting is not based on a. Which of the following is not a characteristic of the cost principle? b. An accountant working in the not-for-profit sector would not be employed by c. the same on the date of acquisition. Ethics are the standards of conduct by which one's actions are judged as 60. fair or unfair. d. both public and private accountants. all of these. 58. $200 million. 71. exchange price paid. The plants will be recorded and reported as assets at a. The current market value of the plants is $600 million. The proprietorship form of business organization b. they be recorded at b. The cost principle requires that when assets are acquired. The economic entity assumption requires that the activities 63. represents the largest number of businesses in the United States. Generally Accepted Accounting Principles. GAAP stands for b. The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. Subjectivity 70. a large retail department store. 67. . The ACE Company has five plants nationwide that cost $200 million. A private accountant can perform many activities in a business organization but would not work in c. 62. It is true that c. b. 69. external auditing. right or wrong. the SEC often mandates guidelines when no accounting principles exist. Preparing tax returns and engaging in tax planning is performed by c. c. 59.
The common characteristic possessed by all assets is d. of an entity be kept separate from the activities of its owner. Liabilities c. A business organized as a corporation c.Owner's equity is best depicted by the following: d. partnership. possess service potential. When recording the financial transactions of Smitty's. . 73. is a common form of organization for service-type businesses. future economic benefit. Assets = Equities. the common unit of measure for all business transactions. 81. 83. 85. 79. Assets – Liabilities = Owner's Equity. the dollar has not been stable over time. 76. Economic entity assumption A basic assumption of accounting assumes that the dollar is c. Jo took out a personal loan to pay for the car. b. Assets – Liabilities. Which of the following is not an advantage of the corporate form of business organization? c. The basic accounting equation may be expressed as a. economic entity assumption. 86. 75. Joan and Sara met at law school and decide to start a small law practice after graduation. proprietorship. Unlimited personal liability for stockholders A small neighborhood barber shop that is operated by its owner would likely be organized as a d.d. a retailer of athletic apparel. 77. A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the d. 78. Jo does not record an entry for a car she purchased for personal use. They agree to split revenues and expenses evenly. Jo Smith is the proprietor (owner) of Smitty's. A problem with the monetary unit assumption is that a. Which of the following is true regarding the corporate form of business organization? c. all of these. The revenues of corporations are greater than the combined revenues of partnerships and proprietorships. 84. The most common form of business organization for a business such as this would be a b. What accounting concept guides Jo's behavior in this situation? b. c. 74. is owned by its stockholders. #####d. The partnership form of business organization b. Assets = Liabilities + Owner's Equity. 82. 80.
owner's equity will decrease. additional investments by owners. Revenues are b. Owner's equity is decreased by c. then c. If expenses are paid in cash. 99. then c. assets will decrease. Capital is a. Liabilities of a company would not include d. 96. ownership claim on total assets. If an individual asset is increased. 97. 100. then c. revenues. assets must have increased by $4. Collection of a $500 Accounts Receivable a. expenses. an owner's permanent investment in the business. then c. The basic accounting equation cannot be restated as d. increases an asset $500.000. then d. 101. owner's equity will increase. gross increases in owner's equity resulting from business activities. these withdrawals are termed c. 104. If total liabilities increased by $4.87. 89. 94.000. . Owner's equity is increased by b. 91. cash. Revenues would not result from b. Owner's equity is often referred to as a. 93. initial investment of cash by owner. When an owner withdraws cash or other assets from a business for personal use. Liabilities of a company are owed to c. 90. creditors. 88. or owner's equity must have decreased by $4. 95. there must be an equal decrease in another asset If services are rendered for credit. residual equity. decreases an asset $500. drawings.000. If an owner makes a withdrawal of cash from a proprietorship. 103. Owner's equity can be described as b. Sources of increases to owner's equity are a. Assets + Liabilities = Owner's Equity. 92. 102. 98.
108. . Use the following information for questions 111–113.000.000 in expenses. 116. owner's capital at the beginning of the period plus net income minus drawings.Auditing is a. yes yes s 119. 109. 111. The net income reported by Jerry's Car Repair Shop for the year was b.A proprietorship is a business a.000. owned by one person. A balance sheet shows d. Net income results when c. $70. During the year the business recorded $150. liabilities. $55. net income is greater than owner drawings. 113. The balance sheet is frequently referred to as b. Jerry's Capital balance changed by what amount from the beginning of the year to the end of the year? d. An income statement d. the examination of financial statements by a CPA in order to express an opinion on their fairness.105. Owner's capital at the end of the period is equal to b.The organization(s) primarily responsible for establishing generally accepted accounting principles is(are) the FASB SEC d. Revenues > Expenses. presents the revenues and expenses for If the owner's equity account increases from the beginning of the year to the end of the year. assets. Jerry's Car Repair Shop started the year with total assets of $90. $95. If supplies that have been purchased are used in the course of business. owner's equity will decrease. then d.000. s 118. 114. s The primary purpose of the statement of cash flows is to report c.000 and total liabilities of $60. 107. the statement of financial position. and Jerry withdrew $15. 112. Financial decision making s 117. 110. then c.000. 106. $40.Which of the following is not part of the accounting process? c. information about cash receipts and cash payments of a company.000 in car repair revenues.000. Jerry's Capital balance at the end of the year was a. The following questions are from the Study Guide. 115. and owner's equity.
The Relias Uptown Grill receives a bill of $400 from the Erml Advertising Agency. s 122. The effect on the components of the basic accounting equation of Jeanie Company is c. Relias. John Relias. s 121. The transaction will affect the b. expenses exceed revenues. for cash. no change in total assets. The effect on specific items in the basic accounting equation is c.Jeanie Company purchases $600 of equipment from Mundelein Inc.A net loss will result during a time period when c. The owner.Morreale Beaver Company buys a $12. balance sheet only.000 van on credit. Capital. an increase in Accounts Payable and a decrease in R. . s 123.s 120. is postponing payment of the bill until a later date.
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