TRUE-FALSE STATEMENTS 41. Owners of business firms are the only people who need accounting Information 2. Transactions that can be measured in dollars and cents are recorded in the financial information system, 3. The hiring of a new company president is an economic event recorded by the financial information system. ‘Ane: ® LO1 BTC Dili: Eoey TOL Sma AACSB. Refetve Thinking AIGA BB: Crica Thinking AICPA FA: Reporting 4. Management of a business enterprise is the major external user of information. Pre Repanng 8. Accounting communicates financial information about a business enterprise to both internal and external users. 6. Accounting Information is used only by external users with a financial interest in a business enterprise. 7. Financial statements are the major means of communicating accounting information to interested parties. TK Difeuty:Esey TOT Smin ACES: Rotectve Thinking AICPA B®. Ciel Thinking AIPA FN: Ravortng 8, Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process BEC GHfeutys Easy TOT Smin ALCS: Ratietne Thang AICP 9. The origins of accounting are attributed to Luca Pacioli, a famous mathematician. 10. The study of accounting will be useful only if a student is interested in working for a profit- oriented business firm 11. Private accountants are accountants who are not employees of business enterprises. 12, The study of accounting is not useful for a business career unless your career objective is to become an accountant 13. Aworking knowledge of accounting Is not relevant to a lawyer or an architect. ities Thinking AGRA FY: Reporting 14, Expressing an opinion as to the faimess of the information presented in financial statements Is a service performed by CPAs. Ane T LO2 TK Dilicuty 15. Accountants rely on a fundamental business concept—ethical behavior—in reporting financial information. 16. The primary accounting standard-setting body in the United States is the International Accounting Standards Board, 17. The Financial Accounting Standards Board Is a part of the Securities and Exchange Commission. 18. The Securities and Exchange Commission oversees U.S. financial markets and accounting standard-setting bodies. ane: LO BTK Dimuity Esty TOT Smn AACSE/Reteetve Thinking AICPA BE-CxtealThinlng AICEA FN Reporting 19. The cost and fair market value of an asset are the same at the time of acquisition and in all subsequent periods.20. 24 22. 23. 24, 26. 26. 27. 28, 29. 20. 34 32. 33, 34, 36. 36. 37, 38, Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners. A partnership must have more than one owner. The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities. ‘The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records, In order to possess future service potential, an asset must have physical substance, ny Easy TOT mn AACSE Reteenve Thineng. ACE 8 ‘Owners’ claims to total business assets take precedence over the claims of creditors because owners invest assets In the business and are liable for losses. The basic accounting equation states that Assets = Liabilities. Ans: F LOB BT-K Dieuly Essy TOT Smn. AACS: Reneswe Thinking AICEA 8B Crit! Thing AICPA FN: Reporung Accountants record both internal and external transactions ‘ane: LOT SEK Oiuty 4) TOT Simin, AACSE:Refectve Thinking ICRA BE: Cts ning ALCOA FH: Reporing Intemal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company. fans'F LOT ET G OMteuy Easy TOT Sin AAGSE Renectve Thnkeng AIGA BE: cnteal Thing AICP: esong The purchase of store equipment for cash reduces the owner's equity by an equal amount. Aref LOT BEC oMmeuty: sy TOT.Smin. AACSE:Retscwe Thnking AICRA 86: Cote nang. AICBA. FN: Reportng The purchase of office equipment on credit increases total assets and total liabilities ‘oimouty: Easy TOT Sein. AASSE:Ratactve Thing AICSK SB: Cres Taneng AICPA Fhe Reporting The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company during a period Are T LOS STK Oiteuy: Easy TOT Simin. AAC: 5: Ranecve Mmting AICAA SS: Crea Thneng AICRA FN: Reparing Net income for the period is determined by subtracting total expenses and drawings from total revenues. ay: a8 TOTS mn 5: Renectve Thinking, AICAA 55: Crmca! Thinking AICPA FR: Raporng Identifying is the process of keeping a chronological diary of events measured in dollars and cents, Aref LOE STK Ditouty: Easy TOT-Smn, AACS: Reecn Thineng AICPA 88: Crtcal Thinking ACSA FN: Repertng Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation. are:F LOB STK DiMeuty, Easy TOT.Smin. AACSE: Rates rang AICPA 55: Ceca Tring AICPA FN: Rapering Accountants do not have to worry about issues of ethics. arf LOS STK Ditty. Easy TOT Semin. AACSE:EMIce AICEA BS: Coecst ng Al Repocng At the time an asset is acquired, cost and fair value should be the same. Are T LOL STS Otol Eeey TOT Emin. AACSE: Rete Tonking AICS S8:Critsal Thinking AICPA PI: Raporing The monetary unit assumption requires that all dollar amounts be rounded to the nearest dollar. Are'F LOS STK Dttouly: Easy TOT Emin, AKCSE:Aetectie Thinking AIGOA S8:CrosalThinkrg AICHE FW Rezoning The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets AreT LOS STK Diteuy Easy TOT Semen. AACS: Retect \eThinung ACSA BE: Crea Thnkng AICPA =NY Regering39. 40. 47. 43 49. at 42. 43. 44. 45. External transactions involve economic events between the company and some other enterprise or party, uy: Easy TOT Sm, In the owner's equity statement, revenues are listed first, follawed by expenses, and net income (or net loss). Ans F LOB STK prtcuny: easy TOT Simin. AAs Retece Tinkng 155: Creat Tanking AICPA FN: Raporing 5: Retectve Tenkng Ccracattmnnng AICPA =N:Raporing MULTIPLE CHOICE QUESTIONS Accountants refer to an economic event as a @ purchase D. sale. © transaction d. change in ownership. ‘Anzio LOt BTK Difiouty: Eazy TOT 10 min. AACSS: Reflective Thinking AICPAGS: Critical Thinking AICPA EN: Raporing The process of recording transactions has become more efficient because @. fewer events can be quantified in financial terms. b. computers are used in processing business events. ¢. more people have been hired to record business transactions. d. business events are recorded only at the end of the year. ‘Ans:b LOL STK Dmeuy Easy TOT LOmn AACSE:Renecive Trnkng AIGPRBS: GrieslTnnkng AICPA FN:Reponing Communication of economic events is the part of the accounting process that involves @. identifying economic events. b. quantifying transactions into dollars and cents ¢. preparing accounting reports. d. recording and classifying information. ‘Aosi¢ LO1 STK Olfcuty: Easy TOT 1.0 min. AACSS: Reflective Tanking AICPABE: Clea! Thinking AICPA FN: Regortng 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 b. The purchase of a new computer. Tne sale of store equipment Payment of income taxes, ‘Aosia LOY BTC Oifteuly: Easy TOT 10min AACSE:Reneosve Thinking AICPABE: CmizalThinkng AICRA FN: Resoning The use of computers in recording business events @ has made the recording process more efficient. b. does not use the same principles as manual accounting systems, has greatly impacted the identification stage of the accounting process. dis economical only for large businesses. he accounting process involves alll of the following exeept a. identifying economic transactions that are relevant to the business. b. communicating financial information to users by preparing financial reports. ¢. recording nonquantifiable economic events. d. analyzing and interpreting financial reports. ange LO} STK Diheuty Easy TOT 10mm. AACSE:Retacive Thinking AICPA SE*Coteal Thniong AICRA FN: Repoang The accounting process is correctly sequenced as a. identification, communication, recording. b. recording, communication, identification ¢. Identification. recoraing. communication d. communication, recording, identification ange LO} STK Dtteuty Essy TOT 1Omm. AACSE:Retative Thining AISA SE:Cotel Tanking AICHA FN: Reponng Which of the following techniques are not used by accountants to interpret and report financial information? a. Graphs. b. Special memos for each class of extemal users cc. Charts. a. Ratios. Ane LO! STK Diftuty Easy TOT 10min ARCSS:Ratlestve Thinking AICPA SE: Crtica! Thinking AIGA FR’ Resortng Which of the following would net be considered an intemal user of accounting data for the GHI Company? a. President of the company. b. Production manager. Merchandise inventory clerk. d. President of the employees' labor union. ansd LO2 BTC Dimiouty: Easy TOT 19 min. AACSE:Renecive Thinkng AIGPA SS: Caioal Pinkng AICPA FN: Reporing60. 61 52. 53. 54 *56, 256, 557. 358, ‘Which of the following would net be considered an extemal user of accounting data for the GHI Company? a. Intemal Revenue Service agent. b. Management. © Creditors. d. Customers. Ans: LOZ BT.G Diteuty Easy TOT 1.0 min, AACSE Refectve Thinking AICPARE: Caos! Tanking AICPA FN: Reponing ‘Which of the following would not be considered internal users of accounting data for a company? a. The president ot a company. b. The controller of a company. © Creditors of a company. d. Salesmen of the company. Which of the following is an external user of accountin, a. Labor unions. b. Finance directors. ¢. Company officers. d. Managers. Ans:2 LO2 BTC Oifiuly: Easy TOT: 10min. AACSE: Reflective Thinking AICPABE: Citical Thinking AICPA FN: Reporing formation? Which one of the following is not an external user of accounting information? a. Regulatory agencies. b. Customers. c. Investors, d. Allorinese answers cnaices are extemal users. os:d LO2 SEC Diftcuty:Easy TOT 1Omn AACSE:Retectve Thnkng AICPASE: Grtcal Thinking AICPA FN: Reconing Bookkeeping differs trom accounting In tnat bookkeeping primanly involves which part ot the accounting process? a. Identincation. b. Communication Recording d. Analysis fos:e LO2 STC Diteuny: Easy TOT 10min. AACSB: Refacive Thinking AICPASS: Catoal Thinking AICPA FN; Renoring All of the following are services offered by public accountants except a. budgeting. b. auditing ¢. tax planning consulting Ans:2 LOB BTK Dieu Easy TOT 10min, ACOH: Refecve Thinking AICPAGE: Cris Thinking AICPA FN: Reporting Which list below best describes the major services performed by public accountants? a. Bookkeeping, mergers, budgets b. Employee training, auditing, bookkeeping. c. Auditing, taxation, management consulting 4. Cost accounting, production scheduling, recruiting. osc LOB STK Oifeuly Ess TOT 10min AACSE:Reliacive Thinking AICPABE: Critica Thinking AICPA EN: Renortng Preparing tax returns and engaging in tax planning is performed by . public accountants only. b. private accountants only. ©. both public and private accountants. d. IRS accountants only. Arsic LOB STK Diffeuy: Easy TOT 12min. AACSS: Refestve Thinking AICASE: Cates Thinking AICPA FN Rasortng Aprivate accountant can perform many activities in a business organization but would not work in a. budgeting . accounting information systems, ©. extemal auditing d. tax accounting fos'e LO8 BTC Dsieuty Easy TOT 10min. RACSE: Retestve Thnng AICFASE: Cres! Tnkng AFA FN Reporting59. 60. 1. 62. 63. 66. 66. 67. 6a. The origins of accounting are generally attributed to the work of a. Christopher Columbus. b. Abner Doubleday. ©. Luca Pacioli @. Leonardo aa vine Ane:e LO2 BTK Oifouty: Esty TOT 1.0 min, AACSB: Reflective Thinking AICPABE: Cece Thinking AICPA FN: Reporting Financial accounting provides econemic and financial information far all of the following except a. creditors, D. investors. ©. managers. d._ other extemal users. The final step in solving an ethical dilemma Is to @. identity and analyze tne principal elements in tne situation. b. recognize an ethical situation. ©. identify the alternatives and weigh the impact of each alternative on stakeholders. recognize the ethical issues involved The fist step in solving an ethical cllemma Is to identify and analyze the principal elements in the situation B. identity the atlematives © recognize an ethical situation and the ethical issues involved weigh the impact of each alternative on various stakenolders. Ethics are the standards of conduct by which one's actions are judged as a. fight or wrona. b. honest or dishonest ¢. Tair or untair. ._ all of these answer choices are correct. Ane:d 102 BEC Diliuy Easy TOT 1 min. AACSB:Ethice AICAABS: Creal Thinking AICPA FN: Repoting Generally accepted accounting principles are a. Income tax regulations of the Intemal Revenue Service. b. standards that indicate how to report economic events. ¢ theories thal are basea on physical laws of he universe @._ principles tnat nave been proven correct by academic researcners. Ans LO4 BTEK Dieu: Easy TOT 1.0 min. AACSO: Reflective Thinking AICPABS: Ciel Thinking AICPA FN: Repoting ‘The histoneal cost principle requires that wnen assets are acquired, they be recorded at a. appraisal value. bo cost ¢. market price. d._ book value. ans:b LO BLK Diteuty: Easy TOT 10min. AACSS:Refesive Thinking AICPAES: Citic! Thinking AICPA FN: Regoring The historical cost of an asset and its fair value are @. never the same. b. ihe same when the asset is sold. irrelevant when the asset is used by the business in its operations, the same on the date of acquisition Aesid LOt BTC Difcuty-Eaay TOT 10min AACSE:Retectve Tanking AICPA SE: Cites! Thinking AIGA FN: Resortng “The pogy of theory underiying accounting Is not based on physical laws or nature Be coche ©. principles. @._ definitions, The private sector organization involved in developing accounting principles is the @. Feasible Accounting Standards Body b. Financial Accounting Studies Board, ¢. Financial Accounting Standards Board d. Financial Auditors’ Standards Body. Anse LO4 STK Diteuly Eaty TOT 1mm AACSE: Retecmve Thnkng AICRARE:Crica! Thing AICPA ER: Repareng69, 70. 71 72. 7A. 78. 76. ‘The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that a. they are both governmental agencies. b. the SEC is a private organization of accountants, the SEC offen mandatés guidelines when no accounting pnnciples exist d._ the SEC and FASB rarely cooperate in developing accounting standards. GAAP stands for a. Generally Accepted Auditing Procedures. b. Generally Accepted Accounting Principles. c. Generally Accepted Auditing Principles. d. Generally Accepted Accounting Procedures. Ans'b LO4 ST: Diieuty Easy TOT 10min. AACSE:Retecive Thinking AICPA: Crteal Thinking AICPA ¥:-Reporing Financial information that is capable of making a difference in a decision is a. faithfully representative. b. relevant. convergent. d._ generally accepted. ‘os:b LOA BT K Dilfcuy: Easy TOT 10min, #ACSE:Refecve Thinking AICPABD: Cital Thinking AICAA FN: Reporing The Duce Company has five plants nationwide that cost a total of $100 million. The current fair value of the plants Is $500 million. The plants will be recorded and reported as assets at a. $100 milion b. $600 million. ¢. $400 million. @. $500 milion ‘esis LOA BTC Oifculy: Easy TOT 10min. AACE: Reflective Tking AICPABE: Citeal Thinking. AICPA °N: Reporting “The fair value principle is applied for a. all assets D. current assets. c. buildings. d. investment securities. Ane d LO OTK Difcutly Eazy TOT 10min AACSS: Reflective Thinking AICPA: Chica! Thinking AICAA FN: Resoting ‘The proprietorship form of business organization a. must have at least three owners in most states. b. represents the largest number of businesses in the United States c. combines the records of the business with the personal records of the owner. @._is charactenzea by a legal aistinction between the business as an economic unit and the owner, ‘The economic entity assumption requires that the activities a. of different entities can be combined If all the entilies are corporations. b. must be reported to the Securities and Exchange Commission ¢. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. dof an entity be kept separate from the activities of its owner. A business organized as a corporation a. Is not a separate legal entity in most states. b. requires that stockholders be personally liable for the debis of the business. ¢. is owned by its stockholders. d._ terminates when one of its original stockholders dies. ange LOS STK Diiuty: Easy TOT 10min, AACSE:Refecive Thinking AICPABE: Citcal Thinking AICPA FN: Reponing77. 78. 79. 80 a1 83 84. 85. ‘The partnership form of business organization a. isa separate legal entity b. is a common form of organization for service-type businesses. ©. enjoys an unlimited life. d__ has limited liability. Ans: 402 STK Dimcuny Easy TOT 10) AAGSE: Retesive Thinkng AICFAES: Clea! Thneng AICPA FN: Raroneng Which of the following is not an advantage of the corporate form of business organization? a Limitea Hiapilnty of tocknolders. b. Transferability of ownership ¢. Unlimited personal liability for stockholders @ Unlimited ite ans.¢ LOS BTK Dieuty Easy TOT 10min. AACSE:Refecwe Thinking AICPASE: Cita! Thinong AICPA FN: Reporing A small neignbomood barber snop that Is operated by its owner would likely De organized asa a. joint venture. b. partnership. ¢. corporation. @. proprietorship. Ane'd LOS BTC Difcuty Eany TOT 10min AACSE:Refectve Thinking AICPARE: Cite! Thinking AICPA FN: Reporing John and Sam met at law school and decide to start a-smail law practice after graduation. They agree to eplit revenues and expenses evenly. The most common form of business organization for @ business such as this would be 3 Joint venture. partnership. corporation, proprictorship. ch of the following ie true regarding the comorate form of business organization? Corporations ere the most prevalent form of business organization. Corporate businesses sre generally smailer in size than parinerships. end proprietor ships. The revenues of corporstions are greater than the combined revenues of partnerships and proprietorships. c. Corporations are separate legal entities organized exclusively under federal law. vas pang. A basic assumption of accounting that requires activities of an entity be kept separate Grom the activities of ite owner is referred fo 52 the 8. stand alone concent. B. monetary unit assumption ©. corporate form of ownership. €. economic entity assumption Ted Leo is the proprietor (owner) of Ted's, a retailer of golf apparel. When recording the Financial transactions of Ted's Ted dass not record an entry for a car he purchased for personal use. Ted tock out a personal loan to pay for the car. Whet accounting concept guides Ted's behavior in this situation? 3 Pay back concept bh. Economic entity assumption ©. Cash basis concept 4 Monetary unit assumption Abbasic assumption of accounting assumes that the dollar is . unreisted to business transactions, b. a poor measure of economic activities. ¢. the common unit of measure for all business transactions, useless in measuring an economic event H Dmeuty Easy TOT + Come AACSE:Ratanne Thneng AIGPASS:CrtcalTmneng AUGER FH: Rasen The assumption that the unit of measure remains sufficiently constant over time is part of the 3 economic entity assumption. b. cost principle. ©. historical cost principle monetary unit assumptiona7. 38 3 30 a 22. 83. es. “EZ GUSiness thet enjoy limited lability is = 2 proprietorship. b partnership. ©. eerporation. 4. sole proprietorship. ‘A.problem with the monetary unit sssumption is that &. the dollar has not been stable over time. b. the dollar has been stable over time. ©. the dollar is a common medium of exchange. @. itis impossible to account for international transactions. ‘The common characteristic possessed by all assets is 2. Tong life b. great monetary value. ©. tangible nature. G. future economic benefit (Qwner's equity is best depicted by the following: 8. Assets = Licbilities. b. Liabilities + Assets. €. Residual equity + Assets. a. Assets — Linbilities. The basic sccounting equation may be expressed es, 3 Assets = Equities. b. Assets — Liabilities = Owner's Equity. ©. Assets = Liabilities + Owner's Equity @. Allof these answer choices are correct. Liabilities 8. are future economic benefits. b. are existing debts and obligations ©. possess service potential. ¢. are ihings of value used by the business in its operation. Liabilities of a company would not include notes payable b. accounts payable. ©. Salaries and wages payable, c. cash Liabilities of 2 company are owed to a. debtors B. benefactors, ©. creditors. d underwriters. ‘Owners equity can be described as &. creditorship claim on total assets. b. ownership claim on total assets ©. benefactors claim on total assets debtor claim on total assets ‘Owner's equity is offen referred to 2s a. residual equity. B. leftovers. ©. spoils. second equity. When an owner withdraws cash or other assets from @ business for personal use, these withdrawals are termed a. depletions. b. consumptions. ©. drawings, d acredit line.97, 98. 99 100. 101 102. 103 104 105 Capital is a. an owner's permanent investment in the business. b. equal to liabilities minus owner's equity. c. equal to assets minus owner's equity. equal to liabilities plus drawings. Revenues would not result from a. sale of merchandise. b. initial investment of cash by owner. c._ performance of services. 4. rental of property. Sources of increases to owner's equity are a. additional investments by owners. b. purchases of merchandise. ¢. withdrawals by the owner. d. expenses. The basic accounting equation cannot be restated as a. Assets — Liabilities = Owner's Equity. b. Assets — Owner's Eauity = Liabilities ¢. Owner's Equity + Liabilities = Assets. d. Assets + Liabilities = Owner's Equity. fans:@ LOS STG Oiteuiy: Easy TOT: 10mn. AACSB:Refectve Thang AICPASS: Cmca Thinong AICPA Owner's equity is decreased by all of the following except a owner's investments b. owner's withdrawals. ¢. expenses. owner's drawings Ans:a LOS TK Difiouly: Easy TOT 10min. AACGE:Refective Thinking AICPAGB: Critical Thinking AICPA FN: Annet loss will result during a time period when a. liabilities exceed assets. b. drawings exceed investments, c. expenses exceed revenues d_ revenues exceed expenses. Anse LOS STC Ditiouly:Essy TOT 10min RACSE:Retiacive Thinking AICPAE:Crtel Thing AICPA FN: Ranortng If total liabilities increased by $30,000 and owner's equity increased by $20,000 during a Period of time, then total assets must change by what amount and direction during that same period? a. $50,000 decrease b. $10,000 decrease ¢. $10,000 increase d. $50,000 increase If total liabilities decreased by $30,000 and owner’s equity increased by $20,000 during a Period of time, then total assets must change by what amount and direction during that ‘same period? $50,000 decrease b. $10,000 decrease ¢. $10,000 increase $50,000 increase ‘Ans: LOB BT-AP Diiculy: Cary TOT: 1.0.min, AACSB: Reietve Tinking AICPA.BB: Orca! Thinking AICPA FN: Reporing If total liabilities decreased by $50,000 and owner's equity increased by $30,000 during 2 period of time, then total assets must change by what amount and direction during that ‘same period? a $20,000 decrease b. $20,000 decrease c. $20,000 increase d. $80,000 increase [Ans:b L068 BT-AP Diiculy: ary TOT: 1.0.min, AACSB: Reletve Thinking AICPA BG: Chica! Thinking AICPA FN: Reporing108 407. 108 109. 10. If total liabilities decreased by $30,000 and owner's equity decreased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period? @ $50,000 decrease b. $10,000 decrease: ¢. $10,000 increase &. $50,000 increase If total liabilities increased by $25,000 during 2 period of time snd owner's equity Gecteased by $9,000 during the same period. then the amount and direction (increase or decrease) of the period's change in total asseis is a(n) = $34,000 decrease. b. $16,000 decrease. ©. $16,000 increase @. $34,000 increase. ‘The secounting equetion for Quattro Enterprises is as follows: Assets —_Lishilities Owner's Equity $120,000 = 60.000 + $60,000 If Quattro purchases effice equipment on account for $25,000, the scceunting equation will change to. ‘Liathilities $60,000 + $60,000 b. $145,000 = Seg.gn0 + $85,000 5. 5.000 = $72,500 + $72,500 @ $145,000 = $85,000 + $60,000 Area WOE STC Demuay Eas) TOTTEme AACEE:Retcve Torkng AICRASE: Coca Tones AICRA ewe ReSoAng Assets a. $120,000 As of June 30, 2014, Actual Tigers Company has assets of $100,000 and owner's equity ‘[f $40,000. What are the liabilities for Actual Tigers Company as of June 30, 2014? a. $40,000 b. $60,000 ©. $100,000 @ $140,000 Owner's equity is increased by a. drawings b. revenues. c. expenses. a. liabilities. sey LOE STG Omeuyemyy TOT +o me ACES: Aeterna Tammy AIGFASS crt! Taneng AICPA FR/ReDODm1 112, 113, 114, 115, 116. 417. 18. ‘Owner's equity is decreased by a. assets b. revenues. ©. expenses @. liabilties, fos ¢ L08 BTC OMeuty Easy TOT 10m AACSE.Rtlcive Thing AIGPABB Cibcal Tring AICPA FR: Reponhg If total liabilities increased by $8,000, then 2. assets must have decreased by $€,000. b. owner's equity must have increased by $8,000. €: agsets must have increased by $8,000, or owner's equity must have decreased by 4. assets and owner's equity each increased by $4,000 Collection of a $1,000 Accounts Receivable a. increases an asset $1,000; decreases an asset $1,000. b. increases an asset $1,000; decreases a liability $1,000, « 4. decreases a liability $1,000, increases owner's equity $1,000. decreases an asset $1,000; decreases a liability $1,000. Revenues are a. the cost of assets consumed during the period, b. gross increases in owner's equity resulting from business activities. c. the cost of services used during the period d. actual or expected cash outflows. If an individual asset is increased, then a. there must be an equal decrease in a specific liability b. there must be an equal decrease in owner's equity. ¢. there must be an equal decrease in another asset. d. All of these answer choices are possible dosic LO? BTC Difluty: Easy TOT 10min, AACSE:Refectve Thnkng AICFABS: Cfcal Thinking AICPA FN: Reporing If services are rendered for credit, then a. assets will decrease. b. liabilities will increase ¢. owner's equity will increase. 4. liabilities will decrease Ansic LOT ETK Dieuly: Easy TOT 1.0 mn. AACSE:Retectve Thinking AICFABE: Creal Thinking AICPA FN: Reporting If expenses are paid in cash, then a. assets will increase. b. liabilities will decrease ¢. owner's equity will increase. d._ assets will decrease. Ane:d LOT BTC Oiieuty:Easy TOT 10min AACSS: Reflective Thinking AICFABE: Creal Thinking FN: Reporting If an owner makes a withdrawal of cash from @ proprietorship, then @. there has been a violation of accounting principles. owner's equity will increase. owner's equity will decrease. d__ there will be a new liability showing the owner owes money to the business. Anes LOT BTS Dineuity Esgy TOT 10min AACES! Reteetve Thing AICPASS Caten Thinking AIGA FN: Repomng Ht supplies that have bean purchased are used in the course of business, then a. a liability will increase. b. an asset will increase. ©. owner's equity will decrease. owner's equity will incroase Anae LOT BTS Citeity Eaey TOT: 70min, AACSS. ReRGeINe THiking AICPASS Citical Thinking AICPA FN: Reponing120, 121 122. 123, 124, 125, 126. 127 As of December 31, 2014, Calexico Company has assets of $42,000 and owner's equity of $20,000. What are the liabilities for Calexico Company as of December 31, 2014? a $22,000 b. $20,000. ©. $42,000 d. $62,000. 55 Cresalhinung AICPA RE Repaing Which of the following events is not a business transaction? a. Invesiment of cash by the owner. b. Hired empioyees. ©. Incurred utility expenses for the month d. Eamed revenue for services provided focie LOT BEC Diieuty Eoey TOT 1Omn AACSE:Ratctie Thnleng AICPA BE cr Tanking AICPA EN Reporing Net income results when a. Assets > Liabilities, b. Revenues = Expenses cc. Revenues » Expenses d. Revenues < Expenses Qwner's capital at the end of the period is equal to @. owner's capital at the beginning of the period plus net income minus liabilities. b. owner's capital at the beginning of the period plus net income minus drawings c. netincome. assets plus liabilities, Arcib LOO STC Diiasty Easy TOT 12min AACSS:Rafstie Thinkeng AICPAS: sal Thing AICPA FN: Raserng Abalance sheet shows @. revenues, liabilities, and owner's equity. bb expenses, drawings, and owner's equity. ¢. revenues, expenses, and drawings. d assets, liabilities, and owner's equity ‘Are:d LOG BK Oifisty:Eery TOT1.0min AACSB: Refectve Thinking AICOA BB: Chel Thinking AICPA EN Reporing An income statement a. summarizes the changes in owner's equity for a specific period of time. b. reporis the changes in assets, liabilities, and owner's equity over a period of time c. reports the assets, liabilities, and owner's equity at a specific date d__ presents the revenues and expenses for a specific period of time Ane: d LOB STK Difluty: Easy TOT 10min. AACSE: Retestve Thinking AICAAES: Cities! Thinking AICPA FN: Raporing If the owner's equity account increases from the beginning of the year to the end of the year, then @. net income is less than owner drawings. b. anetloss is less than owner drawings. ©. additional owner investments are less than net losses. d. net income is greater than owner drawings, Anes LO8 STK Diouty = xy TOT 10min, AACSE:Ratecive Tinkng AICHAES:Crtea Thinera AICPA FN: Reporting Mofro's Computer Repair Shop started the year with total assets of $200,000 and total liabilities of $200,000. During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofro withdrew $50,000. Mofro's Owner's Capital balance at the end of the year was a. $200,000 b. $100,000 c. $250,000 4. $300,000 Asie LO8 SAP Difeuly Medium TOT 1Emin. ACES: Ratesine Thing AICPABB: Cite! Thing AICRA FH: Rporing ‘Sotutor: ($200,000 - $200,000) + (s800000 - $200 6) - $60,000 = S2s0.000128, 129. 130. 131. 132, 133, 134, 138 Mofro’s Computer Repair Shop started the year with total assets of $300,000 and total liabilites of $200,000. During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofo withdrew $50,000. The net income reported by Motro's Computer Repair Shop for the year was a. $100,000. b. $180,000. ec. $200,000. d $250,000 Ansie 108 GTAP Difculy: Easy TOT 10min, AACSE:Refectne Thinking AICPAER: Crtcel Thinking AICPA FN: Reporting {eluien: 00.000 - $209.00 - s200.200 Mofro’s Computer Repair Shop started the year with total assets of $300,000 and total liabilives of $200,000. During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Moro withdrew $50,000. Mofro's Owner's Capital balance changed by what amount from the beginning of the year to the end of the year? a. $100,000. b. $150,000 «$200,000. 4d. $250,000 Sotuton: ($200 0 $209,000) + (00,000 - $200.00 -s20.00 = $250.c00 $280,000 - so9.000= siza.c00 The balance sheet is frequently referred to as a. an operating statement. b. the statement of financial position. ¢. the statement of cash flows. the statement of owner's equity, The primary purpose of the statement of cash flows Is to report a. a company's investing transactions. b. a company’s financing transactions. ¢. information about cash receipts and cash payments of a company. . the net increase or decrease in cash. Ans’: LOS BTC DMeuty:Eesy TOT 10min, AACSB Refeetve Thinking AICPABB. Crile! THnking AICPA FH: Reporting All of the financial statements are for a period of time except the a. income statement. b. owner's equity statement. balance sheet . statement of cash flows. AICPA EN: Reporting ‘The ending owner's equity amount Is shown on a. the balance sheet only. b. the owner's equity statement only. ¢. both the income statement and the owner's equity statement d._ both the balance sheet and the owner's equity statement. Black Keys Company began the year with owner's equity of $280,000. During the year, the company recorded revenues of $375,000, expenses of $285,000, and had owner drawings of $30,000. What was Black Keys’ owner's equity at the end of the year? a. $260,000. b. $340,000. ¢. $370,000. @. $400,000. Sufjan Stevens Ito began the Sufjan Company by investing $75,000 of cash in the business. The company recorded revenues of $655,000, expenses of $420,000, and had ‘owner drawings of $30,000. What was Sufjan's net income for the year? 2, $105,000. b. $135,000. ¢. $165,000. d. $180,000. ‘Soliton: $888,000 $420,000 « $136,000,