Preparing a budget for a business is considered
A. financial accounting.
B. managerial accounting. - ANSWER-B. managerial accounting.
(Management
... [Show More] accounting provides information to people within an organization while financial accounting is mainly for those outside it, such as shareholders.)
Accounting is the information system that
A. measures business activities
B. communicates the results to decision
makers
C. processes information into reports
D. all of the above. - ANSWER-D. all of the above.
Which of the following is not an external user of
a business's financial information?
A. Taxing authorities
B. Customers
C. Employees
D. Investors - ANSWER-C. Employees
Which statement below best describes the accounting
equation?
A. The change in retained earnings equals net
income less dividends.
B. Equality of revenue and expense transactions
over time.
C. Financing activities equal investing and
operating activities.
D. Resources of the company equal creditors' and
owners' claims to those resources. - ANSWER-D. Resources of the company equal creditors' and
owners' claims to those resources.
(assets = liabilities + stockholders' equity)
Owners' claims to the company's resources are
referred to as:
A. Liabilities.
B. Assets.
C. Stockholders' equity.
D. Net liabilities. - ANSWER-C. Stockholders' equity.
(assets = liabilities + stockholders' equity)
If total assets of a company equal $25,000 and
total stockholders' equity equals $10,000, then
total liabilities equal $15,000.
A. True
B. False - ANSWER-A. True
(Assets = Liabilities + Equity
$25,000 = $15,000 + $10,000)
Amounts owed to suppliers for supplies
purchased on account are defined as a(n):
A. Revenue.
B. Asset.
C. Liability.
D. Expense. - ANSWER-C. Liability
(assets = liabilities + stockholders' equity)
If total liabilities of a company equal $29,000
and total stockholders' equity equals $15,000,
then total assets equal $14,000.
A. True
B. False - ANSWER-B. False
(Assets = Liabilities + Equity
$44,000 = $29,000 + $15,000)
Financial accounting does not deal with which of the following?
A. Measuring a company's economic activity.
B. Providing information to internal users.
C. Preparing financial reports.
D. Communicating financial results to
investors. - ANSWER-B. Providing information to internal users.
The accounting equation shows that a
company's resources equal creditors' and owners' claims to those resources.
A. True
B. False - ANSWER-A. True
An alternative form of the accounting equation is:
A. Assets ‐ Liabilities = Stockholders' Equity.
B. Net Income = Revenues ‐ Expenses.
C. Stockholders' Equity = Assets + Liabilities.
D. Assets = Liabilities ‐ Stockholders' Equity. - ANSWER-A. Assets ‐ Liabilities = Stockholders' Equity.
Which of the following does not represent an asset of a company?
A. Supplies held by the company.
B. Amounts owed to suppliers.
C. Equipment owned and used for
operations.
D. Amounts receivable from customers. - ANSWER-B. Amounts owed to suppliers.
(Liability)
The amounts recorded when the company sells
products or provides services to customers are
referred to as:
A. Liabilities
B. Revenues
C. Assets
D. Expenses - ANSWER-B. Revenues
(Revenues are recorded at the time
the company provides products or
services to customers)
If a company has stockholders' equity of $25,000 at the
end of the year, which of the following statements
must be true?
A. The company has issued $25,000 of common
stock.
B. Net income for the year equals $25,000.
C. The company's assets exceed liabilities by
$25,000.
D. Total revenues during the year equal $25,000. - ANSWER-C. The company's assets exceed liabilities by
$25,000.
(assets = liabilities + stockholders' equity
assets ‐ liabilities = stockholders' equity
assets ‐ liabilities = $25,000)
The costs of providing goods and services to
customers are referred to as:
A. Assets
B. Expenses
C. Liabilities
D. Revenues - ANSWER-B. Expenses
Using the information below from the accounting records of
Knomark Corporation, stockholders' claims to the company's
resources amount to:
-Assets $1,200,000
-Liabilities $800,000
-Net income $100,000
-Retained earnings $250,000
A. $1,200,000
B. $800,000.
C. $250,000
D. $400,000 - ANSWER-D. $400,000
(assets = liabilities + stockholders' equity
$1,200,000 = $800,000 + $400,000)
Which of the following best describes revenue?
A. Resources of a company.
B. Sales of goods and services to a customer.
C. Cash received from a customer.
D. Dividends paid to stockholders. - ANSWER-B. Sales of goods and services to a customer.
The difference between revenues and expenses
is referred to as net income or net loss.
A. True
B. False - ANSWER-A. True
Use the following amounts to calculate net income:
Revenues, $12,000; Liabilities, $5,000; Expenses,
$4,000; Assets, $19,000; Dividends, $4,000
A. $6,000.
B. $8,000.
C. $4,000.
D. $14,000. - ANSWER-B. $8,000
(Revenues - Expenses = Net Income)
Dividends represent a return of the company's
profits to its owners, the stockholders.
A. True
B. False - ANSWER-A. True
The resources of a company are referred to as:
A. Liabilities
B. Revenues
C. Assets
D. Expenses - ANSWER-C. Assets
(Assets benefit future operations. Examples are
cash, inventory, supplies, accounts receivable,
buildings and equipment.)
Liabilities can be best described as:
A. The amount of expenses over the past year.
B. The amount expected to be distributed to stockholders.
C. The amount owed to creditors
D. The amount of services provided to customers during the year. - ANSWER-C. The amount owed to creditors
(Storage account used is accounts payable)
Most business enterprises in the United
States are
A. government units.
B. partnerships
C. sole proprietorships.
D. corporations. - ANSWER-C. sole proprietorships.
Transfer of ownership will not affect the continuity of a
A. corporation or partnership
B. corporation
C. partnership
D. sole proprietorship - ANSWER-B. corporation
Which business form has the advantage of
limited liability?
A. Corporation
B. Sole proprietorship
C. Partnership
D. All business forms share equal limited
liability - ANSWER-A. Corporation
(Stockholders of a
corporation are not
obligated to pay the
corporation's debts out
of their own pocket.)
Which of the following is an operating activity?
A. Issuing common stock.
B. Paying dividends.
C. Borrowing cash from a bank to acquire a
factory.
D. Paying electricity bills for the month. - ANSWER-D. Paying electricity bills for the month.
Financing activities include:
A. The purchase of a building.
B. Issuing common stock to stockholders.
C. Transactions with company employees.
D. Selling goods or services to customers. - ANSWER-B. Issuing common stock to stockholders.
How many of the following transactions are operating
activities?
1. Borrowed $50,000 from the bank
2. Purchased $12,000 in supplies
3. Provide services to customers for $27,000
4. Paid the utility bill of $750
5. Purchased a delivery truck for $12,000
6. Received $25,000 from issuing common stock
A. One.
B. Two
C. Three
D. Four - ANSWER-C. Three
(2. Purchased $12,000 in supplies
3. Provide services to customers for $27,000
4. Paid the utility bill of $750)
Transactions related to the primary business
activities of the company, such as selling goods
and services to customers, are referred to as:
A. Investing activities.
B. Operating activities.
C. Management activities.
D. Financing activities. - ANSWER-B. Operating activities.
Amalgamated Company engages in the following cash
payments:
-Paid dividends to owners $2,000
-Paid rent 500
-Repay loan to the bank 5,000
-Purchase equipment 1,000
What is the total amount of cash paid for operating
activities?
A. $1,500
B. $500
C. $6,000.
D. $2,000
E. $7,000 - ANSWER-B. $500
(?)
The equation best describing the income statement is:
A. Revenues ‐ Expenses = Income
B. Assets = Revenues - Expenses
C. Assets = Liabilities + Stockholders' Equity
D. Revenues + Expenses = Income - ANSWER-A. Revenues ‐ Expenses = Income
(DADE CLER)
The costs related to rent, utilities, and salaries in
the current reporting period are examples of
liabilities.
A. True
B. False - ANSWER-B. False
(these are examples of expenses)
Which of the following items would not appear
in an income statement?
A. Salaries expense
B. Service revenue
C. Cash
D. Advertising expense - ANSWER-C. Cash
Which of the following best explains the meaning of
total stockholders' equity?
A. The difference between total revenues and total
expenses, less dividends for the year.
B. The amount of common stock less dividends
over the life of the company.
C. All revenues, expenses, and dividends over the
life of the company.
D. The amount of capital invested by stockholders
plus profits retained over the life of the
company. - ANSWER-D. The amount of capital invested by st [Show Less]