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Exam 1: Introduction to Accounting and Business

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Question 31

Multiple Choice

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If a shareholder wanted to know how money flowed into and out of the company,which financial statement would the shareholder use?

A) income statement
B) statement of cash flows
C) balance sheet
D) statement of retained earnings

E) A) and C)
F) B) and C)

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Question 32

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Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

A) True
B) False

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Question 33

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Bob Johnson is the sole owner of Johnson's Carpet Cleaning Service.Bob purchased a personal automobile for $10,000 cash plus he took out a loan for $20,000 in his name.Describe how this transaction is related to the business entity concept.

Which of the following is not true of accounting principles?

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

What are the three sections of the statement of cash flows?

Donner Company is selling a piece of land adjacent to its business.An appraisal reported the market value of the land to be $120,000.The Focus Company initially offered to buy the land for $107,000.The companies settled on a purchase price of $115,000.On the same day,another piece of land on the same block sold for $122,000.Under the cost concept,what is the amount that will be used to record this transaction in the accounting records?

Dave Ryan is the CEO of Ryan's Arcade.At the end of its accounting period,December 31,Ryan's Arcade has as liabilities of $125,000.Using the accounting equation,determine the following amounts: a stockholders' equity as of December 31 of the current year b stockholders' equity as of December 31 at the end of the next year,assuming that assets increased by $65,000 and liabilities increased by $35,000 during the year

Determine the missing amount for each of the following:

Given the following: Calculate net income or net loss.

Land,originally purchased for $30,000,is sold for $62,000 in cash.What is the effect of the sale on the accounting equation?

Revenue is earned only when money is received.

The assets and liabilities of the company are $128,000 and $84,000,respectively.Stockholders' equity should equal

Which of the following is a manufacturing business?

Managerial accounting information is used by external and internal users equally.

Many countries outside the United States use financial accounting standards issued by the

If a building is appraised for $85,000,offered for sale at $90,000,and the buyer pays $80,000 cash for it,the buyer would record the building at $85,000.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

About 90% of the businesses in the United States are organized as corporations.

The asset created by a business when it makes a sale on account is termed