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acct ch1 quiz

Financial reports are used by
management, creditors, and investors
Which of the following group of companies are all examples of a merchandising business
GameStop, Best Buy, Gap
Which of the following is the best description of accounting’s role in business?
Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company
Which of the following is not a role of accounting in business?
To personally guarantee loans of the business
The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit of the client?
one year
For accounting purposes, the business entity should be considered separate from its owners if the entity is
partnership, proprietorship, corporation
Equipment with an estimated market value of $30,000 is offered for sale at $45,000. The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days. The amount used in the buyer’s accounting records to record this acquisition is
Which of the following concepts relates to separating the reporting of business and personal economic transactions?
Business Entity Concept
The accounting equation may be expressed as
assets-liabilities=owners equity
Which of the following is not an asset?
owners equity
The assets and liabilities of the company are $128,000 and $84,000, respectively. Owner’s equity should equal
Which of the following is not a business transaction?
making a sales offer
The monetary value charged to customers for the performance of services sold is called a(n)
Revenues are reported when
work has begun on the job
Expenses are recorded when
assets are used in the process of earning revenue
Goods purchased on account for future use in the business, such as supplies, are called
prepaid expenses
The asset created by a business when it makes a sale on account is termed
accounts receivable
If total assets decreased by $88,000 during a period of time and owner’s equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total liabilities is
159,000 decrease
How does the purchase of equipment by signing a note affect the accounting equation?
assets increase; liabilities increase
Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.
Increase Assets (Cash) and increase Owner’s Equity (Clifford Moore, Capital)
The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)
income statement
Which of the following financial statements reports information as of a specific date?
balance sheet
Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner’s equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?
Liabilities are reported on the
balance sheet
The asset section of the Balance Sheet normally presents assets in
in the order what will be converted into cash

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