Accounting 210 Midterm (Chapter 1 Quiz)

The accounting equation for Quattro Enterprises is as follows: Assets Liabilities Stockholders' Equity$120000=$60000+$60000 If Quattro purchases office equipment on account for $25000, the accounting equation will change to Assets= Liabilities + Stockholders' Equity

$145000=$85000 +$60000

Centro-matic Company began the year with stockholders' equity of $30000. During the year, Centro-matic issued additional shares of stock in exchange for cash of $42000, recorded expenses of $120000, and paid dividends of $8000. If Centro-matic's ending stockholders' equity was $112000, what was the company's revenue for the year?

$168,000

If total liabilities decreased by $50000 and stockholders' equity increased by $30000 during a period of time, then total assets must change by what amount and direction during that same period?

$20,000 decrease

Mofro's Computer Repair Shop started the year with total assets of $300000 and total liabilities of $200000. During the year, the business recorded $500000 in computer repair revenues, $300000 in expenses, and Mofro paid dividends of $50000. The net income reported by Mofro's Computer Repair Shop for the year was

$200,000

If total liabilities increased by $30000 and stockholders' equity increased by $20000 during a period of time, then total assets must change by what amount and direction during that same period?

$50,000 increase

Owner's equity is best depicted by the following:

Assets - Liabilities

The basic accounting equation may be expressed as

Assets = Liabilities + Stockholders' Equity

GAAP stands for

Generally Accepted Accounting Principles

Which of the following events is not a business transaction?

Hired Employees

Which of the following would not be considered an external user of accounting data for the GHI Company?

Management.

Which of the following would not be considered an internal user of accounting data for the GHI Company?

President of the employees' labor union

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

Recording

Net income results when

Revenues > Expenses

Liabilities

are existing debts and obligations.

A balance sheet shows

assets, liabilities, and stockholders' equity.

The historical cost principle requires that when assets are acquired, they be recorded at

cost

When assets are distributed to the owners of a corporation, these distributions are termed

dividends

Stockholders' equity is decreased by

expenses

A net loss will result during a time period when

expenses exceed revenues

The common characteristic possessed by all assets is

future economic benefit

Martin Corporation purchased land in 2010 for $290000. In 2018, it purchased a nearly identical parcel of land for $460000. In its 2018 balance sheet, Martin valued these two parcels of land at a combined value of $920000. By reporting the land in this manner, Martin Corp. has violated the

historical cost principle

The accounting process is correctly sequenced as

identification, recording, communication.

The starting point of the accounting process is

identifying economic events

Collection of a $1000 Accounts Receivable

increases an asset $1000; decreases an asset $1000.

A business organized as a corporation

is owned by its stockholders

Revenues would not result from

issuance of common stock.

The economic entity assumption requires that the activities

of an entity be kept separate from the activities of its owner.

Stockholders' equity can be described as

ownership claim on total assets.

Communication of economic events is the part of the accounting process that involves

preparing accounting reports

An income statement

presents the revenues and expenses for a specific period of time.

The proprietorship form of business organization

represents the largest number of businesses in the United States.

Retained earnings at the end of the period is equal to

retained earnings at the beginning of the period plus net income minus dividends.

Stockholders' equity is increased by

revenues

Generally accepted accounting principles are

standards that indicate how to report economic events

A basic assumption of accounting assumes that the dollar is

the common unit of measure for all business transactions

Andre Dickinson, owner of Andre's Fine Wines, also owns a personal residence that costs $475000. The market value of his residence is $625000. During preparation of the financial statements for Andre's Fine Wines, the accounting concept most relevant to the presentation of Andre's home is

the economic entity assumption