Accounting Chp 1 (Test)

As of December 31, 2016, Cancon Company has assets of $42,000 and owner's equity of $22,000. What are liabilities for Cancon Company as of December 31, 2016? A. $20,000. B. $42,000. C. $64,000. D. $22,000.

A

Eli's Electronic Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year, the business recorded $400,000 in electronic repairs revenues, $300,000 in expenses, and Eli withdrew $50,000. The net income reported by Eli's Electronic Repairs Shop for the year was A. $100,000. B. $250,000. C. $300,000. D. $150,000

A

GAAP stands for A. Generally Accepted Accounting Principles. B. Generally Accepted Accounting Procedures. C. Generally Accepted Auditing Principles. D. Generally Accepted Auditing Procedures.

A

Owner's equity is decreased by all of the following except A. owner's investments. B. owner's drawings. C. owner's withdrawals. D. expenses.

A

Match the following terms and definitions. a. Accounts receivable c. Accounts payable b. Creditor d. Note payable _______ (1) Amounts due from customers _______ (2) Amounts owed to suppliers for goods and services purchased _______ (3) Amounts owed to bank _______ (4) Party to whom money is owed

A C D B

Classify each of these items as an asset (A), liability (L), or owner's equity (OE). _____ 1. Accounts receivable _____ 2. Accounts payable _____ 3. Owner's Capital _____ 4. Supplies _____ 5. Utilities expense _____ 6. Cash _____ 7. Notes payable _____ 8. Equipment

A L OE A OE A L A

An income statement A. reports the assets, liabilities, and owner's equity at a specific date. B. presents the revenues and expenses for a specific period of time. C. reports the changes in assets, liabilities, and owner's equity over a period of time. D. summarizes the changes in owner's equity for a specific period of time.

B

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? A. Analysis. B. Recording. C. Communication. D. Identification.

B

When an owner withdraws cash or assets from a business for personal use, these withdrawals are termed A. consumptions. B. drawings. C. depletions. D. a credit line.

B

The accounting process is correctly sequenced as A. recording, communication, identification. B. identification, communication, recording. C. identification, recording, communication. D. communication, recording, identification.

C

The economic entity assumption requires that the activities A. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. B. must be reported to the Securities and Exchange Commission. C. of an entity be kept separate from the activities of its owner. D. of different entities can be combined if all the entities are corporations.

C

Which of the following events is not a business transaction? A. Investment of cash by the owner. B. Earned revenue for services provided. C. Hired employees. D. Incurred utility expenses for the month.

C

Mellon Company purchases $1,500 of equipment from Office Equipment Inc. for cash. The effect on the components of the basic accounting equation of Mellon Company is A. an increase in assets and a decrease in liabilities. B. an increase in assets and liabilities. C. no change in total assets. D. a decrease in assets and liabilities.

C.

A balance sheet shows A. revenues, expenses, and drawings. B. expenses, drawings, and owner's equity. C. revenues, liabilities, and owner's equity. D. assets, liabilities, and owner's equity

D

Ethics are the standards of conduct by which one's actions are judged as A. right or wrong. B. honest or dishonest. C. fair or unfair. D. All of these answer choices are correct.

D

Martha Innocenzi Ito began the Innocenzi Company by investing $75,000 of cash in the business. The company recorded revenues of $555,000, expenses of $410,000, and had owner drawings of $30,000. What was Innocenzi's net income for the year? A. $115,000. B. $190,000. C. $175,000. D. $145,000.

D

The historical cost principle requires that when assets are acquired, they be recorded at A. book value. B. market price. C. appraisal value. D. cost.

D

Indicate whether the following items would appear on the balance sheet (BS), income statement (IS), or owner's equity statement (OE). 1.Utilities expense 2.Accounts receivable 3.Owner's drawings 4.Service revenue 5.Salaries and wages payable 6.Equipment

IS BS OE IS BS BS