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