ACCT 203 Exam 1

The revenue recognition principle: - Prescribes that a company report the details behind financial statements that would impact users' decisions. - Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. - Provides guidance on when a company must recognize revenue. - Prescribes that a company record the expenses it incurred to generate the revenue reported. - Prescribes that accounting information is based on actual cost.

- Provides guidance on when a company must recognize revenue.

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been: - An increase of $80,000. - An increase of $30,000. - A decrease of $80,000. - A decrease of $30,000. - An increase of $25,000.

An increase of $30,000.

If assets are $99,000 and liabilities are $32,000, then equity equals: $198,000. $32,000. $67,000. $99,000. $131,000.

Assets = Liabilities + Stockholders' Equity$99,000 = $32,000 + Stockholders' Equity; Stockholders' Equity = $67,000

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year? $45,000. $92,000. $98,000. $210,000. $282,000.

Assets = Liabilities + Stockholders' EquityAssets = $92,000 + (Beginning Equity + Revenues − Expenses)Assets = $92,000 + ($145,000 + $210,000 − $165,000)Assets = $92,000 + $190,000; Assets = $282,000

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholders' equity? - $29,000. - $71,000. - $17,000. - $88,000. - $105,000.

Assets = Liabilities + Stockholders' EquityCash + Accounts Receivable + Office Equipment = Accounts Payable + Stockholders' Equity$22,000 + $16,000 + $50,000 = $17,000 + Stockholders' Equity$88,000 = $17,000 + Stockholders' Equity; Stockholders' Equity = $71,000

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets? Assets would have increased $93,000. Assets would have increased $55,000. Assets would have decreased $55,000. None of the above. Assets would have decreased $93,000.

Assets = Liabilities + Stockholders' EquityChange in Assets = Change in Liabilities + Change in Stockholders' Equity Change in Assets = + $74,000 − $19,000 Change in Assets = + $55,000

A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities? - $104,000. - $68,000. - $76,000. - $32,000. - $176,000.

Assets − Equity = LiabilitiesCash + Accounts Receivable + Equipment − Equity = Liabilities$24,000 + $30,000 + $50,000 − $72,000 = $32,000

Marsha Bogswell is the sole stockholder of Bogswell Legal Services. Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogswell Legal Services? - Expense recognition (Matching) principle. - Business entity assumption. - Going-concern assumption. - Measurement (Cost) principle. - Monetary unit assumption.

Business entity assumption.

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and dividends to stockholders of $9,000; there were no stock issuances. Calculate the ending equity. $47,000. $38,000. $25,000. $97,000. $88,000.

Ending Equity = Beginning Equity + Revenues − Expenses + Stock issuances − Dividends Ending Equity = $72,000 + $90,000 − $65,000 + 0 − $9,000 Ending Equity = $88,000

The area of accounting aimed at serving the decision making needs of internal users is: - SEC reporting. - Financial accounting. - Managerial accounting. - External auditing. - Bookkeeping.

Managerial accounting.

The Superior Company acquired a building for $500,000. The building was appraised at a value of $575,000. The seller had paid $300,000 for the building 6 years ago. Which accounting principle would require Superior to record the building on its records at $500,000? Revenue recognition principle. Going-concern assumption. Business entity assumption. Measurement (Cost) principle. Monetary unit assumption.

Measurement (Cost) principle.

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be: - Assets increase $1,300 and liabilities increase $1,300. - Assets decrease $1,300 and equity increases $1,300. - Assets increase $1,300 and liabilities decrease $1,300. - One asset increases $1,300 and another asset decreases $1,300, causing no effect. - Assets decrease $1,300 and equity decreases $1,300.

One asset increases $1,300 and another asset decreases $1,300, causing no effect.

Time period assumption: - Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. - Prescribes that a company record the expenses it incurred to generate the revenue reported. - Means that a business is accounted for separately from other business entities, including its owner. - Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. - Means that we can express transactions and events in monetary, or money, units.

Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.

Revenues are: - The same as net income. - The excess of expenses over assets. - The costs of assets or services used. - The increase in equity from a company's sales of products and services. - Resources owned or controlled by a company.

The increase in equity from a company's sales of products and services.