ActMidterm

As of June 30, 2020, Little Giantz Company has assets of $100,000 and owner's equity of $60,000. What are the liabilities for Little Giantz Company as of June 30, 2020? Select one: a. $40,000 b. $60,000 c. $100,000 d. $160,000

A

Collection of a $1,500 Accounts Receivable Select one: a. increases an asset $1,500; decreases an asset $1,500. b. increases an asset $1,500; decreases a liability $1,500. c. decreases a liability $1,500; increases owner's equity $1,500. d. decreases an asset $1,500; decreases a liability $1,500.

A

Sources of increases to owner's equity are Select one: a. additional investments by owners. b. purchases of merchandise. c. withdrawals by the owner. d. expenses.

A

The primary accounting standard-setting body in the United States is the Select one: a. Financial Accounting Standards Board. b. International Accounting Standards Board. c. Internal Revenue Service. d. Securities and Exchange Commission.

A

Which of the following is an external user of accounting information? Select one: a. Labor unions. b. Finance directors. c. Company officers. d. Managers.

A

As of December 31, 2020, Cancon Company has assets of $42,000 and owner's equity of $22,000. What are the liabilities for Cancon Company as of December 31, 2020? Select one: a. $22,000. b. $20,000. c. $42,000. d. $64,000.

B

El Centro Company began the year with owner's equity of $30,000. During the year, El Centro received additional owner investments of $42,000, recorded expenses of $120,000, and had owner drawings of $12,000. If El Centro's ending owner's equity was $112,000, what was the company's revenue for the year? Select one: a. $164,000. b. $172,000. c. $202,000. d. $214,000.

B

Foxes Service Shop started the year with total assets of $320,000 and total liabilities of $240,000. During the year, the business recorded $630,000 in revenues, $450,000 in expenses, and owner drawings of $60,000.The net income reported by Foxes Service Shop for the year was Select one: a. $140,000. b. $180,000. c. $200,000. d. $270,000.

B

If total liabilities decreased by $40,000 and owner's equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period? Select one: a. $50,000 decrease b. $10,000 decrease c. $10,000 increase d. $50,000 increase

B

Juggernaut Company buys a $29,000 van on credit. The transaction will affect the Select one: a. income statement only. b. balance sheet only. c. income statement and owner's equity statement only. d. income statement, owner's equity statement, and balance sheet.

B

Letty Company began the year with owner's equity of $105,000. During the year, Letty received additional owner investments of $147,000, recorded expenses of $420,000, and had owner drawings of $28,000. If Letty's ending owner's equity was $290,000, what was the company's revenue for the year? Select one: a. $458,000. b. $486,000. c. $605,000. d. $633,000.

B

Luis Consulting started the year with total assets of $60,000 and total liabilities of $17,000. During the year, the business recorded $48,000 in consulting revenues and $36,000 in expenses. Luis made an additional investment of $8,000 and withdrew cash of $9,000 during the year. Owner's equity changed by what amount from the beginning of the year to the end of the year? Select one: a. $3,000. b. $11,000. c. $12,000. d. $45,000.

B

Luis Consulting started the year with total assets of $60,000 and total liabilities of $17,000. During the year, the business recorded $48,000 in consulting revenues and $36,000 in expenses. Luis made an additional investment of $8,000 and withdrew cash of $9,000 during the year. The net income reported by Luis Consulting for the year was: Select one: a. $3,000. b. $12,000. c. $18,000. d. $27,000.

B

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? Select one: a. $115,000. b. $145,000. c. $175,000. d. $190,000.

B

Sam Ryo is the proprietor (owner) of Sam's, a retailer of golf apparel. When recording the financial transactions of Sam's, Sam does not record an entry for a car he purchased for personal use. Sam took out a personal loan to pay for the car. What accounting concept guides Sam's behavior in this situation? Select one: a. Pay back concept b. Economic entity assumption c. Cash basis concept d. Monetary unit assumption

B

The historical cost principle requires that when assets are acquired, they be recorded at Select one: a. appraisal value. b. cost. c. market price. d. book value.

B

A business whose owners enjoy limited liability is a Select one: a. proprietorship. b. partnership. c. corporation. d. sole proprietorship.

C

All of the financial statements are for a period of time except the Select one: a. income statement. b. owner's equity statement. c. balance sheet. d. statement of cash flows.

C

Big Bite Diner received a bill of $800 from the Blackstone Wine Advertising Agency. The owner, K. T. Lang, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is Select one: a. a decrease in Cash and an increase in Accounts Payable. b. a decrease in Cash and an increase in Owner's Capital. c. an increase in Accounts Payable and a decrease in Owner's Capital. d. a decrease in Accounts Payable and an increase in Owner's Capital.

C

Communication of economic events is the part of the accounting process that involves: a. identifying economic events. b. quantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information.

C

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 repair revenues, $300,000 in expenses, and Eli withdrew $50,000. Eli's Owner's Capital balance at the end of the year was Select one: a. $200,000. b. $100,000. c. $150,000. d. $350,000.

C

IFRS, compared to GAAP, tends to be more Select one: a. detailed. b. rules-based. c. principles-based. d. full of disclosure requirements.

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 Select one: a. an increase in assets and liabilities. b. a decrease in assets and liabilities. c. no change in total assets. d. an increase in assets and a decrease in liabilities.

C

On January 1, 2020, Utah Utility Company reported owner's equity of $705,000. During the year, the owner withdrew cash of $30,000. At December 31, 2020, the balance in owner's equity was $795,000. What amount of net income or net loss would the company report for 2020? Select one: a. Net loss of $60,000 b. Net income of $90,000 c. Net income of $120,000 d. Net income of $150,000

C

Preparing tax returns and engaging in tax planning is performed by Select one: a. public accountants only. b. private accountants only. c. both public and private accountants. d. IRS accountants only.

C

The accounting process is correctly sequenced as Select one: a. identification, communication, recording. b. recording, communication, identification. c. identification, recording, communication. d. communication, recording, identification.

C

When an owner withdraws cash or other assets from a business for personal use, these withdrawals are termed Select one: a. depletions. b. consumptions. c. drawings. d. a credit line.

C

At October 1, Flambo Company reported owner's equity of $70,000. During October, the owner made additional investments of $4,000 and the company earned net income of $14,000. If owner's equity at October 31 totals $78,000, what amount of owner drawings were made during the month? Select one: a. $0 b. $4,000 c. $8,000 d. $10,000

D

The common characteristic possessed by all assets is Select one: a. long life. b. great monetary value. c. tangible nature. d. future economic benefit.

D

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

D

The fair value principle is applied for Select one: a. all assets. b. current assets. c. buildings. d. investment securities.

D

U.S. accounting standards are developed primarily by the Select one: a. IFRS. b. GAAP. c. IASB. d. FASB.

D

T/F: In order to possess future service potential, an asset must have physical substance.

False

T/F: Accountants record both internal and external transactions.

True