Chapter 1 Accounting

According to the fraud triangle, the three factors that must exist for a person to commit fraud include __, __, and __.

(1) Opportunity (2) Incentive (3) Rationalization.

Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation.

Increase Cash by $4,000; Increase Common Stock by $4,000.

When recording transactions into the accounting equation, which of the following statements are correct?

The accounting equation must always remain in balance After recording the transaction, assets will always equal liabilities plus equity.

Which of the following statements below lists the rules of entering transactions into the accounting equation?

The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

A process of analyzing data to identify meaningful relations and trends is called data

analytics

The FASB conceptual framework consists of all of the following except:

concepts

A(n) _____ user of accounting information does not directly run the organization.

external

Return on assets is computed as Net Income divided by Total Assets.

false

Generally accepted accounting principles (GAAP) wants information to have:

relevance faith representation

Which list of accounts below, identifies only accounts that would appear on a balance sheet.

Common Stock, Equipment, Accounts Payable

All of the following are part of the FASB conceptual framework

Elements Qualitative characteristics Recognition and measurement Objectives

Which statement below defines accounting?

It identifies, records, and communicates business transactions.

Which of the statement(s) below define(s) an asset?

Resources with expected future benefits Resources controlled by the business An amount owned

Which of the following statements best represents the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Which of the following statements best represents the reason for the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

The accounts payable account is a(n) ______ account.

liability