Acc 201 Exam 1

19. Rocky Industries received its telephone bill in the amount of $150 and immediately paid it. Rocky's general journal entry to record this transaction will include a A. Debit to Telephone Expense for $150 B. Credit to Accounts Payable for $150 C. Debit to Cash $150

A

9. An example of an operation activity is A. Paying Wages B. Purchasing office equipment C. Borrowing money from a bank D. Selling stock E. Paying off a loan

A

12. The description of the relation between a company's assets, liabilities and equity, which is expressed as Assets = Liabilities + Equity are known as the: A. Income statement equation B. Accounting equation C. Business equation D. Return on equity ratio E. Net income

B

13. If assets are $99,000 and liabilities are $32,000, then equity equals: A. $32,000 B. $67,000 C. $99,000 D. $131,000 E. $198,000

B

14. The distribution of assets to stockholders is called a(n): A. Liability B. Dividend C. Expense D. Contribution E. Investment

B

6. To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the: A. Objectivity principle B. Realization principle C. Business entity principle D. Going-concern principle E. Revenue recognition principle

C

2. The operating functions of a business include: A. Research and development B. Purchasing C. Marketing D. Distribution E.All of the above

E

4. The principle prescribing that financial statements reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue is the: A. Going-concern principle B. Business entity principle C. Objectivity principle D. Cost Principle E. Monetary unit principle

A

15. Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity? A. $55,000 B. $110,000 C. $165,000 D. $220,000 E. Cannot be determined from the given information

B

20. The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is: A. Cash basis accounting B. The matching principle C. The time period principle D. Accrual basis accounting E. Revenue basis accounting

B

3. The private board that currently has the authority to establish U.S. generally accepted accounting principles isthe: A. APB B. FASB C. AAA D. AICPA E. SEC

B

5. A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000 and purchased for $137,000. The land should be recorded in the purchaser'sbooks at: A. $95,000 B. $137,000 C. $138,500 D. $140,000 E. $150,000

B

8. An example of a financing activity is A. Buying office supplies B. Obtaining a long-term loan C. Buying office equipment D. Selling inventory E. Buying land

B

16. Viscount Company collected $34,000 cash on its accounts receivable. How does this transaction affect the company's accounting equation? A. Assets decrease and equity increases B. Both assets and liabilities decrease C. Assets, liabilities and equity are unchanged D. Both assets and equity are unchanged and liabilities increase E. Assets increase and equity decreases

C

10. Net Income: A. Decreases equity B. Represents the amount of assets owners put into a business C. Equals assets minus liabilities D. Is the excess of revenues over expenses E. Represents owners' claims against assets

D

11. If equity is $300,000 and liabilities are $192,000, then assets equal: A. $108,000 B. $192,000 C. $300,000 D. $492,000 E. $792,000

D

17. A debit is: A. An increase in an account B. The right-hand side of a T-account C. A decrease in an account D. The left-hand side of a T-account E. An increase to a liability account

D

18. A simple account form widely used in accounting to illustrate how debits and credits work is called a: A. Dividend account B. Common stock account C. Drawing account D. T-account E. Balance column sheet

D

7. On December 15, 2008, Myers Legal Services signed a $80,000 contract with a client to provide legal services to the client in 2009. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2009 and not 2008. A. Monetary unit principle B. Going-concern principle C. Cost principle D. Business entity principle E. Revenue recognition principle

E

External users of accounting information include: A. Shareholders B. customers C. creditors D. government regulators E. All the above

E