Accounting Exam 1
If total assets equal $345,000 and total owners equity equal $120,000 then total liability must equal :
$225,000
At the end of the year, the owner's equity in Durante Co. is $360,000 During the year, the assets of the business has increased by $68,000 and the liabilities had increased by $118,000. Owners equity at the beginning of the year must have been :
$410,000
Which of the following is not an objective of generally accepted accounting principles? 1. To minimize the amount of income taxes owned 2. To ensure that both preparers and users of financial statements understanding the concepts and assumptions used in presenting information within these statements 3. to enhance the relevance and verifiability of information contained in financial statements 4. To increase the comparability of financial statements prepared by different companies
1. To minimize the amount of income taxes owned
Which of the following is not a user of internal accounting information? 1. Store manager 2. Chief executive officer 3. Creditor 4. Chief financial officer
3. Creditor
The principle of adequate disclosure means that a company should disclose
Any financial facts that a reasonably informed person would consider necessary for the proper interception of the financial statements.
Financial statements may be prepared for which time period?
Any time period
Generally accepted accounting principles are intended to assist accounting in preparing financial statements that :
Are relevant, verifiable, comparable, and understandable
In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a management accounting report is more likely to :
Be tailored to the specific needs of an individual decision maker.
The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done today by computers
Book keeping
True or false, Management accounting information is oriented toward the future while financial accounting information is historical in nature?
TRUE
True or false, Notes payable and accounts payable both require a company to pay an amount owned by a certain date. Notes payable generally have interest, while accounts payable generally do not.
TRUE
Statement of financial position (balance sheet), income statement of cash flows.
Financial statements
An important quality of accounting information that allows investors, creditors, management, and other users to rely on the information
Integrity
Procedures and processes within an organization that ensure the integrity of accounting information
Internal controll
The area of accounting that refers to providing information to support internal management decisions
Management accounting
An expense is best defined as :
Past, present, or future payments of cash required to generate revenue.
Financial statements are designed primarily to :
Provide people outside the business organizations with information about the company's financial position and operating results.
The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients
Public accounting
The general purpose financial statements prepared annually by a corporation would not include : 1. Balance sheet 2. Income tax return 3. Income statement 4. Statement of cash flow
2. Income tax return
Owners' equity in business increases as a result of which of the following? 1. Payments of cash to the owners 2. Losses from the unprofitable operation of the business 3. Earning from the profitable operation of the business 4. Borrowing from a commercial bank
3. Earning from the profitable operation of the business
All of the following are characteristics of management accounting, except 1. Reports are used primarily by insiders rather than by persons outside of the business entity 2. its purpose is to assist managers in planning and controlling business operations 3. Information must be developed in conformity with generally accepted accounting principles or with income tax regulation 4. Information may be tailored to assist in specific managerial decisions
3. Information must be developed in conformity with generally accepted accounting principles or with income tax regulation
The objectives of an accounting system include all of the following, except 1. Interpret and record the effects of business transactions. 2. Classify the effects of transactions to facilitate the preparation of reports 3. Summarize and communicate information to decision makers. 4. Dictate the specific types of business transactions the enterprise may pursue.
4. Dictate the specific types of business transactions the enterprise may pursue.
Which of the following is generally not considered an external user of accounting information? 1. Stockholders of a corporation 2.Bank lending officers 3. Financial analysts 4. Factory Managers
4. Factory Managers
The accounting system of most business organization
Are tailored to meet the organization's need for accounting information and the resources available for operating the system
If during the current year, liabilities of Hayden Travel decreased by $50,000 and owners equity increased by $75,000 then :
Assets increased during the year by $25,000
If during the current year, liabilities of Corbett's Store increased $220,000 and owners equity increased by, $160,000 then :
Assets increased during the year by $380,000
The purchase of an asset, such as office equipment, for cash will cause owners equity to decrease
FALSE
True or false, The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports.
FALSE
True or false, Total assets plus total liabilities must equal total owners equity
FALSE
The area of accounting that refers to providing information to support external investments and credit decisions.
Financial accounting
A broad term that describes all information provided to external users, including but not limited to financial statements
Financial reporting
Generally accepted accounting principles are the "ground rules" used in the preparation of :
Financial statements
The fact that the same information is provided to various external users, including investors and creditors
General-purpose information
The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed :
Generally accepted accounting principles
Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of :
Investors and creditors
Which of the following is a characteristic of financial accounting information
Its preparation requires judgment
Which financial statement is prepared as of a specific date?
The balance sheet
Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?
The balance sheet
Retained earnings is :
The owner's equity that has accumulated as a result of profitable operations
A balance sheet :
Shows the assets, liabilities, and owners equity of a business entity, valued in conformity with generally accepted accounting principles
Capital stock represents :
The amount invested in the business by stockholders when shares of stock were initially issued by a corporation
