Principles of Accounting I Quiz 1

If assets are $99,000 and liabilities are $32,000, then equity equals:

$ 67,000. Equity = $99,000 - $32,000 = $67,000

If a parcel of land that was originally purchased for $85,00 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is purchased for $137,000, the land should be recorded in the purchaser's books at:

$137,000.

If assets are $365,000 and equity is $120,000, then liabilities are:

$245,000. Liabilities = $365,000 - $120,000 = $245,000

The assets of a company total $200,000; the liabilities, $700,000. What are the claims of the owners?

$500,000. Explanation: $700,000 - $200,000 = $500,000

Nike had income of $350 million and average invested assets of $2,000 million. Its ROA is:

17.5% $350 million/$2,000 million = 17.5%

Cash investments by owners are listed on which of the following statements?

A. Balance sheet. B. Income statement. C. Statement of owner's equity. D. Statement of cash flows. Correct Response Both c and d.

Ethics:

Are beliefs that separate right from wrong. And law often coincide. Help to prevent conflicts of interest. Are critical in accounting. All of the above.

Resources owned or controlled by a company that are expected to yield benefits are:

Assets.

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):

Balance sheet.

Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?

Business entity principle

The principle that requires every business to be accounted for separately and distinctly from its owner or owners is known as the:

Business entity principle.

The rules adopted by the accounting profession as guides in preparing financial statements are:

Comprised of both general and specific principles. Known as generally accepted accounting principles. Abbreviated as GAAP. Intended to make information in financial statements relevant, reliable, and comparable. All of the above.

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Cost principle.

The difference between a company's assets and its liabilities, or net assets is:

Equity

A partnership:

Has unlimited liability.

Accounting is

Is an information and measurement system. Identifies, records, and communicates information about business activities Helps people make better decisions Involves interpreting information and designing information systems to provide useful reports that monitor and control a company's activities. All of the above

The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion is the:

Objectivity principle.

Net income:

Occurs when revenues exceed expenses.

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss), and withdrawals; and the ending balance, is the:

Statement of owner's equity.

Revenues are:

The gross increase in equity from a company's earning activities.