Acc. CH1 HW

False

The Cost Principles states that acquired assets and services should be recorded at their market​ value, not their actual cost.

True

The Economic Entity Assumption draws boundaries around each entity to keep its affairs distinct from those of other entities and separate from its owners

True

The Monetary Unit Assumption states that items on the financial statements should be measured in a particular monetary unit.

Assets​ = Liabilities​ + Equity

The accounting equation is typically shown in which of the following​ forms?

True

A corporation is a business entity formed under state law and the state grants a charter which is the document that gives the​ state's permission to form a corporation.

True

A payment of a cash dividend would decrease cash and decrease equity.

True

Accounting information must be relevant and have faithful representation for investors and lenders to make sound business decisions.

Review it's internal controls

An audit is an examination of a​ company's financial statements and records.

True

An audit is an examination of a​ company's financial statements and records.

Asset

An economic resource that is expected to benefit the business in the future is called​ a(n):

True

Contributed Capital is the amount invested in a corporation by its owners and is also known as ​Paid-In Capital.

False

Corporate officers are appointed by the board of directors to manage a business and never run the business for their own benefit rather than the benefit of the company.

•Corporate taxation​ - corporations pay a variety of taxes not paid by sole proprietorships or partnerships •Government regulation​ - corporations are subjected to more government regulation than other forms of business.

Disadvantages of the corporate form of a business include ​(check all that ​apply)​:

Dividends

Distributions to stockholders are called

$130,000

If a business has assets of $ 270,000 and equity of $140,000​, then liabilities must equal

True

Limited liability means the most a stockholder can lose is the amount they originally paid for the stock

The objective to financial reporting is to

Provide information useful for making investment and lending decisions

Revenues exceed expenses

Net income occurs when

True

Retained Earnings is increased by revenues but decreased by dividends and expenses.

Decrease Retained Earnings

The payment of expenses with cash would

Equity

The​ stockholders' claim to the assets of a business is called

Cash decreases

When Smart Touch Learning purchases land for cash

False

When an owner contributes cash into a​ corporation, the​ corporation's assets increase while its equity decreases.

•The incorporators agree to a set of bylaws that guide the​ corporation's activities. •The corporate charter from the state includes an authorization to issue a certain number of shares to investors

When organizing a corporation

FASB

Which of the following is a privately funded organization that oversees the creation and governance of accounting​ standards?

Contributed capital increases equity while expenses decreases equity

Which of the following is​ true?

IFRS

Which of the following stands for the set of global financial standards that are used or required by more than 120​ nations?

•A corporation may enter into contracts •Ownership interest is divided into shares of stock •A corporation can​ buy, own, and sell property

Which of the following statements describes a corporation ​(check all that ​apply)​:

It is harder for corporations to raise capital compared to a sole proprietorship.

Which of the following statements is false regarding a​ corporation?

U.S. GAAP leaves less room for professional judgment while IFRS leaves more room for professional judgment

Which of the following statements is true comparing U.S. GAAP to​ IFRS?

The FASB oversees the creation of accounting​ standards, GAAP are the accounting​ standards, and the SEC oversees the U.S. financial markets

Which of the following statements is​ true?

A purchase of office supplies on credit

Which of the following transactions would increase assets and​ liabilities?

Salaries Payable

Which of the following would be considered a​ liability?

Hiring an employee

Which of the following would not be considered a business transaction that would affect the accounting​ equation?

Michael McNamee is the proprietor of a property management​ company, Apartment​ Exchange, near the campus of Penscola State College. The business has cash of​ $8,000 and furniture that cost​ $9,000 and has a market value of​ $13,000. The business debts include accounts payable of​ $6,000. Michael's personal home is valued at​ $400,000, and his personal bank account has a balance of​ $1,200. Identify the principle or assumption that best matches the​ situation: a. ​Michael's personal assets are not recorded on the Apartment​ Exchange's balance sheet. b. The Apartment Exchange records furniture at its cost of​ $9,000, not its market value of​ $13,000. c. The Apartment Exchange reports its financial statements in U.S. dollars. d. Michael expects the Apartment Exchange to remain in operations for the foreseeable future.

a.​ Michael's personal assets are not recorded on the​ company's balance​ sheet: the economic entity assumption. b. The company records furniture at its cost of​ $9,000, not its market value of​ $13,000: the cost principle. c. The company records its financial statements in U.S.​ dollars: the monetary unit assumption. d. Michael expects the company to remain in operations for the foreseeable​ future: the going concern assumption.

Generally Accepted Accounting Principles​ (GAAP) ​(check all that​ apply)

•Creates the acceptable accounting practices •Rests on a conceptual framework that identifies the​ objectives, characteristics,​ elements, and implementation of financial statements