Accounting Chapter 1

Identify the correct definition of an asset: An asset refers to the claims of a business's owners. An asset is an amount owed to a creditor. An asset is a resource that a business owns or controls.

An asset is a resource that a business owns or controls

Which of the following correctly depicts the accounting equation? Multiple choice question. Equity = Assets + Liabilities Assets = Liabilities + Equity Liabilities = Assets + Equity Assets + Liabilities = Equity

Assets = Liabilities + Equity

Generally accepted accounting principles (GAAP) wants information to have: Check all that apply. faithful representation concepts relevance rules

Faithful Representation Relevance

The correct definition of revenues is: Revenues (increase/decrease) (liabilities/equity) and are earned from the sale of products and services.

INCREASE EQUITY

Jack Pickle decided to start a small business. His initial investment was $4,000. Demonstrate how to record this transaction in the accounting equation. Decrease Cash by $4,000; decrease J. Pickle, Capital by $4,000 Increase Cash by $4,000; increase Revenues by $4,000 Increase Cash by $4,000; Increase J. Pickle, Capital by $4,000 Increase Cash by $4,000; decrease J. Pickle, Capital by $4,000

Increase Cash by $4,000; Increase J. Pickle, Capital by $4,000

True or false: Owner withdrawals are resources taken from the business for personal use. True False

True

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

analytics

Pete Jackson purchased office equipment costing $3,000 for his business and paid immediately. Record this transaction in the accounting equation by: increasing Cash; increasing Expenses increasing Cash; increasing Equipment decreasing Cash; increasing Equipment increasing Equipment; increasing Revenues

decreasing Cash; increasing Equipment

A graphical presentation of data to help in understanding their significance is called data _____.

Visualization

Which of the statements correctly represents the accounting equation? What a business owns will always equal what it owes to creditors and owners. What a business owns will always equal the owners' ownership in the business. What the business owns will always equal what it owes creditors. A business's income will always equal what it owes to creditors.

What a business owns will always equal what it owes to creditors and owners

The three factors that must exist for a person to commit fraud include __, __, and __. justification pressure opportunity criminality rationalization

pressure opportunity rationalization

What is accounting? Accounting records business transactions and communicates financial information. Accounting inspires management to work harder in order to climb the corporate ladder. Accounting identifies personnel who do not have strong customer service skills. Accounting accumulates passwords for security purposes.

Accounting records business transactions and communicates financial information.

Identify the main sections on a statement of cash flows. (Check all that apply.) Cash flows from operating activities Cash flows from borrowing activities Cash flows from investing activities Cash flows from owner activities Cash flows from financing activities

Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

Sally Smith purchased $100 of supplies for her business and paid immediately. She would record this transaction in the accounting equation by which of the following? Increase Supplies; increase Revenues. Increase Cash; increase Expenses. Increase Cash; increase Supplies. Decrease Cash; increase Supplies.

Decrease Cash; increase Supplies.

The definition of expenses includes which of the following statements? (Check all that apply.) Expenses are the assets earned from a company's earnings activities. Expenses decrease equity. Expenses are the costs necessary to earn revenue. Expenses are creditors' claims against the company.

Expenses decrease equity. Expenses are the costs necessary to earn revenue.

Bob's Bakery receives its utility bill of $800 for the month and pays it immediately. Record this transaction in the accounting equation. Increase Expenses and decrease Cash. Increase Accounts Payable and increase Expenses. Increase Expenses and increase Cash. Increase Cash and increase Accounts Payable.

Increase Expenses and decrease Cash.

Users of accounting information can be divided into two main groups. These groups include: production managers and purchasing managers customers and regulators lenders and shareholders internal and external

Internal and external

Buying and selling of long-term assets such as land and equipment would be included in the ______ activities section of the statement of cash flows.

Investing

The accounts payable account is a(n) ______ account. revenue expense asset liability

Liability

The _____ principle states that accounting information is based on actual cost. revenue recognition expense recognition measurement full disclosure

Measurement

An employee that has unpaid bills might exhibit the following fraud factor: Pressure Opportunity Rationalization

Pressure

An income statement reports a company's net income or net loss during a period. Which of the following accounts would appear on an income statement? (Check all that apply.) Accounts Payable Rent Expense Service Revenue Cash Rent Revenue Wages Expense

Rent Expense Service Revenue Rent Revenue Wages Expense

Which of the statement(s) below define(s) an asset? (Check all that apply.) Multiple select question. Resources controlled by the business A creditor's claim An owner's claim A resource owned Resources with future benefits

Resources controlled by the business A resource owned Resources with future benefits

The ______ recognition principle states that revenue is recognized when goods or services are provided to customers and at an amount expected to be received.

Revenue

The definition of revenues includes which of the following statements? Revenues are resources owned or controlled by a company. Revenues are the sales of products or services to customers by a business. Revenues are creditor's claims against the company. Revenues increase equity.

Revenues are the sales of products or services to customers by a business. Revenues increase equity.

Which of the following statements below lists the rules of entering transactions into the accounting equation? An asset account and a liability account are always affected. The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity. The accounting equation can be out of balance only when payment will be received at a future date. Transactions entered into the accounting equation must involve cash and an equity account.

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

When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.) Expenses are listed on the right side of the accounting equation and will increase the owner's equity account. Cash must always equal Owner's Equity. The accounting equation must always remain in balance. After recording the transaction, total assets will always equal total liabilities plus owner's equity.

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

Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply. The equation reflects the fact that, at any point in time, total revenues will always equal total liabilities and assets. The equation states that Assets = Liabilities + Equity. The equation applies to all business transactions. The equation states that Revenues - Expenses = Assets. The relation of assets, liabilities and equity is reflected in the equation. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

The equation states that Assets = Liabilities + Equity. The equation applies to all business transactions. The relation of assets, liabilities and equity is reflected in the equation. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

The correct definition of an income statement includes which of the following? The statement explains changes in equity over a period of time. The statement identifies cash inflows and outflows during a period of time. The statement describes a business's revenues and expenses over a period of time. The statement describes a company's assets, liabilities and owner's equity at a point in time.

The statement describes a business's revenues and expenses over a period of time.

Jackson's Catering Services sold cookies to the local college. The college paid immediately. Record this transaction in Jackson's accounting equation by: decreasing Cash; increasing Revenues increasing Cash; increasing Expenses increasing Cash; increasing Revenues increasing Supplies; increasing Revenues

increasing Cash; increasing Revenues

Sally Smith decided to start a sea shell business. Her initial investment in the business consisted of $10,000 in cash. Record this transaction in the accounting equation of the new business by: increasing Cash; increasing S. Smith, Capital. increasing Accounts Payable; increasing Revenues. increasing Cash; increasing Expenses. decreasing Cash; increasing S. Smith, Capital.

increasing Cash; increasing S. Smith, Capital.

On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation by: increasing Supplies, and decreasing Expenses increasing Cash, and increasing Supplies decreasing Cash, and increasing Supplies increasing Supplies, and increasing Accounts Payable

increasing Supplies, and increasing Accounts Payable

Russell's Consulting Services provided $1,000 of services to the local college and immediately collected $700, but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by: decreasing Cash; and increasing both Accounts Receivable and Russell, Capital increasing both Cash and Accounts Receivable; and increasing Revenues increasing Cash and Accounts Payable; and increasing Revenues increasing both Cash and Accounts Receivable; and decreasing Revenues

increasing both Cash and Accounts Receivable; and increasing Revenues

When supplies are purchased on credit it means that: (Check all that apply.) Multiple select question. the Accounts Payable account will be increased. the business will pay for the supplies at a later time. a liability has been incurred. the business will be paying for the supplies right away.

the Accounts Payable account will be increased. the business will pay for the supplies at a later time. a liability has been incurred.