Accounting Quiz- Chapter 1
If during the accounting period, the company's assets decreased by $15,000 and equity increased by $4,000, then by how much did liabilities change?
Decreased by $19,000
When cash is received from a customer in payment of an account receivable, how are the elements of the accounting equation affected?
Increase assets (cash) and decrease assets (accounts receivable).
Purchasing equipment on account (payment to be made in the future) will have what effect on the elements of the accounting equation?
Increase in equipment (assets) and an increase in liabilities.
If during the current accounting period, the company's assets increased by $24,000 and equity increased by $5,000, then how did liabilities change?
Increased by $19,000
The basic accounting equation is Assets = Liabilities + Equity. The Equity term of the equation can be further broken down into several other terms. Assume that the entity is a sole proprietorship. Which of the following statements is correct?
Increases in expenses will decrease equity; and owner withdrawals will decrease equity
Company assets total $150,000 and its liabilities total $30,000. What is the equity of this company?
$120,000
If at the end of the accounting period, the company's liabilities total $29,000 and its equity totals $50,000, then what must be the total of assets?
$79,000
The owner's investment of cash in the company will result in which of the following?
An increase in cash and an increase in equity.
Total assets and total liabilities of a company are reported on which of the following?
Balance sheet
Which of the following financial statements refers to a specific date (point in time)?
Balance sheet
A CPA owns a large home and she has divided the second floor into two separate units: one used as her personal residence and the other rented out to local college students as an apartment. On the first floor, she has her own CPA firm where she meets with and provides accounting services to clients. If she wishes to keep separate records for each of these three activities, the accounting principle or assumption to which she is adhering is?
Business entity assumption
Which one of the following users of accounting information is considered to be an external user of accounting information rather than an internal user of accounting information?
Company customers
The three basic business entities discussed in this chapter include sole proprietorship, partnership, and corporation. Which of these entities is considered a legal entity and is also subject to federal income taxation at the entity level?
Corporation
Assume that a company's beginning owner's capital was $20,000. During the period, withdrawals were $24,000, and the owner made additional investments during the period of $50,000. The ending capital balance was $90,000. What was the net income or net loss for the period?
Net income, $44,000
A statement of cash flows will report cash flows from which of the following activities?
Operating activities, Investing activities, Financing activities