ACCT Exam 1 questions

Common stock

The portion of stockholders' equity that results from receiving cash from investors.

Partnership

A business that is owned jointly by two or more individuals but does not issue stock.

Corporation

A business that raises money by issuing shares of stock.

Stockholder

A party that invests in common stock.

Creditor

A party to whom a business owes money.

Cash, and other resources that are reasonably expected to be realized in cash or sold or consumed in the business within one year or the operating cycle, are called: Current assets. Intangible assets. Long-term investments. Property, plant, and equipment.

A. current assets

A paid dividend A. decreases assets and stockholders' equity. B. increases assets and stockholders' equity. C. increases assets and decreases stockholders' equity. D. decreases assets and increases stockholders' equity.

A. decreases assets and stockholders' equity.

The purchase of an asset on credit A. increases assets and liabilities. B. increases assets and stockholders' equity. C. decreases assets and increases liabilities. D. leaves total assets unchanged.

A. increases assets and liabilities.

If services are rendered on account, then A. stockholders' equity will increase. B. liabilities will decrease. C. assets will decrease. D. liabilities will increase.

A. stockholders' equity will increase.

Accounts receivable

Amounts due from customers.

Auditors opinion

An expression about whether financial statements conform with generally accepted accounting principles.

Which of the following correctly identifies normal balances of accounts? A. Assets Debit Liabilities Credit Common Stock Credit Revenues Debit Expenses Credit B. Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit C. Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Credit D. Assets Credit Liabilities Debit Common Stock Debit Revenues Credit Expenses Debit

B. Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses

If an individual asset is increased, then A. there could be an equal decrease in a specific liability. B. there could be an equal decrease in stockholders' equity. C. there could be an equal decrease in another asset. D. none of these answer choices are correct.

C. There could be an equal decrease in another asset.

An account is a part of the financial information system and is described by each one of the following except A. an account has a title. B. an account has a debit and credit side. C. an account is a source document. D. an account consists of three parts.

C. an account is a source document

When collection is made on Accounts Receivable, A. stockholders equity will increase. B. total assets will increase. C,. total assets will decrease. D. total assets will remain the same.

D. Total assets will remain the same.

A payment of a portion of an accounts payable will A. decrease net income. B. increase liabilities. C. not affect total assets. D. not affect stockholders' equity.

D. not affect stockholders' equity.

The normal balance of any account is the A. side which decreases that account. B. right side. C. left side. D. side which increases that account.

D. side which increases that account.

Accounts payable

Obligations to suppliers of goods.

In recording an accounting transaction in a double-entry system A. there must always be entries made on both sides of the accounting equation. B. the amount of the debits must equal the amount of the credits. C. there must only be two accounts affected by any transaction. D. the number of debit accounts must equal the number of credit accounts.

the amount of the debits must equal the amount of the credits.