Quiz Questions #1

The assets of Moon Company are $160,000 and the total liabilities are $60,000. The equity is ________.

$100,000

Accounting is referred to as the language of business because it is the method of communicating business information to decision makers. True False

True

Harris Landscaping Services incurred $500 as a labor expense and promised to pay the labor agency within 30 days. Which of the following accounts will increase as a result of this transaction? a. Accounts Payable b. Retained Earnings c. Accounts receivable d. Cash

a. Accounts Payable

In a limited-liability company (LLC), the ________. a. Members (owners) pay income tax on their share of the LLC's earnings. b. Members (owners) are liable for each other's actions. c. The business pays the income tax on the earnings of the LLC. d. Members are personally liable to pay the entity's debts.

a. Members (owners) pay income tax on their share of the LLC's earnings.

David has decided to open an auto-detailing business. He will pick up an automobile from the client, take it to his parents' garage, detail it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special organization, which type of business organization, in effect, has he chosen? a. A limited liability company b. A sole proprietorship c. A partnership d. A corporation

b. A sole proprietorship

Which of the following is the correct accounting equation? a. Assets + Liabilities = Equity b. Assets = Liabilities + Equity c. Assets + Revenues = Liabilities + Expense d. Assets + Revenues = Equity

b. Assets = Liabilities + Equity

The field of accounting that focuses on providing information for external decision makers is ________. a. Managerial accounting b. Governmental accounting c. Financial accounting d. Nonmonetary accounting

c. financial accounting

Vista Camera Services started the year with total assets of $110,000 and total liabilities of $45,000. The revenues and the expenses for the year amounted to $120,000 and $90,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $50,000. What is the amount of stockholders' equity at the end of the year? a. $50,000 b. $120,000 c. $90,000 d. $45,000

d. $45,000

Corporations pay their own income tax on corporate income. Stockholders pay personal income tax on the dividends received from corporations. This is an example of ________. a. No mutual agency b. Continuous Life c. A limited liability company d. Double Taxation

d. Double Taxation

Which of the following is an external user of a business's financial information? a. Cost accountant b. The board of directors c. Company manager d. Customers

d. customers

Managerial accounting provides information to ________. a. outside investors and lenders b. creditors c. taxing authorities d. internal decision makers

d. internal decision makers

Creditor: financial accounting (FA) or managerial accounting (MA)?

FA

Internal Revenue Service: financial accounting (FA) or managerial accounting (MA)?

FA

Stockholder: financial accounting (FA) or managerial accounting (MA)?

FA

Business Manager: financial accounting (FA) or managerial accounting (MA)?

MA

Human resources director: financial accounting (FA) or managerial accounting (MA)?

MA