Accounting Chapter 1

Return to questionItem 34Item 34 Which of the following accounts is not included in the liability section of the balance sheet?

Accounts receivable

The income statement reports all of the following except

Assets owned by a business

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a

Balance sheet

Accounts payable appear on which of the following statements?

Balance sheet

The accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the

Business entity assumption

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the

Business entity assumption

Which of the following accounts is not included in the calculation of net income?

Cash

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank). Which of the following are two of the important provisions of Dodd-Frank?

Clawback and whistleblower

Clawback provisions and whistleblower provisions are components of which legislation?

Dodd-Frank Act

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

Equipment was purchased on credit

The Securities and Exchange Commission (SEC) has given the task of setting GAAP to the

FASB

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the

Going-concern assumption

The group that sets international preferred accounting practices is called the

IASB

Rent expense appears on which of the following statements?

Income statement

The area of accounting aimed at serving the decision-making needs of internal users is

Managerial accounting.

The business entity assumption

Means that a business is accounted for separately from other business entities, including its owner.

The going concern assumption

Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the

Measurement (Cost) principle

When expenses exceed revenues, the result is called

Net loss

The expense recognition principle, also called the matching principle

Prescribes that a company record the expenses it incurred to generate the revenue reported

The full disclosure principle

Prescribes that a company report the details behind financial statements that would impact users' decisions

The materiality constraint

Prescribes that only information that would influence the decisions of a reasonable person need be disclosed

The time period assumption

Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods

The primary objective of financial accounting is to

Provide accounting information that serves external users.

The revenue recognition principle

Provides guidance on when a company must recognize revenue

External users of accounting information include all of the following except

Purchasing managers

The basic financial statements include all of the following except

Statement of Changes in Assets

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner; net income (or net loss); withdrawals; and the ending balance, is the

Statement of owner's equity

Which of the following accounts is not included in the asset section of the balance sheet?

Wages expense

Revenue is properly recognized

When goods or services are provided to customers and at the amount expected to be received from the customer

Distributions of cash or other resources by a business to its owners are called

Withdrawals