CL Accounting I Quiz 1

Lito Company had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate the net increase or decrease in cash.

$7,000 decrease

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Assets increase $12,000 and equity increases $12,000.

Marsha Bogswell is the owner of Bogswell Legal Services. Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogswell Legal Services?

Business entity assumption

The Financial Accounting Standards Board (FASB) is given the task of setting GAAP from the:

Securities and Exchange Commission (SEC)

If assets are $375,000 and equity is $125,000, then liabilities are:

$250,000

Zippy had cash inflows from operating activities of $60,500; cash outflows from investing activities of $47,000; and cash inflows from financing activities of $25,000. The net change in cash was:

$38,500 Increase

If assets are $99,000 and liabilities are $32,000, then equity equals:

$67,000

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Accounting equation

Which of the following is not classified as a liability?

Accounts Receivable

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

Accounts receivable.

If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:

Assets increase $4,500 and liabilities increase $4,500

T/F A sole proprietorship is a business with multiple owners

FALSE

T/F Internal users of accounting information do not directly manage the organization and have limited access to its accounting information.

FALSE

T/F Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable.

FALSE

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n):

Financing Activity

If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:

Increased $45,000

A company purchases equipment for $75,000 cash. This represents a(n):

Investing activity

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

Managerial accounting

Which of the following is not reported on the statement of cash flows?

The net increase or decrease in equity for the period reported.

Revenue is properly recognized:

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

Components of the Fraud Triangle

opportunity, pressure, rationalization

Determine the net income of a company for which the following information is available for the month of July. Employee salaries expense $ 180,000 Interest expense 10,000 Rent expense 20,000 Consulting revenue 400,000

$190,000

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $12,300; Accounts Receivable, $6,750; Supplies, $750; Equipment, $11,300; Accounts Payable, $8,650. What is the amount of equity as of May 31 of the current year?

$22,450

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

$71,000

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?

Assets increase by $75,000 and liabilities increase by $75,000

T/F A limited liability company (LLC) offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

TRUE

T/F External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

TRUE

T/F Objectivity means that information is supported by independent, unbiased evidence.

TRUE

T/F Owners of a corporation are called shareholder or stockholders

TRUE

T/F Return on assets is often stated in ratio form as the amount of net income divided by average total assets.

TRUE