Accounting Final Ch. 1 – Flashcards

Financial reports are used by management creditors investors all are correct

Which of the following group of companies are all examples of a merchandising business? Delta Airlines, Marriott, Gap Gap, Amazon, NIKE GameStop, Sony, Dell GameStop, Best Buy, Gap

Which of the following is the best description of accounting's role in business? a. Accounting provides stockholders with information regarding the market value of the company's stocks. b. Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company. c. Accounting helps in decreasing the credit risk of the company. d. Accounting is not responsible for providing any form of information to users. That is the role of the Information Systems Department.

Which of the following is not a role of accounting in business? a. To provide reports to users about the economic activities and conditions of a business. b. To personally guarantee loans of the business. c. To provide information to other users to determine the economic performance and condition of the business. d. To assess the various informational needs of users and design its accounting system to meet those needs.

The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit for the client? Indefinitely One year Two years There is no such prohibition.

For accounting purposes, the business entity should be considered separate from its owners if the entity is a corporation a proprietorship a partnership all of the above

Equipment with an estimated market value of $30,000 is offered for sale at $45,000. The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is $30,000 $35,000 $15,000 $45,000

Which of the following concepts relates to separating the reporting of business and personal economic transactions? Cost Concept Unit of Measure Concept Business Entity Concept Objectivity Concept

The accounting equation may be expressed as a. Assets = Equities - Liabilities b. Assets + Liabilities = Owner's Equity c. Assets = Revenues less Liabilities d. Assets - Liabilities = Owner's Equity

Which of the following is not an asset? Investments Cash Inventory Owner's Equity

The assets and liabilities of the company are $128,000 and $84,000, respectively. Owner's equity should equal $212,000 $44,000 $128,000 $84,000

Which of the following is not a business transaction a. make a sales offer b. sell goods for cash c. receive cash for services to be rendered later d. pay for supplies

The monetary value charged to customers for the performance of services sold is called asset net income capital revenue

Revenues are reported when a. a contract is signed b. cash is received from the customer c. work is begun on the job d. work is completed on the job

Expenses are recorded when a. cash is paid for services rendered b. a bill is received in advance of services rendered c. assets are used in the process of earning revenue d. none of these

Goods purchased on account for future use in the business, such as supplies, are called prepaid liabilities revenues prepaid expenses liabilities

The asset created by a business when it makes a sale on account is termed accounts payable prepaid expense unearned revenue accounts receivable

If total assets decreased by $88,000 during a period of time and owner's equity increased by $71,000 during the same period, then the amount and direction (inc or dec) of the period's change in total liabilities $17,000 increase $88,000 decrease $159,000 increase $159,000 decrease

How does the purchase of equipment by signing a note affect the accounting equation? a. assets increase; assets decrease b. assets increase; liabilities decrease c. assets increase; liabilities increase d. assets increase; owner's equity increases

Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected a. Increase Assets (Cash) and increase Liabilities (Accounts Payable) b. Increase Assets (Cash) and increase Owner's Equity (Clifford Moore, Capital) c. Increase Assets (Accounts Receivable) and decrease Liabilities (Accounts Payable) d. Increase Assets (Cash) and increase Assets (Accounts Receivable)

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a a. prior period statement b. statement of owner's equity c. income statement d. balance sheet

Which of the following financial statements reports information as of a specific date? a. income statement b. statement of owner's equity c. statement of cash flows d. balance sheet

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared? I,OE, B B, I, OE OE, I, B B,OE, I

Liabilities are reported on the a. income statement b. statement of owner's equity c. statement of cash flows d. balance sheet

The asset section of the balance sheet normally presents assets in a. alphabetical order. b. order of largest to smallest dollar amounts. c. in the order what will be converted into cash. d. any order.