acct ch1 quiz – Flashcards
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Financial reports are used by
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management, creditors, and investors
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Which of the following group of companies are all examples of a merchandising business
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GameStop, Best Buy, Gap
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Which of the following is the best description of accounting's role in business?
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Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company
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Which of the following is not a role of accounting in business?
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To personally guarantee loans of the business
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The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit of the client?
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one year
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For accounting purposes, the business entity should be considered separate from its owners if the entity is
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partnership, proprietorship, corporation
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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
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35,000
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Which of the following concepts relates to separating the reporting of business and personal economic transactions?
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Business Entity Concept
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The accounting equation may be expressed as
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assets-liabilities=owners equity
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Which of the following is not an asset?
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owners equity
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The assets and liabilities of the company are $128,000 and $84,000, respectively. Owner's equity should equal
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$44,000
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Which of the following is not a business transaction?
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making a sales offer
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The monetary value charged to customers for the performance of services sold is called a(n)
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revenue
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Revenues are reported when
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work has begun on the job
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Expenses are recorded when
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assets are used in the process of earning revenue
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Goods purchased on account for future use in the business, such as supplies, are called
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prepaid expenses
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The asset created by a business when it makes a sale on account is termed
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accounts receivable
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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 (increase or decrease) of the period's change in total liabilities is
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159,000 decrease
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How does the purchase of equipment by signing a note affect the accounting equation?
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assets increase; liabilities increase
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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.
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Increase Assets (Cash) and increase Owner's Equity (Clifford Moore, Capital)
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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(n)
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income statement
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Which of the following financial statements reports information as of a specific date?
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balance sheet
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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?
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I,OE, B
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Liabilities are reported on the
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balance sheet
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The asset section of the Balance Sheet normally presents assets in
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in the order what will be converted into cash
