Chapter 1 – Introduction to Accounting and Business – Flashcards
Unlock all answers in this set
Unlock answersquestion
sell products purchased from other businesses to make their objective of maximizing their profits
answer
Merchandising businesses
question
Which of the following users is not considered an external user of accounting information?
answer
A Manager
question
Which of the following is not accurate when it pertains to managerial accounting?
answer
Provides economic data reports on the operations and condition of the business that are useful for banks and other creditors in deciding whether to lend money to the business
question
Which of the following forms of business entities generates 90% of business revenues in the U.S.?
answer
Corporations
question
Which of the following concepts requires that economic data be recorded in dollars in the U.S.?
answer
Unit of measure concept
question
Which of the following statements about GAAP is not true?
answer
GAAP allows a company's management to record and report data as it sees fit.
question
Emily owns three businesses: a dry cleaner, a market, and a candy store. The dry cleaner has revenue of $5,000; the market has revenue of $10,000; and the candy store has revenue of $7,000. Under the business entity concept, Emily should record
answer
None of these choices are correct.
question
Which of the following does not represent the accounting equation?
answer
Assets + Owners's Equity = Liabilities
question
Which of the following best represents the accounting equation?
answer
Assets = Liabilities + Owner's Equity
question
Assets are
answer
resources owned by the business
question
Assets and liabilities of a company are $150,000 and $30,000, respectively. Determine owner's equity using the accounting equation.
answer
$120,000
question
Money earned by a business for selling goods or services to its customers represents
answer
revenues.
question
The paying of an expense reduces
answer
owner's equity
question
Paying an amount on an account reduces
answer
the amount owed on a liability.
question
Clayton Company purchased a new coffee maker in the amount of $3,500. Clayton paid $1,000 down and will pay the remainder in 60 days. What effect does this transaction have on the accounting equation?
answer
$2,500 net increase in assets and $2,500 increase in liabilities
question
The statement that provides the financial position of a company as of a specific date is the
answer
Balance Sheet
question
Included in the statement of owner's equity are
answer
net income (loss) and withdrawals.
question
Which of the following statements provides a summary of cash receipts and cash payments for a specific period of time, such as a month or a year?
answer
Statement of cash flows
question
Given the following information, determine the amount of Cash on the balance sheet (assume there are only three assets). Liabilities equal $3,050; Owner's equity equals $25,000; Supplies equal $1,500; and Land equals $22,500.
answer
$4,050
question
Which of the following statements about GAAP is not true?
answer
GAAP allows a company's management to record and report data as it sees fit.
question
The area of accounting concerned with providing internal users with information is called
answer
managerial accounting.
question
Which of the following users is not considered an internal user of accounting information?
answer
a supplier
question
On August 1, Harvey Company offered to pay $13,000 for equipment that was advertised as being sold for $19,000 by Carrone Company. The equipment had a retail value of $23,000 on that day. On August 10, Carrone Company offered to sell the equipment for $14,700, and Harvey Company agreed to buy at that price. At what value will Harvey Company record the equipment on the books?
answer
$14,700
question
Assets of a company may include
answer
cash, inventory, buildings, and equipment.
question
Cool Taste Company recorded $5,000 in sales on account for the week. What effect does this transaction have on the accounting equation?
answer
$5,000 increase in assets and $5,000 increase in owner's equity.
question
Cool Taste Company purchased $1,500 of supplies with cash. What effect does this transaction have on the accounting equation?
answer
no affect on the accounting equation
question
The statement that reports net income or loss for a certain period in time is the
answer
income statement
question
The principles and concepts that the management of a company uses to record and report its financial information are called
answer
GAAP
question
All business transactions can be stated in terms of
answer
changes in the elements of the accounting equation
question
Which financial statement reports financial data based on the matching concept?
answer
Income statement
question
Given the following information, determine net income. The capital balance on January 1, 2016 equals $25,000; investments and withdrawals during 2016 total $53,000 and $28,350, respectively; the capital balance at December 31, 2016 equals $64,850.
answer
$15,200
