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Ending retained earnings on the statement of retained earnings is calculated by adding stockholder investments and net losses and subtracting net income and dividends.

A) True
B) False

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Zapper has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and investments by stockholders of $6,000. Its ending equity is:


A) $223,000.
B) $240,000.
C) $268,000.
D) $274,000.
E) $208,000.

F) C) and D)
G) B) and D)

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_________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

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Investing activities are the means an organization uses to pay for resources like land, buildings, and equipment to carry out its plans.

A) True
B) False

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Identify several opportunities in accounting and distinguish between private accounting and public accounting.

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The four broad areas of accounting are f...

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A common characteristic of __________ is their ability to yield expected future benefits to a business.

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A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities?


A) $104,000.
B) $76,000.
C) $32,000.
D) $68,000.
E) $176,000.

F) A) and D)
G) B) and D)

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The International Accounting Standards Board (IASB) :


A) Hopes to create harmony among accounting practices of different countries to improve comparability.
B) Is the government group that establishes reporting requirements for companies that issue stock to the investing public.
C) Has the authority to impose its standards on companies around the world.
D) Is the only source of generally accepted accounting principles (GAAP) .
E) Only applies to companies that are members of the European Union.

F) A) and B)
G) B) and E)

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The following schedule reflects shows the first month's transactions of the Green Construction Company Inc. : The following schedule reflects shows the first month's transactions of the Green Construction Company Inc. : Provide descriptions for each transaction. Provide descriptions for each transaction.

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1. Investment of cash in business by own...

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Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice.

A) True
B) False

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A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.

A) True
B) False

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The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information.

Premises
Assess whether a company has paid all required taxes and complied with securities rules.
Decide whether to buy, hold, or sell a company's stock.
Know what, when, and how much to purchase.
Assess whether an organization is likely to repay its loans with interest.
Judge the soundness of a customer before making sales on credit.
Responses
Shareholders
Regulators
Lenders
Purchasing Managers
Suppliers

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Assess whether a company has paid all required taxes and complied with securities rules.
Decide whether to buy, hold, or sell a company's stock.
Know what, when, and how much to purchase.
Assess whether an organization is likely to repay its loans with interest.
Judge the soundness of a customer before making sales on credit.

The balance sheet is based on the accounting equation.

A) True
B) False

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According to the cost principle, it is necessary for managers to report an approximation of an asset's market value upon purchase.

A) True
B) False

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


A) Income statement equation.
B) Accounting equation.
C) Business equation.
D) Return on equity ratio.
E) Net income.

F) C) and D)
G) B) and E)

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Match each of the following terms with the most appropriate definition.

Premises
The uncertainty about the return to be earned.
Expresses the relation of assets, liabilities and equity in a company, comparing the resources the company owns to the sources of funds to acquire the resources.
Resources a company owns or controls that are expected to yield future benefit.
A financial ratio stated as income divided by assets invested.
Decreases in equity from costs of providing products or services to customers.
Resources such as cash that a stockholder puts into the company.
Creditor's claims on a company's assets.
Resources such as cash that a stockholder r receives from the company for personal use.
Responses
Dividends
Expenses
Accounting equation
Return on assets
Risk
Assets
Liabilities
Common stock

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The uncertainty about the return to be earned.
Expresses the relation of assets, liabilities and equity in a company, comparing the resources the company owns to the sources of funds to acquire the resources.
Resources a company owns or controls that are expected to yield future benefit.
A financial ratio stated as income divided by assets invested.
Decreases in equity from costs of providing products or services to customers.
Resources such as cash that a stockholder puts into the company.
Creditor's claims on a company's assets.
Resources such as cash that a stockholder r receives from the company for personal use.

The assumption that requires that a business be accounted for separately from its owners is the __________________ assumption.

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If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:


A) Increased $22,000.
B) Decreased $22,000.
C) Increased $89,000.
D) Decreased $156,000.
E) Increased $156,000.

F) C) and D)
G) A) and B)

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Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and Dividends by the company of $12,000. Calculate the ending equity.


A) $(5,000) .
B) $29,000.
C) $5,000.
D) $99,000.
E) $75,000.

F) All of the above
G) B) and C)

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Rent expense appears on which of the following statements?


A) Balance sheet.
B) Income statement.
C) Statement of retained earnings.
D) Statement of periodic expenses.
E) Statement of cash flows only.

F) C) and D)
G) A) and D)

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