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Exam 1: Accounting in Business

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Question 1

Multiple Choice

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Rent expense that is paid with cash appears on which of the following statements?

A) Balance sheet.
B) Income statement.
C) Statement of changes in equity.
D) Income statement and statement of cash flows.
E) Statement of cash flows only.

F) None of the above
G) C) and E)

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Question 2

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The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss) ; withdrawals; and the ending balance, is the:

A) Statement of financial position.
B) Statement of cash flows.
C) Balance sheet.
D) Income statement.
E) Statement of changes in equity.

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

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Question 3

Multiple Choice

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All of the following are regarding ethics except:

Technology

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

An exchange of value between two entities is called:

A net loss occurs when revenues exceed expenses.

The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:

If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:

Owner's withdrawals are expenses.

Decreases in equity that represent costs of assets or services used to earn revenues are called:

Identify and describe the four basic financial statements:

_________________ is net income divided by average total assets.

The accounting equation is _____________________________.

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

Using the accounting equation, equity is equal to _______________________.

Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?

The accounting equation implies that: Assets + Liabilities = Equity.

Match each of the following items 1 through 5 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement.

Graham Roofing Company, owned by R. Graham, began operations in May and completed the following transactions during that first month of operations. Show the effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns in the table below. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance.