Question 1

Liabilities are defined as "the residual interest in the assets of an entity that remainsafter deducting its equity".

Accepted Answer

A) True 
 B)False

Question 2

If assets are $144,000 and liabilities are $37,000, then equity equals

Accepted Answer

A)  $107,000.
B)  $37,000.
C)  $74,000.
D)  $144,000.
E)  $181,000.F) B) and D)
G) All of the above

Question 3

Limited liability is a key consideration as to why corporations can raise resources fromshareholders.

Accepted Answer

A) True 
 B)False

Question 4

The underlying concepts that make up acceptable accounting practices are referred to asgenerally accepted accounting principles (GAAP).

Accepted Answer

A) True 
 B)False

Question 5

The financial statement that describes where a company's cash came from and where itwent during the period is the:

Accepted Answer

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

Question 6

The accounting equation can be restated as assets - equity = liabilities

Accepted Answer

A) True 
 B)False

Question 7

The natural business year for businesses is always the same as the calendar year

Accepted Answer

A) True 
 B)False

Question 8

The balance sheet can be used in order to assess the creditworthiness of potential customers.

Accepted Answer

A) True 
 B)False

Question 9

The organization established to try to achieve global agreement on the use of a common set of accounting principles is called:

Accepted Answer

A)  Abbreviated as IFRS.
B)  International Accounting Standards Board.
C)  Accounting Standards Board.
D)  Generally accepted accounting principles.
E)  All of these answers are correct.F) A) and C)
G) B) and E)

Question 10

Blu Lightning Co. spent $6,000 in cash for a computer. Enter the appropriateamounts into the accounting equation format.

Accepted Answer

The answer of Blu Lightning Co. spent $6,000 in cash...

Question 11

Describe the purpose and importance of accounting

Accepted Answer

Accounting is an information system. It ...

Question 12

On May 1, Fiona Nash formed a computer consulting business. In order to startthe business she invested $20,000 in equipment. Enter the appropriate amounts into the accounting equation format.

Accepted Answer

The answer of On May 1, Fiona Nash formed a...

Question 13

Dividends represent distributions of profits to the partners of a business

Accepted Answer

A) True 
 B)False

Question 14

Accounting information is only relevant for people in business

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  Revenue recognition principle.
B)  Cost principle.
C)  Going concern principle.
D)  Monetary unit principle.
E)  Business entity principle.F) C) and D)
G) A) and B)

Question 16

Businesses can take the following form(s)

Accepted Answer

A)  Sole proprietorship.
B)  Partnership.
C)  Sole proprietorship and partnership.
D)  Not-for-profit.
E)  All of these answers are correct.F) All of the above
G) D) and E)

Question 17

The financing side of the accounting equation describes where the assets came from

Accepted Answer

A) True 
 B)False

Question 18

Willie's Attic has the following account balances for the dates given:  What would equity be on September 1 and September 30?

Accepted Answer

A)  $74,000; $4,000.
B)  $86,000; $106,000.
C)  $74,000; $106,000.
D)  $86,000; $4,000.
E)  None of these answers is correct.F) A) and B)
G) None of the above

Question 19

Salaries paid with cash appear on which of the following statement(s) ?

Accepted Answer

A)  Statement of cash flows.
B)  Income statement.
C)  Statement of changes in equity.
D)  Balance sheet.
E)  Both an income statement and statement of cash flows.F) A) and B)
G) A) and C)

Question 20

A corporation

Accepted Answer

A)  Is regulated by Canada Revenue Agency.
B)  Has shareholders who have unlimited liability for the acts of the corporation.
C)  Can only have two owners.
D)  Is not a legal entity.
E)  Is a legal entity separate and distinct from its owners.F) All of the above
G) A) and B)

Exam 1: Accounting in Business

The underlying concepts that make up acceptable accounting practices are referred to asgenerally accepted accounting principles (GAAP).

Correct AnswerverifiedShow Answer

The financing side of the accounting equation describes where the assets came from

Correct AnswerverifiedShow Answer

The accounting equation can be restated as assets - equity = liabilities

Correct AnswerverifiedShow Answer

The balance sheet can be used in order to assess the creditworthiness of potential customers.

Correct AnswerverifiedShow Answer

A corporation

Correct AnswerverifiedShow Answer

Salaries paid with cash appear on which of the following statement(s) ?

Correct AnswerverifiedShow Answer

Businesses can take the following form(s)

Correct AnswerverifiedShow Answer

On May 1, Fiona Nash formed a computer consulting business. In order to startthe business she invested $20,000 in equipment. Enter the appropriate amounts into the accounting equation format.

Correct AnswerverifiedShow Answer

Willie's Attic has the following account balances for the dates given: What would equity be on September 1 and September 30?

Correct AnswerverifiedShow Answer

The natural business year for businesses is always the same as the calendar year

Correct AnswerverifiedShow Answer

If assets are $144,000 and liabilities are $37,000, then equity equals

Correct AnswerverifiedShow Answer

Limited liability is a key consideration as to why corporations can raise resources fromshareholders.

Correct AnswerverifiedShow Answer

Blu Lightning Co. spent $6,000 in cash for a computer. Enter the appropriateamounts into the accounting equation format.

Correct AnswerverifiedShow Answer

The financial statement that describes where a company's cash came from and where itwent during the period is the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The organization established to try to achieve global agreement on the use of a common set of accounting principles is called:

Correct AnswerverifiedShow Answer

Dividends represent distributions of profits to the partners of a business

Correct AnswerverifiedShow Answer

Describe the purpose and importance of accounting

Correct AnswerverifiedAccounting is an information system. It ...View AnswerShow Answer

Liabilities are defined as "the residual interest in the assets of an entity that remainsafter deducting its equity".

Correct AnswerverifiedShow Answer

Accounting information is only relevant for people in business

Correct AnswerverifiedShow Answer

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Accounting is an information system. It ...
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