Business Accounting Essay Example

Business Accounting Paper CHAPTER 1 Accounting: An Overview and Analysis MULTIPLE CHOICE QUESTIONS 41. Accountants refer to an economic event as a a. purchase. b. sale. c. transaction. d. change in ownership. 42. The process of recording transactions has become more efficient because a. fewer events can be quantified in financial terms. b. computers are used in processing business events. c. more people have been hired to record business transactions. d. business events are recorded only at the end of the year. 43. Communication of economic events is the part of the accounting process that involves a. identifying economic events. b. uantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information. 44. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The appointment of a new CPA firm to perform an audit. b. The purchase of a new computer. c. The sale of store equipment. d. Payment of income taxes. 45. The use of computers in recording business events a. has made the recording process more efficient. b. does not use the same principles as manual accounting systems. c. has greatly impacted the identification stage of the accounting process. . is economical only for large businesses. 46. The accounting process involves all of the following except a. identifying economic transactions that are relevant to the business. b. communicating financial information to users by preparing financial reports. c. recording nonquantifiable economic events. d. analyzing and interpreting financial reports. 47. The accounting process is correctly sequenced as a. identification, communication, recording. b. recording, communication, identification. c. identification, recording, communication. d. communication, recording, identification. 48. Which of the following techniques are not used by accountants to interpret and report financial information? a. Graphs b. Special memos for each class of external users c. Charts d. Ratios 49. Which of the following would not be considered an internal user of accounting data for the XYZ Company? a. President of the company b. Production manager c. Merchandise inventory clerk d. President of the employees labor union 50. Which of the following would not be considered an external user of accounting data for the XYZ Company? a. Internal Revenue Service Agent b. Management c. Creditors d. Customers 51. Which of the following would not be considered internal users of accounting data for a company? a. The president of a company b. The controller of a company c. Creditors of a company d. Salesmen of the company 52. Which of the following is an external user of accounting information? a. Labor unions b. Finance directors c. Company officers d. Managers 53. Which one of the following is not an external user of accounting information? a. Regulatory agencies b. Customers c. Investors d. All of these are external users 54. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? . Identification b. Communication c. Recording d. Analysis a55. All of the following are services offered by public accountants except a. budgeting. b. auditing. c. tax planning. d. consulting. a56. Which list below best describes the major services performed by public accountants? a. Bookkeeping, mergers, budgets b. Employee training, auditing, bookkeeping c. Auditing, taxation, management consulting d. Cost accounting, production scheduling, recruiting a57. Preparing tax returns and engaging in tax planning is performed by a. public accountants only. b. private accountants only. c. both public and private accountants. . IRS accountants only. a58. A private accountant can perform many activities in a business organization but would not work in a. budgeting. b. accounting information systems. c. external auditing. d. tax accounting. 59. The origins of accounting are generally attributed to the work of a. Christopher Columbus. b. Abner Doubleday. c. Luca Pacioli. d. Leonardo da Vinci. 60. Financial accounting provides economic and financial information for all of the following except a. creditors. b. investors. c. managers. d. other external users. 61. The final step in solving an ethical dilemma is to a. dentify and analyze the principal elements in the situation. b. recognize an ethical situation. c. identify the alternatives and weigh the impact of each alternative on stakeholders. d. recognize the ethical issues involved. 62. The first step in solving an ethical dilemma is to a. identify and analyze the principal elements in the situation. b. identify the alternatives. c. recognize an ethical situation and the ethical issues involved. d. weigh the impact of each alternative on various stakeholders. 63. Ethics are the standards of conduct by which ones actions are judged as a. right or wrong. b. onest or dishonest. c. fair or unfair. d. all of these. 64. Generally accepted accounting principles are a. income tax regulations of the Internal Revenue Service. b. standards that indicate how to report economic events. c. theories that are based on physical laws of the universe. d. principles that have been proven correct by academic researchers. 65. The cost principle requires that when assets are acquired, they be recorded at a. appraisal value. b. exchange price paid. c. selling price. d. list price. 66. The cost of an asset and its fair market value are a. never the same. b. the same when the asset is sold. . irrelevant when the asset is used by the business in its operations. d. the same on the date of acquisition. 67. The body of theory underlying accounting is not based on a. physical laws of nature. b. concepts. c. principles. d. definitions. 68. The private sector organization involved in developing accounting principles is the a. Feasible Accounting Standards Body. b. Financial Accounting Studies Board. c. Financial Accounting Standards Board. d. Financial Auditors Standards Body. 69. The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that a. they are both governmental agencies. b. the SEC is a private organization of accountants. c. the SEC often mandates guidelines when no accounting principles exist. d. the SEC and FASB rarely cooperate in developing accounting standards. 70. GAAP stands for a. Generally Accepted Auditing Procedures. b. Generally Accepted Accounting Principles. c. Generally Accepted Auditing Principles. d. Generally Accepted Accounting Procedures. 71. Which of the following is not a characteristic of the cost principle? a. Reliability b. Subjectivity c. Objectivity d. Verifiability 72. We will write a custom essay sample on Business Accounting specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Business Accounting specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Business Accounting specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at a. $100 million. b. $600 million. c. $400 million. d. $500 million. 73. All of the following are advantages cost has over other valuations except that it a. is reliable. b. can be objectively measured. c. can be verified. d. is relevant. 74. The proprietorship form of business organization a. must have at least three owners in most states. b. represents the largest number of businesses in the United States. c. ombines the records of the business with the personal records of the owner. d. is characterized by a legal distinction between the business as an economic unit and the owner. 75. The economic entity assumption requires that the activities a. of different entities can be combined if all the entities are corporations. b. must be reported to the Securities and Exchange Commission. c. of a sole proprietorshi p cannot be distinguished from the personal economic events of its owners. d. of an entity be kept separate from the activities of its owner. 76. A business organized as a corporation a. is not a separate legal entity in most states. . requires that stockholders be personally liable for the debts of the business. c. is owned by its stockholders. d. terminates when one of its original stockholders dies. 77. The partnership form of business organization a. is a separate legal entity. b. is a common form of organization for service-type businesses. c. enjoys an unlimited life. d. has limited liability. 78. Which of the following is not an advantage of the corporate form of business organization? a. Limited liability of stockholders b. Transferability of ownership c. Unlimited personal liability for stockholders d. Unlimited life 79. A small neighborhood barber shop that is operated by its owner would likely be organized as a a. joint venture. b. partnership. c. corporation. d. proprietorship. 80. Joan and Sara met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a a. joint venture. b. partnership. c. corporation. d. proprietorship. 81. Which of the following is true regarding the corporate form of business organization? a. Corporations are the most prevalent form of business organization. b. Corporate businesses are generally smaller in size than partnerships and proprietor-ships. c. The revenues of corporations are greater than the combined revenues of partnerships and proprietorships. d. Corporations are separate legal entities organized exclusively under federal law. 82. A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the a. stand alone concept. b. monetary unit assumption. c. corporate form of ownership. d. economic entity assumption. 83. Deb Smith is the proprietor (owner) of Smittys, a retailer of athletic apparel. When recording the financial transactions of Smittys, Deb does not record an entry for a car she purchased for personal use. Deb took out a personal loan to pay for the car. What accounting concept guides Debs behavior in this situation? a. Pay back concept b. Economic entity assumption c. Cash basis concept d. Monetary unit assumption 84. A basic assumption of accounting assumes that the dollar is a. unrelated to business transactions. b. a poor measure of economic activities. c. the common unit of measure for all business transactions. d. useless in measuring an economic event. 85. The assumption that the unit of measure remains sufficiently constant over time is part of the a. economic entity assumption. b. cost principle. c. historical cost principle. d. monetary unit assumption. 86. A business that enjoys limited liability is a a. proprietorship. b. partnership. c. corporation. d. sole proprietorship. 87. A problem with the monetary unit assumption is that a. the dollar has not been stable over time. b. the dollar has been stable over time. c. the dollar is a common medium of exchange. d. it is impossible to account for international transactions. 88. The common characteristic possessed by all assets is a. ong life. b. great monetary value. c. tangible nature. d. future economic benefit. 89. Owners equity is best depicted by the following: a. Assets = Liabilities. b. Liabilities + Assets. c. Residual equity + Assets. d. Assets – Liabilities. 90. The basic accounting equation may be expressed as a. Assets = Equities. b. Assets – Liabilities = Ow ners Equity. c. Assets = Liabilities + Owners Equity. d. all of these. 91. Liabilities a. are future economic benefits. b. are existing debts and obligations. c. possess service potential. d. are things of value used by the business in its operation. 92. Liabilities of a company would not include . notes payable. b. accounts payable. c. wages payable. d. cash. 93. Liabilities of a company are owed to a. debtors. b. benefactors. c. creditors. d. underwriters. 94. Owners equity can be described as a. creditorship claim on total assets. b. ownership claim on total assets. c. benefactors claim on total assets. d. debtor claim on total assets. 95. Owners equity is often referred to as a. residual equity. b. leftovers. c. spoils. d. second equity. 96. When an owner withdraws cash or other assets from a business for personal use, these withdrawals are termed a. depletions. b. consumptions. c. drawings. d. credit line. 97. Capital is a. an owners permanent investment in the business. b. equ al to liabilities minus owners equity. c. equal to assets minus owners equity. d. equal to liabilities plus drawings. 98. Revenues would not result from a. sale of merchandise. b. initial investment of cash by owner. c. performance of services. d. rental of property. 99. Sources of increases to owners equity are a. additional investments by owners. b. purchases of merchandise. c. withdrawals by the owner. d. expenses. 100. The basic accounting equation cannot be restated as a. Assets – Liabilities = Owners Equity. b. Assets – Owners Equity = Liabilities. c. Owners Equity + Liabilities = Assets. d. Assets + Liabilities = Owners Equity. 101. Owners equity is decreased by all of the following except a. owners investments. b. owners withdrawals. c. expenses. d. owners drawings. 102. A net loss will result during a time period when a. liabilities exceed assets. b. drawings exceed investments. c. expenses exceed revenues. d. revenues exceed expenses. 103. If total liabilities increased by $15,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? . $20,000 decrease b. $20,000 increase c. $25,000 increase d. $30,000 increase 104. If total liabilities decreased by $15,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $20,000 increase b. $10,000 decrease c. $10,000 increase d. $15,000 d ecrease 105. If total liabilities decreased by $25,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $20,000 decrease b. $20,000 increase c. $25,000 increase . $30,000 increase 106. If total liabilities decreased by $15,000 and owner’s equity decreased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $20,000 increase b. $10,000 increase c. $20,000 decrease d. $10,000 decrease 107. If total liabilities increased by $14,000 during a period of time and owner’s equity decreased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total assets is a(n) a. $14,000 increase. b. $20,000 increase. c. $8,000 decrease. d. $8,000 increase. 08. The accounting equation for Goodboys Enterprises is as follows: AssetsLiabilitiesOwnerâ€⠄¢s Equity $120,000=$60,000+$60,000 If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to AssetsLiabiltiesOwner’s Equity a. $120,000 = $60,000 +$60,000 b. $132,000 = $60,000 +$72,000 c. $132,000 = $66,000 +$66,000 d. $132,000 = $72,000 +$60,000 109. As of June 30, 2008, Houston Company has assets of $100,000 and owner’s equity of $5,000. What are the liabilities for Houston Company as of June 30, 2008? a. $85,000 b. $90,000 c. $95,000 d. $100,000 110. Owners equity is increased by a. drawings. b. revenues. c. expenses. d. liabilities. 111. Owners equity is decreased by a. assets. b. revenues. c. expenses. d. liabilities. 112. If total liabilities increased by $4,000, then a. assets must have decreased by $4,000. b. owners equity must have increased by $4,000. c. assets must have increased by $4,000, or owners equity must have decreased by $4,000. d. assets and owners equity each increased by $2,000. 113. Collection of a $500 Accounts Receivable a. increases an asset $500; decreases an asset $500. b. increases an asset $500; decreases a liability $500. c. ecreases a liability $500; increases owners equity $500. d. decreases an asset $500; decreases a liability $500. 114. Revenues are a. the cost of assets consumed during the period. b. gross increases in owners equity resulting from business activities. c. the cost of services used during the period. d. actual or expected cash outflows. 115. If an individual asset is increased, the n a. there must be an equal decrease in a specific liability. b. there must be an equal decrease in owners equity. c. there must be an equal decrease in another asset. d. none of these is possible. 116. If services are rendered for credit, then . assets will decrease. b. liabilities will increase. c. owners equity will increase. d. liabilities will decrease. 117. If expenses are paid in cash, then a. assets will increase. b. liabilities will decrease. c. owners equity will increase. d. assets will decrease. 118. If an owner makes a withdrawal of cash from a proprietorship, then a. there has been a violation of accounting principles. b. owners equity will increase. c. owners equity will decrease. d. there will be a new liability showing the owner owes money to the business. 119. If supplies that have been purchased are used in the course of business, then a. liability will increase. b. an asset will increase. c. owners equity will decrease. d. owners equity will increase. 120. As of December 31, 2008, Anders Company has assets of $35,000 and owners equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008? a. $15,000 b. $10,000 c. $25,000 d. $20,000 121. Which of the following events is not a business transaction? a. Investment of cash by the owner b. Hired employees c. Incurred utility expenses for the month d. Earned revenue for services provided 122. Net income results when a. Assets ; Liabilities. b. Revenues = Expenses. c. Revenues ; Expenses. d. Revenues ; Expenses. 123. Owners capital at the end of the period is equal to a. owners capital at the beginning of the period plus net income minus liabilities. b. owners capital at the beginning of the period plus net income minus drawings. c. net income. d. assets plus liabilities. 124. A balance sheet shows a. revenues, liabilities, and owners equity. b. expenses, drawings, and owners equity. c. revenues, expenses, and drawings. d. assets, liabilities, and owners equity. 125. An income statement a. summarizes the changes in owners equity for a specific period of time. b. eports the changes in assets, liabilities, and owners equity over a period of time. c. reports the assets, liabilities, and owners equity at a specific date. d. presents the revenues and expenses for a specific period of time. 126. If the owners equity account increases from the beginning of the year to the end of the year, then a. net income is less than owner drawings. b. a net loss is l ess than owner drawings. c. additional owner investments are less than net losses. d. net income is greater than owner drawings. Use the following information for questions 127–129. Jimmys Car Repair Shop started the year with total assets of $270,000 nd total liabilities of $180,000. During the year, the business recorded $450,000 in car repair revenues, $255,000 in expenses, and Jimmy withdrew $45,000. 127. Jimmys Capital balance at the end of the year was a. $240,000. b. $225,000. c. $285,000. d. $195,000. 128. The net income reported by Jimmys Car Repair Shop for the year was a. $150,000. b. $195,000. c. $90,000. d. $405,000. 129. Jimmys Capital balance changed by what amount from the beginning of the year to the end of the year? a. $45,000 b. $195,000 c. $90,000 d. $150,000 130. The balance sheet is frequently referred to as a. an operating statement. . the statement of financial position. c. the statement of cash flows. d. the statement of owners equity. 131. The primar y purpose of the statement of cash flows is to report a. a companys investing transactions. b. a companys financing transactions. c. information about cash receipts and cash payments of a company. d. the net increase or decrease in cash. 132. All of the financial statements are for a period of time except the a. income statement. b. owners equity statement. c. balance sheet. d. statement of cash flows. 133. The ending owners equity amount is shown on a. the balance sheet only. b. he owners equity statement only. c. both the income statement and the owners equity statement. d. both the balance sheet and the owners equity statement. 134. Benson Company began the year with owner’s equity of $175,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and had owner drawings of $20,000. What was Benson’s owner’s equity at the end of the year? a. $255,000 b. $215,000 c. $405,000 d. $235,000 135. Ed Dexter began the Dexter Company by inve sting $20,000 of cash in the business. The company recorded revenues of $185,000, expenses of $160,000, and had owner drawings of $10,000. What was Dexter’s net income for the year? a. $15,000 b. $35,000 c. $25,000 d. $45,000 136. Jenner Company began the year with owner’s equity of $15,000. During the year, Jenner received additional owner investments of $21,000, recorded expenses of $60,000, and had owner drawings of $4,000. If Jenner’s ending owner’s equity was $46,000, what was the company’s revenue for the year? a. $70,000 b. $74,000 c. $91,000 d. $95,000 137. Janzen Company began the year with owner’s equity of $217,000. During the year, Janzen received additional owner investments of $294,000, recorded expenses of $840,000, and had owner drawings of $56,000. If Janzen’s ending owner’s equity was $531,000, what was the company’s revenue for the year? a. $860,000 b. $916,000 c. $1,154,000 d. $1,210,000 Use the following information for questions 138-139. Benny’s Repair Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and owner drawings of $20,000. 138. Owner’s equity at the end of the year was a. $120,000. b. $100,000. c. $80,000. d. $90,000. 139. The net income reported by Benny’s Repair Shop for the year was a. $80,000. b. $100,000. c. $60,000. . $190,000. Use the following information for questions 140–141. Berwick Company compiled the following financial information as of December 31, 2008: Revenues$140,000 Berwick, Capital (1/1/08)105,000 Equipment40,000 Expenses125,000 Cash35,000 Berwick, Drawings10,000 Supplies5,000 Accounts payable20,000 Accounts receivable15,000 14 0. Berwick’s assets on December 31, 2008 are a. $235,000. b. $170,000. c. $80,000. d$95,000. 141. Berwick’s owner’s equity on December 31, 2008 is a. $105,000. b. $110,000. c. $80,000. d. $120,000. 142. Ironton Company’s owner’s equity at the beginning of August 2008 was $300,000. During the month, the company earned net income of $60,000 and owner’s drawings were $20,000. At the end of August 2008, what is the balance in owner’s equity? a. $260,000 b. $300,000 c. $340,000 d. $380,000 143. On January 1, 2008, Jackson Company reported owner’s equity of $470,000. During the year, the owner withdrew cash of $20,000. At December 31, 2008, the balance in owner’s equity was $500,000. What amount of net income or net loss would the company report for 2008? a. Net income of $30,000 b. Net loss of $50,000 c. Net income of $10,000 d. Net income of $50,000 Use the following information for questions 144–146. Jenkins Catering started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses. Jenkins made an additional investment of $3,000 and withdrew cash of $5,000 during the year. 144. The owner’s equity at the end of the year was a. $21,000. b. $18,000. c. $8,000. d. $2,000. 145. The net income reported by Jenkins Catering for the year was a. $16,000. b. $11,000. c. $8,000. d. $3,000. 146. Owner’s equity changed by what amount from the beginning of the year to the end of the year? a. $15,000 b. $14,000 c. $6,000 d. $3,000 147. During the year 2008, Toronto Enterprises earned revenues of $45,000, had expenses of $25,000, purchased assets with a cost of $5,000 and had owner drawings of $3,000. Net income for the year is a. $45,000. b. $20,000. c. $17,000. d. $15,000. 148. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, no additional investments were made and the company earned net income of $4,000. If owner’s equity at October 31 totals $32,000, what amount of owner drawings were made during the month? a. $0 b. $1,000 c. $3,000 d. $7,000 149. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, no additional investments were made and the company posted a net loss of $3,000. If owner’s equity at October 31 totals $32,000, what amount of owner drawings were made during the month? a. $0 b. $1,000 c. $3,000 d. $7,000 150. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, the owner made additional investments of $2,000 and the company earned net income of $6,000. If owner’s equity at October 31 totals $40,000, what amount of owner drawings were made during the month? a. $0 b. $3,000 c. $4,000 d. $5,000 151. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, the owner made additional investments of $5,000 and the company posted a net loss of $3,000. If owner’s equity at October 31 totals $35,000, what amount of owner drawings were made during the month? a. $0 b. $2,000 c. $3,000 d. $5,000 Additional Multiple Choice Questions 152. Which of the following is not part of the accounting process? a. Recording b. Identifying c. Financial decision making d. Communicating 153. The first part of the accounting process is a. communicating. b. identifying. c. processing. d. recording. 154. Keeping a systematic, chronological diary of events that are measured in dollars and cents is called a. ommunicating. b. identifying. c. processing. d. recording. 155. Auditing is a. the examination of financial statements by a CPA in order to express an opinion on their fairness. b. a part of accounting that involves only recording of economic events. c. an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems. d. conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly. 156. Internal users of accounting information include all of the following except a. company officers. b. investors. c. marketing managers. . production supervisors. 157. The organization(s) primarily responsible for establishing generally accepted accounting principles is(are) the FASBSEC a. nono b. yesno c. noyes d. yesyes 158. The primary accounting standard-setting body in the United States is the a. Financial Accounting Standards Board. b. International Accounting Standards Board. c. Internal Revenue Service. d. Securities and Exchange Commission. 159. A proprietorship is a business a. owned by one person. b. owned by two or more persons. c. organized as a separate legal entity under state corporation law. d. owned by a governmental agency. 160. A net loss will result during a time period when a. assets exceed liabilities. b. assets exceed owners equity. c. expenses exceed revenues. d. revenues exceed expenses. 161. The Ryder’s Uptown Grill received a bill of $400 from the Erml Advertising Agency. The owner, John Ryder, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is a. a decrease in Cash and an increase in Accounts Payable. b. a decrease in Cash and an increase in J. Ryder, Capital. c. an increase in Accounts Payable and a decrease in J. Ryder, Capital. d. a decrease in Accounts Payable and an increase in J. Ryder, Capital. 162. James Company purchases $600 of equipment from Mundelein Inc. for cash. The effect on the components of the basic accounting equation of James Company is a. an increase in assets and liabilities. b. a decrease in assets and liabilities. c. no change in total assets. d. an increase in assets and a decrease in liabilities. 163. Morreale Beaver Company buys a $12,000 van on credit. The transaction will affect the a. income statement only. b. balance sheet only. c. income statement and owners equity statement only. d. income statement, owners equity statement, and balance sheet. Business Accounting Essay Example Business Accounting Essay CHAPTER 1 Accounting: An Overview and Analysis MULTIPLE CHOICE QUESTIONS 41. Accountants refer to an economic event as a a. purchase. b. sale. c. transaction. d. change in ownership. 42. The process of recording transactions has become more efficient because a. fewer events can be quantified in financial terms. b. computers are used in processing business events. c. more people have been hired to record business transactions. d. business events are recorded only at the end of the year. 43. Communication of economic events is the part of the accounting process that involves a. identifying economic events. b. uantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information. 44. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The appointment of a new CPA firm to perform an audit. b. The purchase of a new computer. c. The sale of store equipment. d. Payment of income taxes. 45. The use of computers in recording business events a. has made the recording process more efficient. b. does not use the same principles as manual accounting systems. c. has greatly impacted the identification stage of the accounting process. . is economical only for large businesses. 46. The accounting process involves all of the following except a. identifying economic transactions that are relevant to the business. b. communicating financial information to users by preparing financial reports. c. recording nonquantifiable economic events. d. analyzing and interpreting financial reports. 47. The accounting process is correctly sequenced as a. identification, communication, recording. b. recording, communication, identification. c. identification, recording, communication. d. communication, recording, identification. 48. Which of the following techniques are not used by accountants to interpret and report financial information? a. Graphs b. Special memos for each class of external users c. Charts d. Ratios 49. Which of the following would not be considered an internal user of accounting data for the XYZ Company? a. President of the company b. Production manager c. Merchandise inventory clerk d. President of the employees labor union 50. Which of the following would not be considered an external user of accounting data for the XYZ Company? a. Internal Revenue Service Agent b. Management c. Creditors d. Customers 51. Which of the following would not be considered internal users of accounting data for a company? a. The president of a company b. The controller of a company c. Creditors of a company d. Salesmen of the company 52. Which of the following is an external user of accounting information? a. Labor unions b. Finance directors c. Company officers d. Managers 53. Which one of the following is not an external user of accounting information? a. Regulatory agencies b. Customers c. Investors d. All of these are external users 54. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? . Identification b. Communication c. Recording d. Analysis a55. All of the following are services offered by public accountants except a. budgeting. b. auditing. c. tax planning. d. consulting. a56. Which list below best describes the major services performed by public accountants? a. Bookkeeping, mergers, budgets b. Employee training, auditing, bookkeeping c. Auditing, taxation, management consulting d. Cost accounting, production scheduling, recruiting a57. Preparing tax returns and engaging in tax planning is performed by a. public accountants only. b. private accountants only. c. both public and private accountants. . IRS accountants only. a58. A private accountant can perform many activities in a business organization but would not work in a. budgeting. b. accounting information systems. c. external auditing. d. tax accounting. 59. The origins of accounting are generally attributed to the work of a. Christopher Columbus. b. Abner Doubleday. c. Luca Pacioli. d. Leonardo da Vinci. 60. Financial accounting provides economic and financial information for all of the following except a. creditors. b. investors. c. managers. d. other external users. 61. The final step in solving an ethical dilemma is to a. dentify and analyze the principal elements in the situation. b. recognize an ethical situation. c. identify the alternatives and weigh the impact of each alternative on stakeholders. d. recognize the ethical issues involved. 62. The first step in solving an ethical dilemma is to a. identify and analyze the principal elements in the situation. b. identify the alternatives. c. recognize an ethical situation and the ethical issues involved. d. weigh the impact of each alternative on various stakeholders. 63. Ethics are the standards of conduct by which ones actions are judged as a. right or wrong. b. onest or dishonest. c. fair or unfair. d. all of these. 64. Generally accepted accounting principles are a. income tax regulations of the Internal Revenue Service. b. standards that indicate how to report economic events. c. theories that are based on physical laws of the universe. d. principles that have been proven correct by academic researchers. 65. The cost principle requires that when assets are acquired, they be recorded at a. appraisal value. b. exchange price paid. c. selling price. d. list price. 66. The cost of an asset and its fair market value are a. never the same. b. the same when the asset is sold. . irrelevant when the asset is used by the business in its operations. d. the same on the date of acquisition. 67. The body of theory underlying accounting is not based on a. physical laws of nature. b. concepts. c. principles. d. definitions. 68. The private sector organization involved in developing accounting principles is the a. Feasible Accounting Standards Body. b. Financial Accounting Studies Board. c. Financial Accounting Standards Board. d. Financial Auditors Standards Body. 69. The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that a. they are both governmental agencies. b. the SEC is a private organization of accountants. c. the SEC often mandates guidelines when no accounting principles exist. d. the SEC and FASB rarely cooperate in developing accounting standards. 70. GAAP stands for a. Generally Accepted Auditing Procedures. b. Generally Accepted Accounting Principles. c. Generally Accepted Auditing Principles. d. Generally Accepted Accounting Procedures. 71. Which of the following is not a characteristic of the cost principle? a. Reliability b. Subjectivity c. Objectivity d. Verifiability 72. We will write a custom essay sample on Business Accounting specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Business Accounting specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Business Accounting specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at a. $100 million. b. $600 million. c. $400 million. d. $500 million. 73. All of the following are advantages cost has over other valuations except that it a. is reliable. b. can be objectively measured. c. can be verified. d. is relevant. 74. The proprietorship form of business organization a. must have at least three owners in most states. b. represents the largest number of businesses in the United States. c. ombines the records of the business with the personal records of the owner. d. is characterized by a legal distinction between the business as an economic unit and the owner. 75. The economic entity assumption requires that the activities a. of different entities can be combined if all the entities are corporations. b. must be reported to the Securities and Exchange Commission. c. of a sole proprietorshi p cannot be distinguished from the personal economic events of its owners. d. of an entity be kept separate from the activities of its owner. 76. A business organized as a corporation a. is not a separate legal entity in most states. . requires that stockholders be personally liable for the debts of the business. c. is owned by its stockholders. d. terminates when one of its original stockholders dies. 77. The partnership form of business organization a. is a separate legal entity. b. is a common form of organization for service-type businesses. c. enjoys an unlimited life. d. has limited liability. 78. Which of the following is not an advantage of the corporate form of business organization? a. Limited liability of stockholders b. Transferability of ownership c. Unlimited personal liability for stockholders d. Unlimited life 79. A small neighborhood barber shop that is operated by its owner would likely be organized as a a. joint venture. b. partnership. c. corporation. d. proprietorship. 80. Joan and Sara met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a a. joint venture. b. partnership. c. corporation. d. proprietorship. 81. Which of the following is true regarding the corporate form of business organization? a. Corporations are the most prevalent form of business organization. b. Corporate businesses are generally smaller in size than partnerships and proprietor-ships. c. The revenues of corporations are greater than the combined revenues of partnerships and proprietorships. d. Corporations are separate legal entities organized exclusively under federal law. 82. A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the a. stand alone concept. b. monetary unit assumption. c. corporate form of ownership. d. economic entity assumption. 83. Deb Smith is the proprietor (owner) of Smittys, a retailer of athletic apparel. When recording the financial transactions of Smittys, Deb does not record an entry for a car she purchased for personal use. Deb took out a personal loan to pay for the car. What accounting concept guides Debs behavior in this situation? a. Pay back concept b. Economic entity assumption c. Cash basis concept d. Monetary unit assumption 84. A basic assumption of accounting assumes that the dollar is a. unrelated to business transactions. b. a poor measure of economic activities. c. the common unit of measure for all business transactions. d. useless in measuring an economic event. 85. The assumption that the unit of measure remains sufficiently constant over time is part of the a. economic entity assumption. b. cost principle. c. historical cost principle. d. monetary unit assumption. 86. A business that enjoys limited liability is a a. proprietorship. b. partnership. c. corporation. d. sole proprietorship. 87. A problem with the monetary unit assumption is that a. the dollar has not been stable over time. b. the dollar has been stable over time. c. the dollar is a common medium of exchange. d. it is impossible to account for international transactions. 88. The common characteristic possessed by all assets is a. ong life. b. great monetary value. c. tangible nature. d. future economic benefit. 89. Owners equity is best depicted by the following: a. Assets = Liabilities. b. Liabilities + Assets. c. Residual equity + Assets. d. Assets – Liabilities. 90. The basic accounting equation may be expressed as a. Assets = Equities. b. Assets – Liabilities = Ow ners Equity. c. Assets = Liabilities + Owners Equity. d. all of these. 91. Liabilities a. are future economic benefits. b. are existing debts and obligations. c. possess service potential. d. are things of value used by the business in its operation. 92. Liabilities of a company would not include . notes payable. b. accounts payable. c. wages payable. d. cash. 93. Liabilities of a company are owed to a. debtors. b. benefactors. c. creditors. d. underwriters. 94. Owners equity can be described as a. creditorship claim on total assets. b. ownership claim on total assets. c. benefactors claim on total assets. d. debtor claim on total assets. 95. Owners equity is often referred to as a. residual equity. b. leftovers. c. spoils. d. second equity. 96. When an owner withdraws cash or other assets from a business for personal use, these withdrawals are termed a. depletions. b. consumptions. c. drawings. d. credit line. 97. Capital is a. an owners permanent investment in the business. b. equ al to liabilities minus owners equity. c. equal to assets minus owners equity. d. equal to liabilities plus drawings. 98. Revenues would not result from a. sale of merchandise. b. initial investment of cash by owner. c. performance of services. d. rental of property. 99. Sources of increases to owners equity are a. additional investments by owners. b. purchases of merchandise. c. withdrawals by the owner. d. expenses. 100. The basic accounting equation cannot be restated as a. Assets – Liabilities = Owners Equity. b. Assets – Owners Equity = Liabilities. c. Owners Equity + Liabilities = Assets. d. Assets + Liabilities = Owners Equity. 101. Owners equity is decreased by all of the following except a. owners investments. b. owners withdrawals. c. expenses. d. owners drawings. 102. A net loss will result during a time period when a. liabilities exceed assets. b. drawings exceed investments. c. expenses exceed revenues. d. revenues exceed expenses. 103. If total liabilities increased by $15,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? . $20,000 decrease b. $20,000 increase c. $25,000 increase d. $30,000 increase 104. If total liabilities decreased by $15,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $20,000 increase b. $10,000 decrease c. $10,000 increase d. $15,000 d ecrease 105. If total liabilities decreased by $25,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $20,000 decrease b. $20,000 increase c. $25,000 increase . $30,000 increase 106. If total liabilities decreased by $15,000 and owner’s equity decreased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $20,000 increase b. $10,000 increase c. $20,000 decrease d. $10,000 decrease 107. If total liabilities increased by $14,000 during a period of time and owner’s equity decreased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total assets is a(n) a. $14,000 increase. b. $20,000 increase. c. $8,000 decrease. d. $8,000 increase. 08. The accounting equation for Goodboys Enterprises is as follows: AssetsLiabilitiesOwnerâ€⠄¢s Equity $120,000=$60,000+$60,000 If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to AssetsLiabiltiesOwner’s Equity a. $120,000 = $60,000 +$60,000 b. $132,000 = $60,000 +$72,000 c. $132,000 = $66,000 +$66,000 d. $132,000 = $72,000 +$60,000 109. As of June 30, 2008, Houston Company has assets of $100,000 and owner’s equity of $5,000. What are the liabilities for Houston Company as of June 30, 2008? a. $85,000 b. $90,000 c. $95,000 d. $100,000 110. Owners equity is increased by a. drawings. b. revenues. c. expenses. d. liabilities. 111. Owners equity is decreased by a. assets. b. revenues. c. expenses. d. liabilities. 112. If total liabilities increased by $4,000, then a. assets must have decreased by $4,000. b. owners equity must have increased by $4,000. c. assets must have increased by $4,000, or owners equity must have decreased by $4,000. d. assets and owners equity each increased by $2,000. 113. Collection of a $500 Accounts Receivable a. increases an asset $500; decreases an asset $500. b. increases an asset $500; decreases a liability $500. c. ecreases a liability $500; increases owners equity $500. d. decreases an asset $500; decreases a liability $500. 114. Revenues are a. the cost of assets consumed during the period. b. gross increases in owners equity resulting from business activities. c. the cost of services used during the period. d. actual or expected cash outflows. 115. If an individual asset is increased, the n a. there must be an equal decrease in a specific liability. b. there must be an equal decrease in owners equity. c. there must be an equal decrease in another asset. d. none of these is possible. 116. If services are rendered for credit, then . assets will decrease. b. liabilities will increase. c. owners equity will increase. d. liabilities will decrease. 117. If expenses are paid in cash, then a. assets will increase. b. liabilities will decrease. c. owners equity will increase. d. assets will decrease. 118. If an owner makes a withdrawal of cash from a proprietorship, then a. there has been a violation of accounting principles. b. owners equity will increase. c. owners equity will decrease. d. there will be a new liability showing the owner owes money to the business. 119. If supplies that have been purchased are used in the course of business, then a. liability will increase. b. an asset will increase. c. owners equity will decrease. d. owners equity will increase. 120. As of December 31, 2008, Anders Company has assets of $35,000 and owners equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008? a. $15,000 b. $10,000 c. $25,000 d. $20,000 121. Which of the following events is not a business transaction? a. Investment of cash by the owner b. Hired employees c. Incurred utility expenses for the month d. Earned revenue for services provided 122. Net income results when a. Assets ; Liabilities. b. Revenues = Expenses. c. Revenues ; Expenses. d. Revenues ; Expenses. 123. Owners capital at the end of the period is equal to a. owners capital at the beginning of the period plus net income minus liabilities. b. owners capital at the beginning of the period plus net income minus drawings. c. net income. d. assets plus liabilities. 124. A balance sheet shows a. revenues, liabilities, and owners equity. b. expenses, drawings, and owners equity. c. revenues, expenses, and drawings. d. assets, liabilities, and owners equity. 125. An income statement a. summarizes the changes in owners equity for a specific period of time. b. eports the changes in assets, liabilities, and owners equity over a period of time. c. reports the assets, liabilities, and owners equity at a specific date. d. presents the revenues and expenses for a specific period of time. 126. If the owners equity account increases from the beginning of the year to the end of the year, then a. net income is less than owner drawings. b. a net loss is l ess than owner drawings. c. additional owner investments are less than net losses. d. net income is greater than owner drawings. Use the following information for questions 127–129. Jimmys Car Repair Shop started the year with total assets of $270,000 nd total liabilities of $180,000. During the year, the business recorded $450,000 in car repair revenues, $255,000 in expenses, and Jimmy withdrew $45,000. 127. Jimmys Capital balance at the end of the year was a. $240,000. b. $225,000. c. $285,000. d. $195,000. 128. The net income reported by Jimmys Car Repair Shop for the year was a. $150,000. b. $195,000. c. $90,000. d. $405,000. 129. Jimmys Capital balance changed by what amount from the beginning of the year to the end of the year? a. $45,000 b. $195,000 c. $90,000 d. $150,000 130. The balance sheet is frequently referred to as a. an operating statement. . the statement of financial position. c. the statement of cash flows. d. the statement of owners equity. 131. The primar y purpose of the statement of cash flows is to report a. a companys investing transactions. b. a companys financing transactions. c. information about cash receipts and cash payments of a company. d. the net increase or decrease in cash. 132. All of the financial statements are for a period of time except the a. income statement. b. owners equity statement. c. balance sheet. d. statement of cash flows. 133. The ending owners equity amount is shown on a. the balance sheet only. b. he owners equity statement only. c. both the income statement and the owners equity statement. d. both the balance sheet and the owners equity statement. 134. Benson Company began the year with owner’s equity of $175,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and had owner drawings of $20,000. What was Benson’s owner’s equity at the end of the year? a. $255,000 b. $215,000 c. $405,000 d. $235,000 135. Ed Dexter began the Dexter Company by inve sting $20,000 of cash in the business. The company recorded revenues of $185,000, expenses of $160,000, and had owner drawings of $10,000. What was Dexter’s net income for the year? a. $15,000 b. $35,000 c. $25,000 d. $45,000 136. Jenner Company began the year with owner’s equity of $15,000. During the year, Jenner received additional owner investments of $21,000, recorded expenses of $60,000, and had owner drawings of $4,000. If Jenner’s ending owner’s equity was $46,000, what was the company’s revenue for the year? a. $70,000 b. $74,000 c. $91,000 d. $95,000 137. Janzen Company began the year with owner’s equity of $217,000. During the year, Janzen received additional owner investments of $294,000, recorded expenses of $840,000, and had owner drawings of $56,000. If Janzen’s ending owner’s equity was $531,000, what was the company’s revenue for the year? a. $860,000 b. $916,000 c. $1,154,000 d. $1,210,000 Use the following information for questions 138-139. Benny’s Repair Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and owner drawings of $20,000. 138. Owner’s equity at the end of the year was a. $120,000. b. $100,000. c. $80,000. d. $90,000. 139. The net income reported by Benny’s Repair Shop for the year was a. $80,000. b. $100,000. c. $60,000. . $190,000. Use the following information for questions 140–141. Berwick Company compiled the following financial information as of December 31, 2008: Revenues$140,000 Berwick, Capital (1/1/08)105,000 Equipment40,000 Expenses125,000 Cash35,000 Berwick, Drawings10,000 Supplies5,000 Accounts payable20,000 Accounts receivable15,000 14 0. Berwick’s assets on December 31, 2008 are a. $235,000. b. $170,000. c. $80,000. d$95,000. 141. Berwick’s owner’s equity on December 31, 2008 is a. $105,000. b. $110,000. c. $80,000. d. $120,000. 142. Ironton Company’s owner’s equity at the beginning of August 2008 was $300,000. During the month, the company earned net income of $60,000 and owner’s drawings were $20,000. At the end of August 2008, what is the balance in owner’s equity? a. $260,000 b. $300,000 c. $340,000 d. $380,000 143. On January 1, 2008, Jackson Company reported owner’s equity of $470,000. During the year, the owner withdrew cash of $20,000. At December 31, 2008, the balance in owner’s equity was $500,000. What amount of net income or net loss would the company report for 2008? a. Net income of $30,000 b. Net loss of $50,000 c. Net income of $10,000 d. Net income of $50,000 Use the following information for questions 144–146. Jenkins Catering started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses. Jenkins made an additional investment of $3,000 and withdrew cash of $5,000 during the year. 144. The owner’s equity at the end of the year was a. $21,000. b. $18,000. c. $8,000. d. $2,000. 145. The net income reported by Jenkins Catering for the year was a. $16,000. b. $11,000. c. $8,000. d. $3,000. 146. Owner’s equity changed by what amount from the beginning of the year to the end of the year? a. $15,000 b. $14,000 c. $6,000 d. $3,000 147. During the year 2008, Toronto Enterprises earned revenues of $45,000, had expenses of $25,000, purchased assets with a cost of $5,000 and had owner drawings of $3,000. Net income for the year is a. $45,000. b. $20,000. c. $17,000. d. $15,000. 148. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, no additional investments were made and the company earned net income of $4,000. If owner’s equity at October 31 totals $32,000, what amount of owner drawings were made during the month? a. $0 b. $1,000 c. $3,000 d. $7,000 149. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, no additional investments were made and the company posted a net loss of $3,000. If owner’s equity at October 31 totals $32,000, what amount of owner drawings were made during the month? a. $0 b. $1,000 c. $3,000 d. $7,000 150. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, the owner made additional investments of $2,000 and the company earned net income of $6,000. If owner’s equity at October 31 totals $40,000, what amount of owner drawings were made during the month? a. $0 b. $3,000 c. $4,000 d. $5,000 151. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, the owner made additional investments of $5,000 and the company posted a net loss of $3,000. If owner’s equity at October 31 totals $35,000, what amount of owner drawings were made during the month? a. $0 b. $2,000 c. $3,000 d. $5,000 Additional Multiple Choice Questions 152. Which of the following is not part of the accounting process? a. Recording b. Identifying c. Financial decision making d. Communicating 153. The first part of the accounting process is a. communicating. b. identifying. c. processing. d. recording. 154. Keeping a systematic, chronological diary of events that are measured in dollars and cents is called a. ommunicating. b. identifying. c. processing. d. recording. 155. Auditing is a. the examination of financial statements by a CPA in order to express an opinion on their fairness. b. a part of accounting that involves only recording of economic events. c. an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems. d. conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly. 156. Internal users of accounting information include all of the following except a. company officers. b. investors. c. marketing managers. . production supervisors. 157. The organization(s) primarily responsible for establishing generally accepted accounting principles is(are) the FASBSEC a. nono b. yesno c. noyes d. yesyes 158. The primary accounting standard-setting body in the United States is the a. Financial Accounting Standards Board. b. International Accounting Standards Board. c. Internal Revenue Service. d. Securities and Exchange Commission. 159. A proprietorship is a business a. owned by one person. b. owned by two or more persons. c. organized as a separate legal entity under state corporation law. d. owned by a governmental agency. 160. A net loss will result during a time period when a. assets exceed liabilities. b. assets exceed owners equity. c. expenses exceed revenues. d. revenues exceed expenses. 161. The Ryder’s Uptown Grill received a bill of $400 from the Erml Advertising Agency. The owner, John Ryder, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is a. a decrease in Cash and an increase in Accounts Payable. b. a decrease in Cash and an increase in J. Ryder, Capital. c. an increase in Accounts Payable and a decrease in J. Ryder, Capital. d. a decrease in Accounts Payable and an increase in J. Ryder, Capital. 162. James Company purchases $600 of equipment from Mundelein Inc. for cash. The effect on the components of the basic accounting equation of James Company is a. an increase in assets and liabilities. b. a decrease in assets and liabilities. c. no change in total assets. d. an increase in assets and a decrease in liabilities. 163. Morreale Beaver Company buys a $12,000 van on credit. The transaction will affect the a. income statement only. b. balance sheet only. c. income statement and owners equity statement only. d. income statement, owners equity statement, and balance sheet.