SEU-ACCT101-CH01-Quiz_1

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An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

corporation 

governmental unit

proprietorship

partnership 

The unit of measure concept:  

is not important when applying the cost concept. 

requires that different units be used for assets and liabilities. 

is only used in the financial statements of manufacturing companies. 

requires that economic data be reported in yen in Japan or dollars in the U.S.

The accounting equation may be expressed as  

Assets + Liabilities = Owner’s Equity 

Assets = Equities – Liabilities 

Assets – Liabilities = Owner’s Equity

Assets = Revenues less Liabilities 

The accounting equation may be expressed as  

Assets + Liabilities = Owner’s Equity 

Assets – Liabilities = Owner’s Equity

Assets = Revenues less Liabilities 

Assets = Equities – Liabilities 

Which of the following best describes accounting?  

is of no use by individuals outside of the business. 

records economic data but does not communicate the data to users according to any specific rules. 

is an information system that provides reports to users regarding economic activities and condition of a business.

is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements.

Which of the following is not a business transaction?  

Erin provided services to customers earning fees of $600. 

Erin deposits $15,000 in a bank account in the name of Erin’s Lawn Service.

Erin pays her monthly personal credit card bill.

Erin purchased hedge trimmers for her lawn service agreeing to pay the supplier next month. 

The monetary value charged to customers for the performance of services sold is called a(n)  

capital

asset

net income 

revenue

Which of the following concepts relates to separating the reporting of business and personal economic transactions?  

Unit of Measure Concept 

Objectivity Concept

Cost Concept 

Business Entity Concept 

If total liabilities decreased by $55,000 during a period of time and owner’s equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period’s change in total assets is  

$115,000 increase 

$115,000 decrease

$5,000 decrease 

$5,000 increase 

How does paying a liability in cash affect the accounting equation?  

assets increase; liabilities decrease

liabilities decrease; owner’s equity increases

assets decrease; liabilities decrease 

assets increase; liabilities increase

Allen Marks is the sole owner and operator of Great Marks Company. As of the end of its accounting period, December 31, 2011, Great Marks Company has assets of $940,000 and liabilities of $300,000. During 2012, Allen Marks invested an additional $65,000 and withdrew $45,000 from the business. What is the amount of net income during 2012, assuming that as of December 31, 2012, assets were $995,000, and liabilities were $270,000?  

$ 65,000 

$105,000 

$ 50,000

$370,000

The asset created by a business when it makes a sale on account is termed  

unearned revenue 

prepaid expense 

accounts receivable

accounts payable

Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?  

SEC 

FASB 

IRS 

AICPA

Two common areas of accounting that respectively provide information to internal and external users are:  

financial accounting and tax accounting systems

managerial accounting and financial accounting

forensic accounting and financial accounting

managerial accounting and environmental accounting

The year-end balance of the owner’s capital account appears in  

both the statement of owner’s equity and the balance sheet 

both the statement of owner’s equity and the statement of cash flows

only the statement of owner’s equity 

both the statement of owner’s equity and the income statement 

$115,000 decrease

$5,000 increase 

$5,000 decrease 

$115,000 increase 

Expenses are recorded when  

assets are used in the process of earning revenue 

none of these

cash is paid for services rendered

a bill is received in advance of services rendered 

Earning revenue  

increases assets, decreases owner’s equity 

increases one asset, decreases another asset 

decreases assets, increases liabilities

increases assets, increases owner’s equity. 

Revenues are reported when

a contract is signed 

cash is received from the customer 

work is completed on the job

work is begun on the job 

Which of the following groups are considered to be internal users of accounting information?  

Government and banks

Employees and customers 

Customers and vendors 

Employees and managers 

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Question 1 of 20

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