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| 1 | |
What is a benefit of technology in modern business practice? |
| | A) | It makes up for a lack of understanding of accounting. |
| | B) | It increases the time, effort, and cost of recording transactions. |
| | C) | Although it has not changed the way accountants summarize data, it has changed the way they process and store data. |
| | D) | All of the above. |
| | E) | None of the above. |
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| 2 | |
Which of the following users of accounting information are internal users? |
| | A) | Lenders |
| | B) | Shareholders |
| | C) | Production Managers |
| | D) | Governments |
| | E) | Customers |
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| 3 | |
Certified Public Accountants: |
| | A) | Must meet education and experience requirements and pass an examination. |
| | B) | Are required to exhibit ethical character. |
| | C) | Receive a certificate that denotes their professional standing. |
| | D) | A and C above. |
| | E) | All of the above |
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| 4 | |
Which of the following is true about ethics in accounting? |
| | A) | For information to be useful, it must be trusted. |
| | B) | Ethics are beliefs that distinguish right from wrong. |
| | C) | Ethics are accepted standards of good and bad behavior. |
| | D) | Identifying the proper ethical path is sometimes difficult. |
| | E) | All of the above. |
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| 5 | |
Which form of ownership provides all owners with the least amount of risk to their personal assets? |
| | A) | Sole proprietorship |
| | B) | Limited partnership |
| | C) | Limited liability partnership |
| | D) | Corporation |
| | E) | None of the above |
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| 6 | |
Which the following does not correctly match the accounting principle with its major focus or assumption? |
| | A) | Going-concern assumption - A business has an indefinite life span. |
| | B) | Business entity assumption - A business is distinct from its owners. |
| | C) | Measurement principle – Accounting information is based on actual cost. |
| | D) | Revenue recognition principle – Revenue is recognized (that is, recorded) when cash is received from customers for goods or services provided. |
| | E) | Monetary unit assumption – Transactions and events can be expressed in monetary, or money, units. |
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| 7 | |
The measurement principle means that accounting information is based on actual cost because cost is considered to be: |
| | A) | Objective. |
| | B) | Subjective. |
| | C) | Biased. |
| | D) | B and C above. |
| | E) | All of the above. |
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| 8 | |
Which of the following represent creditors' claim on the assets of a company? |
| | A) | Accounts Receivables |
| | B) | Owner's Equity |
| | C) | Retained Earnings |
| | D) | Liabilities |
| | E) | None of the above |
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| 9 | |
If assets increased by $5,000 and equity increased by $1,000 during the accounting period, then how did liabilities change? |
| | A) | Increased by $6,000 |
| | B) | Increased by $4,000 |
| | C) | Decreased by $4,000 |
| | D) | Decreased by $6,000 |
| | E) | Decreased by $1,000 |
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| 10 | |
The owner of a computer services business was able to acquire a new computer, valued at $5,000, by establishing an account with the computer vendor, Com Pewters Unlimited. There was no down payment. How does this transaction impact the accounting equation? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase equity |
| | D) | Decrease an asset, decrease equity |
| | E) | Increase one asset and decrease another asset |
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| 11 | |
Keith Manich deposited $5,000 in a bank account he established for a pet store that he is going to own and operate as KM's Pets, Incorporated. How does this transaction impact the accounting equation? |
| | A) | Increase an asset and increase a liability |
| | B) | Decrease an asset and decrease a liability |
| | C) | Increase an asset and increase equity |
| | D) | Decrease an asset and decrease equity |
| | E) | Increase one asset and decrease another asset |
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| 12 | |
A local fast-food outlet hired a first-year accounting student to work as its cashier (the person who collects cash from customers). The company pays the student after she works for a week. How does this transaction impact the accounting equation? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase owner's equity |
| | D) | Decrease an asset, decrease owner's equity |
| | E) | Increase one asset and decrease another asset |
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| 13 | |
Cash dividends are declared and paid to the stockholders of the corporation. How does this transaction impact the accounting equation? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase equity |
| | D) | Decrease an asset, decrease equity |
| | E) | Increase one asset and decrease another asset |
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| 14 | |
If the balance of cash is $210,000, the sales revenue totals $500,000, and the net income for the period is $200,000, what is the return on assets (ROA) if the average assets total $800,000? |
| | A) | 15% |
| | B) | 20% |
| | C) | 25% |
| | D) | 40% |
| | E) | None of the above |
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| 15 | |
Which of the following financial statements does not cover a period of time? |
| | A) | Income Statement |
| | B) | Balance sheet |
| | C) | Statement of retained earnings |
| | D) | Statement of cash flows |
| | E) | All of the above |
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