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Accounting Chapter 1
End-of-Chapter Quiz Questions
| Question | Answer |
|---|---|
| True or False. The organization that formulates generally accepted accounting principles is the Financial Accounting Standards Board. | True |
| True or False. A proprietorship is a business with several owners. | False |
| True or False. Professional accountants are held to a high standard of ethical conduct. | True |
| True or False. Bookkeeping is only a part of accounting. | True |
| The valuation of assets on the balance sheet is generally based on: | Historical Cost |
| The accounting equation can be expressed as: | Assets - Liabilities = Owner's Equity |
| An economic resource that's expected to benefit future operations best describes the: | Nature of an Asset |
| What financial statement covers a period of time? | Income Statement and Statement of Cash Flows |
| How would net income be most likely to affect the accounting equation? | Increase assets and increase stockholders' equity |
| During the year, EcoWash, Inc., has $120,000 in revenues, $50,000 in expenses, and $4,000 in dividend payments. Stockholders' equity changed by: | +$66,000 ($120,000 - $50,000 - $4,000 = $66,000) |
| During the year, EcoWash, Inc., has $120,000 in revenues, $50,000 in expenses, and $4,000 in dividend payments. EcoWash has a net income (or net loss) of: | Net Income of $70,000 ($120,000 - $50,000 = $70,000) |
| Rochester Corporation holds cash of $11,000 and owes $27,000 on accounts payable. Rochester has accounts receivable of $40,000, inventory of $34,000, and land that cost $55,000. How much are Rochester's total assets and liabilities? | Total Assets = $140,000 ($11,000 + $40,000 + $34,000 + $55,000) Liabilities = $27,000 |
| What's one item reported on the balance sheet? | Inventory |
| What's one item reported on the balance sheet? | Retained Earnings |
| What's one item reported on the balance sheet? | Accounts Payable |
| During the year, McKenna Company's stockholders' equity increased from $38,000 to $50,000. McKenna earned net income of $18,000. How much in dividends did McKenna declare during the year? | $6,000 [$38,000 + Net Income ($18,000) - Dividends = $50,000; Dividends = $6,000] |
| Javis Company had total assets of $340,000 and total stockholders' equity of $130,000 at the beginning of the year. During the year assets increased by $70,000 and liabilities increased by $25,000. Stockholders' equity at the end of the year is: | $175,000 Beginning [A=340,000; L+E= 210,000+130,000] Increase [A=70,000; L+E= 25,000+45,000] Ending [A=$410,000; L+E= 235,000+175,000] |
| What is a true statement about International Financial Reporting Standards? | They are converging gradually with U.S. standards |
| What is the most accurate statement regarding ethics as applied to decision making in accounting? | Ethics involves making difficult choices under pressure, and should be kept in mind in making every decision, including those involving accounting. |
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