The Accounting Equation is:

• Assets + Liabilities = Owner’s Equity.

• Assets = Liabilities – Owner’s Equity.

• Assets = Liabilities + Owner’s Equity.

• Assets = Liabilities x Owner’s Equity.

Which item is not an asset?

• Cash

• Accounts Payable

• Accounts Receivable

• Supplies

Given that total liabilities decreased by $75,000 and total owner’s equity increased by $90,000
during the same accounting time period what is the net effect on total assets during this period?

• $15,000 increase

• $15,000 decrease

• $90,000 increase

• $90,000 decrease

1. Which of the following qualitative characteristic mandates provided below is complete, free from material error or bias and prudent?

• 1. Understandability

• 1. Comparability

• 1. Relevance

• 1. Reliability

1. Which financial statement formula is the same as the accounting equation?

• Balance Sheet

• Income Statement

• Statement of Changes in Equity

• Statement of Cash Flow

1. The Accrual Basis Assumption allows one to:

• Recognize revenue only when cash is received
• Accrue expenses only when cash is paid
• Recognize revenue and accrue expenses based on cash transactions
• both Recognize revenue only when cash is received and Accrue expenses only when cash is paid

7. Which financial statement reports on the revenues and expenses during a specified period of time?

• 7. A. Income Statement

• 7. B. Statement of Changes in Equity

• 7. C. Balance Sheet

• 7. D. Statement of Cash Flows

7. Mr. Ronald Smith is the owner of several small businesses. He has decided to save money during his initial years of operation by not hiring a professional accountant. He has one journal and logging book where he intermingles the transactions of all of his businesses to find the net effect of his entrepreneurship. Which qualitative characteristic, constraint or assumption does this violate?

• 7. A. Accrual Basis Assumption

• 7. B. Going Concern Assumption

• 7. C. Relevance Qualitative Characteristic

• 7. D. Reliability Qualitative Characteristic

7. Listed below are the account balances of the Arthur Frank entity:

8. Total Assets are:

• A. $100,000.

• B. $338,000.

• C. $278,000.

• D. $213,000.

Listed below are the account balances of the Arthur Frank entity:

The Net Income is:

• A. $137,000.

• B. $250,000.

• C. $363,000.

• D. $150,000.