1.,,,

Which of the following is not a step in the accounting process?

• a. Identification.

• b. Economic entity.

• c. Recording.

• d. Communication

Which of the following statements about users of account-

ing information is incorrect?

• d. Regulatory authorities are internal users.

• c. Present creditors are external users.
  

• b. Taxing authorities are external users.
  

• a. Management is an internal user.
  

The historical cost principle states that:

• 1. assets should be initially recorded at cost and adjusted when

     the fair value changes.

• 1. activities of an entity are to be kept separate and distinct from its owner.

• 1. assets should be recorded at their cost.

• 1. only transaction data capable of being expressed in terms of

     money be included in the accounting records.

The three types of business entities are:

• proprietorships, small businesses, and partnerships.

• roprietorships, partnerships, and corporations.

• financial, manufacturing, and service companies.

• proprietorships, partnerships, and large businesses.

Net income will result during a time period when:

• assets exceed liabilities.

• assets exceed revenues.

• expenses exceed revenues.

• revenues exceed expenses.

As of December 31, 2020, Stoneland AG has assets of €3,500 and equity of €2,000. What are the liabilities for Stoneland AG as of December 31, 2020?

• 1500

• 1000

• 2500

• 2000

Performing services on account will have the following

effects on the components of the basic accounting equation:

• increase assets and decrease equity.
  

• increase assets and increase equity.

• increase assets and increase liabilities.

• increase liabilities and increase equity.

Which of the following events is not recorded in the account-

ing records?

• Equipment is purchased on account.

• An employee is terminated.

• A cash investment is made into the business.

• The company pays a cash dividend.

During 2020, Xia Lin Company’s assets decreased ¥500,000 and its liabilities decreased ¥900,000. Its equity therefore

• increased ¥400,000.

• decreased ¥1,400,000.

• decreased ¥400,000.

• increased ¥1,400,000.

Payment of an account payable affects the components of the accounting equation in the following way.

• 1. decreases assets and increases equity.

• 1. decreases assets and decreases liabilities.

• 1. increases assets and decreases liabilities.

• 1. decreases equity and decreases liabilities.