Accounting - Chapter 1 - Part 1 - Review

Which of the following is not an external user of accounting information?

• Lenders.
• Chief executive officer (CEO).
• Politicians.
• Shareholders.
• Customers.

Which of the following is not classified as a liability?

• Accounts Receivable
• Wages Payable
• Accounts Payable
• Notes Payable
• Taxes Payable

Which of the following is liability account?

• Accounts Payable
• Supplies
• Cash
• Accounts Receivable
• Prepaid Insurance

Which of the following is an internal user of accounting information?

• Customers
• Lenders
• Shareholders
• Human resource manager
• Internal Revenue Service

The assets of a company total $738,000; the liabilities, $219,000. What is the amount of equity?

• It is impossible to determine unless the amount of the owners' investment is known.
• 957000
• 738000
• 519000
• 219000

A partnership:

• Is a separate legal entity from its owners.
• Has owners called shareholders.
• Has unlimited liability for its partners.
• Is also called a sole proprietorship.
• Has an indefinite business life.

Assets created by selling goods and services on credit are:

• Expenses
• Liabilities
• Equity
• Accounts Payable
• Accounts Receivable

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

• Liabilities decrease $30,000; equity increases $30,000.
• Assets decrease $30,000; equity decreases $30,000.
• Assets decrease $30,000; liabilities increase $30,000.
• Assets increase $30,000; equity increases $30,000.
• Assets decrease $30,000; liabilities decrease $30,000.

Which of the following is not an external user of accounting information?

• Shareholders.
• Customers.
• Purchasing managers.
• Government regulators.
• Creditors.

A corporation is:

• A business legally separate from its owners.
• Controlled by the FASB.
• Not responsible for its own acts and own debts
• The same as a limited liability partnership.
• Not subject to double taxation.