Accounting I Exam 1 Review

The accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:

• Time-Period Assumption

• Business Entity Assumption

• Going-Concern Assumption

• Revenue Recognition Principle

• Measurement (cost) principle

Which of the following is a not an asset account?

• Accounts Receivable.

• Supplies.

• Equipment.

• Accounts Payable.

• Land.

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

• Cash was received from providing services to a customer.

• The company paid an amount due on credit.

• Equipment was purchased for cash.

• A utility bill was received for the current month, to be paid in the following month.

• Advertising expense for the month was paid in cash.

Which of the following is not a financial statement?

• Statement of Changes in Assets.

• Statement of Cash Flows.

• Statement of Owner's Equity.

• Income Statement.

• Balance Sheet.

Harley's Hog BBQ owns and operates several barbecue restaurants. In 2019, Harley, the owner, took out a loan for his business in the amount of $100,000. The loan will be completely paid off within 6 months. When preparing the financial statements of the business, Harley opted not to list the loan because it was so close to maturity. Which principle did Harley's Hog BBQ violate?

• cost principle

• full disclosure principle

• revenue recognition principle

• matching

The accounting assumption that a business is expected to survive and operate indefinitely is called a:

• A

  business entity

• capital concern

• charter entitiy

• going concern

Which of the following decreases equity:

• Investing activities.

• Expenses.

• Revenues.

• Accounts receivable.

• Assets.

The full disclosure principle:

• Prescribes that accounting information is based on actual cost.

• Provides guidance on when a company must recognize revenue.

• Prescribes that a company report the details behind financial statements that would impact users' decisions.

• Prescribes that a company record the expenses it incurred to generate the revenue reported.

• Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Revenue is properly recognized:

• When the customer makes an order.

• Only if the transaction creates an account receivable.

• At the end of the accounting period.

• When goods or services are provided to customers and at the amount expected to be received from the customer.

• When cash from a sale is received.

A partnership:

• Is also called a sole proprietorship.

• Has unlimited liability for its partners.

• Has an indefinite business life.

• Is a separate legal entity from its owners.

• Has owners called shareholders.