Accounting Quiz_Chapter 1_IBT_MCU

Accounting is an information and measurement system that identifies, records, and communicates an organization's business activities.

• true

• false

Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually or electronically. This is just one part of accounting.

• true

• false

Internal users of accounting information do not directly run the organization and have limited access to its accounting information.

• true

• false

External users include lenders, shareholders, customers, and regulators.

• true

• false

Which of the following is not true regarding ethics:

• Ethics are beliefs that distinguish right from wrong.

• Good ethics are good business.

• Ethics do not affect the operations or outcome of a company.

• Are critical in accounting.

• Ethics are accepted standards of good and bad behavior.

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

• Assets increase $1,300 and liabilities decrease $1,300.

• One asset increases $1,300 and another asset decreases $1,300, causing no effect.

• Assets decrease $1,300 and equity decreases $1,300.

• Assets decrease $1,300 and equity increases $1,300.

• Assets increase $1,300 and liabilities increase $1,300.

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

• Assets would have increased $55,000.

• Assets would have decreased $55,000.

• Assets would have increased $93,000.

• Assets would have decreased $93,000.

• None of the above.

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

• Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000.

• Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000.

• Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.

• There would be no effect on the accounts because the accounts are affected by the same amount.

• Assets would increase $38,000 and liabilities would decrease $38,000.

An accounting system captures relevant data about transactions and then classifies, records, and reports data.

• true

• false

The cost-benefit constraint says that information disclosed must have benefits to the user that are greater than the costs of providing it.

• true

• false