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WorksheetsAccounting - Chapter 1 Review
Total questions: 56
Worksheet time: 14hrs 0mins
Name
Class
Date
1.
Accounting is an information and measurement system that does all of the following except:
a)
B) Records business activities.
b)
C) Communicates business activities.
c)
D) Eliminates the need for interpreting financial data.
d)
E) Helps people make better decisions.
2.
Technology:
a)
B) Has not improved the clerical accuracy of accounting.
b)
C) Reduces the time, effort and cost of recordkeeping.
c)
D) In accounting has replaced the need for decision makers.
d)
E) In accounting is only available to large corporations.
3.
The primary objective of financial accounting is to:
a)
B) Provide accounting information that serves external users.
b)
C) Monitor and control company activities.
c)
D) Provide information on both the costs and benefits of looking after products and services.
d)
E) Know what, when, and how much product to produce.
4.
The area of accounting aimed at serving the decision making needs of internal users is:
a)
B) Managerial accounting.
b)
C) External auditing.
c)
D) SEC reporting.
d)
E) Bookkeeping.
5.
External users of accounting information include all of the following except:
a)
B) Customers.
b)
C) Purchasing managers.
c)
D) Government regulators.
d)
E) Creditors.
6.
A corporation is:
a)
B) Controlled by the FASB.
b)
C) Not responsible for its own acts and own debts.
c)
D) The same as a limited liability partnership.
d)
E) Not subject to double taxation.
7.
A limited partnership:
a)
B) Is subject to double taxation.
b)
C) Has owners called stockholders.
c)
D) Is the same as a corporation.
d)
E) May only have two partners
8.
A partnership:
a)
B) Has unlimited liability for its partners.
b)
C) Has to have a written agreement in order to be legal.
c)
D) Is a legal organization separate from its owners.
d)
E) Has owners called shareholders.
9.
If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:
a)
B) One asset increases $1,300 and another asset decreases $1,300, causing no effect.
b)
C) Assets decrease $1,300 and equity decreases $1,300.
c)
D) Assets decrease $1,300 and equity increases $1,300.
d)
E) Assets increase $1,300 and liabilities increase $1,300.
10.
If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:
a)
B) Assets increase $12,000 and liabilities decrease $12,000.
b)
C) Assets increase $12,000 and liabilities increase $12,000.
c)
D) Liabilities increase $12,000 and equity decreases $12,000.
d)
E) Assets increase $12,000 and equity increases $12,000.
11.
If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:
a)
B) Equity decreases $4,500 and liabilities increase $4,500.
b)
C) Liabilities decrease $4,500 and assets increase $4,500.
c)
D) Assets increase $4,500 and liabilities increase $4,500.
d)
E) Equity increases $4,500 and liabilities decrease $4,500.
12.
An example of a financing activity is:
a)
B) Obtaining a long-term loan.
b)
C) Buying office equipment.
c)
D) Selling inventory.
d)
E) Buying land.
13.
An example of an operating activity is:
a)
B) Purchasing office equipment.
b)
C) Borrowing money from a bank.
c)
D) Selling stock.
d)
E) Paying off a loan.
14.
An example of an investing activity is:
a)
B) Withdrawals by the owner.
b)
C) Purchase of land.
c)
D) Selling inventory.
d)
E) Contribution from owner.
15.
Net Income:
a)
B) Represents the amount of assets owners put into a business.
b)
C) Equals assets minus liabilities.
c)
D) Is the excess of revenues over expenses.
d)
E) Represents owners' claims against assets.
16.
If equity is $300,000 and liabilities are $192,000, then assets equal:
a)
B) $192,000.
b)
C) $300,000.
c)
D) $492,000.
d)
E) $792,000.
17.
Resources a company owns or controls that are expected to yield future benefits are:
a)
B) Revenues.
b)
C) Liabilities.
c)
D) Owner's Equity.
d)
E) Expenses.
18.
Increases in equity from a company's sales of products or services are:
a)
B) Revenues.
b)
C) Liabilities.
c)
D) Owner's Equity.
d)
E) Expenses.
19.
The difference between a company's assets and its liabilities, or net assets is:
a)
B) Expense.
b)
C) Equity.
c)
D) Revenue.
d)
E) Net loss.
20.
Creditors' claims on the assets of a company are called:
a)
B) Expenses.
b)
C) Revenues.
c)
D) Equity.
d)
E) Liabilities.
21.
Decreases in equity that represent costs of providing products or services to customers, used to earn revenues are called:
a)
B) Equity.
b)
C) Withdrawals.
c)
D) Expenses.
d)
E) Owner's Investment.
22.
The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:
a)
B) Accounting equation.
b)
C) Business equation.
c)
D) Return on equity ratio.
d)
E) Net income.
23.
Revenues are:
a)
B) The excess of expenses over assets.
b)
C) Resources owned or controlled by a company.
c)
D) The increase in equity from a company's sales of products and services.
d)
E) The costs of assets or services used.
24.
If assets are $99,000 and liabilities are $32,000, then equity equals:
a)
B) $67,000.
b)
C) $99,000.
c)
D) $131,000.
d)
E) $198,000.
25.
When expenses exceed revenues, the resulting change in equity is called:
a)
B) Negative equity.
b)
C) Net loss.
c)
D) Net income.
d)
E) A liability.
26.
A resource that the owner takes from the company is called a(n):
a)
B) Withdrawal.
b)
C) Expense.
c)
D) Contribution.
d)
E) Investment.
27.
The assets of a company total $700,000; the liabilities, $200,000. What are the net assets?
a)
B) $700,000.
b)
C) $500,000.
c)
D) $200,000.
d)
E) It is impossible to determine unless the amount of this owners' investment is known.
28.
Assets created by selling goods and services on credit are:
a)
B) Accounts receivable.
b)
C) Liabilities.
c)
D) Expenses.
d)
E) Equity.
29.
Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
a)
B) Assets, $30,000 decrease; liabilities, $30,000 decrease.
b)
C) Assets, $30,000 decrease; liabilities, $30,000 increase.
c)
D) Liabilities, $30,000 decrease; equity, $30,000 increase.
d)
E) Assets, $30,000 decrease; equity $30,000 decrease.
30.
If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:
a)
B) Accounts payable increases $10,000.
b)
C) Cash increases $10,000.
c)
D) Revenue increases $10,000.
d)
E) Revenue decreases $10,000
31.
Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?
a)
B) Assets increase by $75,000 and expenses decrease by $75,000.
b)
C) Liabilities increase by $75,000 and expenses decrease by $75,000.
c)
D) Assets decrease by $75,000 and expenses decrease by $75,000.
d)
E) Assets increase by $75,000 and liabilities increase by $75,000.
32.
If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:
a)
B) Decreased $45,000.
b)
C) Increased $30,000.
c)
D) Increased $45,000.
d)
E) Increased $105,000.
33.
If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:
a)
B) Decreased $22,000.
b)
C) Increased $89,000.
c)
D) Decreased $156,000.
d)
E) Increased $156,000.
34.
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?
a)
B) Assets would have decreased $55,000.
b)
C) Assets would have increased $19,000.
c)
D) Assets would have decreased $19,000.
d)
E) None of the above.
35.
If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?
a)
B) Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000.
b)
C) Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.
c)
D) There would be no effect on the accounts because the accounts are affected by the same amount.
d)
E) Assets would increase $38,000 and liabilities would decrease $38,000.
36.
If assets are $365,000 and equity is $120,000, then liabilities are:
a)
B) $245,000.
b)
C) $365,000.
c)
D) $485,000.
d)
E) $610,000.
37.
Rushing had income of $150 million and average invested assets of $1,800 million. Its return on assets is:
a)
B) 83.3%.
b)
C) 12%.
c)
D) 120%.
d)
E) 16.7%.
38.
Cage Company had income of $350 million and average invested assets of $2,000 million. Its return on assets (ROA) is:
a)
B) 35%.
b)
C) 17.5%.
c)
D) 5.7%.
d)
E) 3.5%.
39.
Speedy has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.
a)
B) 8.5%.
b)
C) 9.5%.
c)
D) 11.8%.
d)
E) 13.0%.
40.
Chou Co. has a net income of $43,000, assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000. Compute its return on assets.
a)
B) 17.2%.
b)
C) 14.3%.
c)
D) 15.6%.
d)
E) 1.5%.
41.
The basic financial statements include all of the following except:
a)
B) Income Statement.
b)
C) Statement of Owner's Equity.
c)
D) Statement of Cash Flows.
d)
E) Statement of Changes in Assets.
42.
The statement of owner's equity:
a)
B) Reports how equity changes over a period of time.
b)
C) Reports on cash flows for operating, financing, and investing activities over a period of time.
c)
D) Reports on cash flows for operating, financing, and investing activities at a point in time.
d)
E) Reports on amounts for assets, liabilities, and equity at a point in time.
43.
The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:
a)
B) Statement of owner's equity.
b)
C) Statement of cash flows.
c)
D) Income statement.
d)
E) Statement of financial position.
44.
A balance sheet lists:
a)
B) Only the information about what happened to equity during a time period.
b)
C) The types and amounts of assets, liabilities, and equity of a business as of a specific date.
c)
D) The inflows and outflows of cash during the period.
d)
E) The assets and liabilities of a company but not the owner's equity.
45.
Cash investments by owners are listed on which of the following statements?
a)
B) Income statement.
b)
C) Statement of owner's equity only.
c)
D) Statement of cash flows only.
d)
E) Statement of owner's equity and statement of cash flows.
46.
Accounts payable appear on which of the following statements?
a)
B) Income statement.
b)
C) Statement of owner's equity.
c)
D) Statement of cash flows.
d)
E) Transaction statement.
47.
The income statement reports all of the following except:
a)
B) Expenses incurred by a business.
b)
C) Assets owned by a business.
c)
D) Net income or loss earned by a business.
d)
E) The time period over which the earnings occurred.
48.
Rent expense appears on which of the following statements?
a)
B) Income statement.
b)
C) Statement of owner's equity.
c)
D) Statement of periodic expenses.
d)
E) Statement of cash flows only.
49.
Flitter reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets:
a)
B) 7.0%.
b)
C) 5.8%.
c)
D) 35.0%.
d)
E) 23.3%.
50.
Charlie's Chocolates' owner made investments of $50,000 and withdrawals of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.
a)
B) $83,000.
b)
C) $64,000.
c)
D) $19,000.
d)
E) $49,000.
51.
If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation during the first month?
a)
B) Assets would decrease $700 and equity would increase $700.
b)
C) Assets would increase $700 and equity would decrease $700.
c)
D) Assets would increase $700 and equity would increase $700.
d)
E) Liabilities would decrease $700 and equity would increase $700.
52.
All of the following are classified as assets except:
a)
B) Supplies.
b)
C) Equipment.
c)
D) Accounts Payable.
d)
E) Land.
53.
All of the following are classified as liabilities except:
a)
B) Notes Payable.
b)
C) Wages Payable.
c)
D) Accounts Payable.
d)
E) Taxes Payable.
54.
All of the following are classified as assets except:
a)
B) Accounts Receivable.
b)
C) Cash.
c)
D) Supplies.
d)
E) Prepaid Insurance.
55.
Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?
a)
B) Assets would decrease $2,000 and equity would decrease $2,000.
b)
C) Assets would increase $2,000 and equity would increase $2,000.
c)
D) Assets would increase $2,000 and liabilities would increase $2,000.
d)
E) Liabilities would decrease $2,000 and equity would increase $2,000.
56.
Which of the following accounts is not included in the asset section of the balance sheet?
a)
B) Accounts receivable.
b)
C) Supplies.
c)
D) Land.
d)
E) Services revenue.
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