Accounting, 25th Edition solutions manual and test bank by Carl S. Warren | James M. Reeve | Jonathan Duchac

Accounting, 25th Edition solutions manual and test bank by   Carl S. Warren | James M. Reeve | Jonathan Duchac 

1. Chapter 1—Introduction to Accounting and Business Question TF #1 (1.0 point)
The main objective of a not-for-profit business is not to make a profit.

a. True

*b. False

2. Chapter 1—Introduction to Accounting and Business Question TF #2 (1.0 point)
An example of an external user of accounting information is the federal government.

*a. True

b. False

3. Chapter 1—Introduction to Accounting and Business Question TF #3 (1.0 point)
A corporation is a business that is legally separate and distinct from its owners.

*a. True

b. False

4. Chapter 1—Introduction to Accounting and Business Question TF #4 (1.0 point)
About 90% of the businesses in the United States are organized as corporations.

a. True

*b. False

5. Chapter 1—Introduction to Accounting and Business Question TF #5 (1.0 point)
The role of accounting is to provide many different users with financial information to make economic decisions.

*a. True

b. False

6. Chapter 1—Introduction to Accounting and Business Question TF #6 (1.0 point)
Proprietorships are owned by one owner and provide only services to their customers.

a. True

*b. False

7. Chapter 1—Introduction to Accounting and Business Question TF #7 (1.0 point)
Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

a. True

*b. False

8. Chapter 1—Introduction to Accounting and Business Question TF #8 (1.0 point)
Accounting information users need reports about the economic activities and condition of businesses.

*a. True

b. False

9. Chapter 1—Introduction to Accounting and Business Question TF #9 (1.0 point)
Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

a. True

*b. False

10. Chapter 1—Introduction to Accounting and Business Question TF 2 (1.0 point)
The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

a. True

*b. False

11. Chapter 1—Introduction to Accounting and Business Question TF 3 (1.0 point)
An account receivable is typically classified as a revenue.

a. True

*b. False

12. Chapter 1—Introduction to Accounting and Business Question TF 4 (1.0 point)
Managerial accounting information is used by external and internal users equally.

a. True

*b. False

13. Chapter 1—Introduction to Accounting and Business Question TF 5 (1.0 point)
Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

*a. True

b. False

14. Chapter 1—Introduction to Accounting and Business Question TF 6 (1.0 point)
Proper ethical conduct implies that you only consider what's in your best interest.

a. True

*b. False

15. Chapter 1—Introduction to Accounting and Business Question TF 7 (1.0 point)
Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

*a. True

b. False

16. Chapter 1—Introduction to Accounting and Business Question TF 8 (1.0 point)
Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

a. True

*b. False

17. Chapter 1—Introduction to Accounting and Business Question TF 9 (1.0 point)
A business is an organization in where basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

*a. True

b. False

18. Chapter 1—Introduction to Accounting and Business Question TF 10 (1.0 point)
The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles.

*a. True

b. False

19. Chapter 1—Introduction to Accounting and Business Question TF 11 (1.0 point)
The cost concept is the basis for entering the exchange price into the accounting records.

*a. True

b. False

20. Chapter 1—Introduction to Accounting and Business Question TF 12 (1.0 point)
The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

*a. True

b. False

21. Chapter 1—Introduction to Accounting and Business Question TF 13 (1.0 point)
If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.

a. True

*b. False

22. Chapter 1—Introduction to Accounting and Business Question TF 14 (1.0 point)
Generally accepted accounting principles regulate how and what financial information is reported by businesses.

*a. True

b. False

23. Chapter 1—Introduction to Accounting and Business Question TF 15 (1.0 point)
The accounting equation can be expressed as Assets - Liabilities = Owner's Equity.

*a. True

b. False

24. Chapter 1—Introduction to Accounting and Business Question TF 16 (1.0 point)
The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

*a. True

b. False

25. Chapter 1—Introduction to Accounting and Business Question TF 17 (1.0 point)
The owner’s rights to the assets rank ahead of the creditors' rights to the assets.

a. True

*b. False

26. Chapter 1—Introduction to Accounting and Business Question TF 18 (1.0 point)
If the liabilities owed by a business total $300,000 and owners equity is equal to $300,000, then the assets also total $300,000.

a. True

*b. False

27. Chapter 1—Introduction to Accounting and Business Question TF 19 (1.0 point)
If total assets decreased by $30,000 during a specific period and owner's equity decreased by $35,000 during the same period, the period's change in total liabilities was an $65,000 increase.

a. True

*b. False

28. Chapter 1—Introduction to Accounting and Business Question TF 20 (1.0 point)
If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total owner's equity was a $200,000 increase.

*a. True

b. False

29. Chapter 1—Introduction to Accounting and Business Question TF 21 (1.0 point)
If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash and the owner invested $10,000 in cash, the capital of the owner increased by $40,000.

*a. True

b. False

30. Chapter 1—Introduction to Accounting and Business Question TF 22 (1.0 point)
An account receivable is a claim against a customer arising from a sale on account.

*a. True

b. False

31. Chapter 1—Introduction to Accounting and Business Question TF 23 (1.0 point)
Paying an account payable increases liabilities and decreases assets.

a. True

*b. False

32. Chapter 1—Introduction to Accounting and Business Question TF 24 (1.0 point)
Receiving payments on an account receivable increases both equity and assets.

a. True

*b. False

33. Chapter 1—Introduction to Accounting and Business Question TF 25 (1.0 point)
Cash withdrawals by owners decrease assets and increase equity.

a. True

*b. False

34. Chapter 1—Introduction to Accounting and Business Question TF 26 (1.0 point)
Purchasing supplies on account increases liabilities and decreases equity.

a. True

*b. False

35. Chapter 1—Introduction to Accounting and Business Question TF 27 (1.0 point)
Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.

a. True

*b. False

36. Chapter 1—Introduction to Accounting and Business Question TF 28 (1.0 point)
Revenue is earned only when money is received.

a. True

*b. False

37. Chapter 1—Introduction to Accounting and Business Question TF 29 (1.0 point)
Expenses are assets that are used up during the process of earning revenue.

*a. True

b. False

38. Chapter 1—Introduction to Accounting and Business Question TF 30 (1.0 point)
The excess of revenue over the expenses incurred in earning the revenue is called capital.

a. True

*b. False

39. Chapter 1—Introduction to Accounting and Business Question TF 31 (1.0 point)
The principal financial statements of a proprietorship are the income statement, statement of owner's equity, and the balance sheet.

a. True

*b. False

40. Chapter 1—Introduction to Accounting and Business Question TF 32 (1.0 point)
An income statement is a summary of the revenues and expenses of a business as of a specific date.

a. True

*b. False

41. Chapter 1—Introduction to Accounting and Business Question TF 33 (1.0 point)
A statement of owner's equity reports the changes in the owner's equity for a period of time.

*a. True

b. False

42. Chapter 1—Introduction to Accounting and Business Question TF 34 (1.0 point)
The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

a. True

*b. False

43. Chapter 1—Introduction to Accounting and Business Question TF 35 (1.0 point)
The financial statements of a proprietorship should include the owner's personal assets and liabilities.

a. True

*b. False

44. Chapter 1—Introduction to Accounting and Business Question TF 36 (1.0 point)
The balance sheet represents the accounting equation.

*a. True

b. False

45. Chapter 1—Introduction to Accounting and Business Question TF 37 (1.0 point)
An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

a. True

*b. False

46. Chapter 1—Introduction to Accounting and Business Question TF 38 (1.0 point)
No significant differences exist between the accounting standards issued by the FASB and the IASB.

a. True

*b. False

47. Chapter 1—Introduction to Accounting and Business Question TF 39 (1.0 point)
The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

*a. True

b. False

48. Chapter 1—Introduction to Accounting and Business Question TF 40 (1.0 point)
The main objective for all business is to maximize unrealized profits.

a. True

*b. False

49. Chapter 1—Introduction to Accounting and Business Question TF 41 (1.0 point)
The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

*a. True

b. False

50. Chapter 1—Introduction to Accounting and Business Question TF 42 (1.0 point)
Net income and net profit do not mean the same thing.

a. True

*b. False

51. Chapter 1—Introduction to Accounting and Business Question MA #1 (16.0 points)
Match each transactions with its effect on the accounting equation. Each letter may be used more than once.Received cash for services providedReceived utility bill to be paid next monthInvestment of land by ownerPaid part of an amount owed to a creditorPaid cash for the purchase of a one year insurance policy Received payment from a customer on accountCash withdrawal by ownerProvided a service to a customer on accountPurchased supplies on creditPaid wagesCash investment by ownerBorrowed money from a bankPurchased equipment for cashReceived cash for providing services to customersUsed up supplies that were already on handIncrease assets, increase owner’s equity Increase liabilities, decrease owner’s equity Increase assets, increase owner’s equity Decrease assets, decrease liabilities No effect No effect Decrease assets, decrease owner’s equity Increase assets, increase owner’s equity Increase assets, increase liabilities Decrease assets, decrease owner’s equity Increase assets, increase owner’s equity Increase assets, increase liabilities No effect Increase assets, increase owner’s equity Decrease assets, decrease owner’s equity

[a] 1. Received cash for services provided

[b] 2. Received utility bill to be paid next month

[c] 3. Investment of land by owner

[d] 4. Paid part of an amount owed to a creditor

[e] 5. Paid cash for the purchase of a one year insurance policy

[f] 6. Received payment from a customer on account

[g] 7. Cash withdrawal by owner

[h] 8. Provided a service to a customer on account

[i] 9. Purchased supplies on credit

[j] 10. Paid wages

[k] 11. Cash investment by owner

[l] 12. Borrowed money from a bank

[m] 13. Purchased equipment for cash

[n] 14. Received cash for providing services to customers

[o] 15. Used up supplies that were already on hand

a. Increase assets, increase owner’s equity

b. Increase liabilities, decrease owner’s equity

c. Increase assets, increase owner’s equity

d. Decrease assets, decrease liabilities

e. No effect

f. No effect

g. Decrease assets, decrease owner’s equity

h. Increase assets, increase owner’s equity

i. Increase assets, increase liabilities

j. Decrease assets, decrease owner’s equity

k. Increase assets, increase owner’s equity

l. Increase assets, increase liabilities

m. No effect

n. Increase assets, increase owner’s equity

o. Decrease assets, decrease owner’s equity

52. Chapter 1—Introduction to Accounting and Business Question MA 2 (11.0 points)
Match the following business types with each business listed below.Each may be used more than once.A tax preparation firmA law firmA health club and spaAn automobile dealerA book publisherA hospitalA supermarketA modular homebuilderA men’s clothing storeA dressmaking companyService firm Service firm Service firm Merchandising firm Manufacturing firm Service firm Merchandising firm Manufacturing firm Merchandising firm Manufacturing firm

[a] 1. A tax preparation firm

[b] 2. A law firm

[c] 3. A health club and spa

[d] 4. An automobile dealer

[e] 5. A book publisher

[f] 6. A hospital

[g] 7. A supermarket

[h] 8. A modular homebuilder

[i] 9. A men’s clothing store

[j] 10. A dressmaking company

a. Service firm

b. Service firm

c. Service firm

d. Merchandising firm

e. Manufacturing firm

f. Service firm

g. Merchandising firm

h. Manufacturing firm

i. Merchandising firm

j. Manufacturing firm

53. Chapter 1—Introduction to Accounting and Business Question MA #2 (10.0 points)
Match the following characteristics with the  form of business entity that best describes it. Each may be used more than once.Comprises 70% of business entities in the United StatesGenerates 90% of business revenuesOwned by two or more individualsOrganized as a separate legal taxable entity Easy and cheap to organizeOften used as an alternative to a partnershipUsed by large businessHas the ability to obtain large amounts of resources Offers tax and legal liability advantages for ownersProprietorship Corporation Partnership Corporation Proprietorship Limited liability company (LLC) Corporation Corporation Limited liability company (LLC)

[a] 1. Comprises 70% of business entities in the United States

[b] 2. Generates 90% of business revenues

[c] 3. Owned by two or more individuals

[d] 4. Organized as a separate legal taxable entity

[e] 5. Easy and cheap to organize

[f] 6. Often used as an alternative to a partnership

[g] 7. Used by large business

[h] 8. Has the ability to obtain large amounts of resources

[i] 9. Offers tax and legal liability advantages for owners

a. Proprietorship

b. Corporation

c. Partnership

d. Corporation

e. Proprietorship

f. Limited liability company (LLC)

g. Corporation

h. Corporation

i. Limited liability company (LLC)

54. Chapter 1—Introduction to Accounting and Business Question MA #3 (8.0 points)
Match the following characteristics with the  financial statement it describes it. Each may be used more than once.Reports as of a specific dateThe first statement preparedHas three sections: operating, investing and financingReports only revenues and expensesThe second statement preparedA formal presentation of the accounting equationThe connecting link between the income statement and balance sheetBalance Sheet Income Statement Statement of  Cash Flows Income Statement Statement of Owner’s Equity Balance Sheet Statement of Owner’s Equity

[a] 1. Reports as of a specific date

[b] 2. The first statement prepared

[c] 3. Has three sections: operating, investing and financing

[d] 4. Reports only revenues and expenses

[e] 5. The second statement prepared

[f] 6. A formal presentation of the accounting equation

[g] 7. The connecting link between the income statement and balance sheet

a. Balance Sheet

b. Income Statement

c. Statement of  Cash Flows

d. Income Statement

e. Statement of Owner’s Equity

f. Balance Sheet

g. Statement of Owner’s Equity

55. Chapter 1—Introduction to Accounting and Business Question MC #1 (1.0 point)
Profit is the difference between

a. assets and liabilities

b. the incoming cash and outgoing cash

c. the assets purchased with cash contributed by the owner and the cash spent to operate the business

*d. the amounts received from customers for goods or services and the amounts paid for
the inputs used to provide the goods or services.

56. Chapter 1—Introduction to Accounting and Business Question MC #2 (1.0 point)
Most businesses in the United States are

*a. proprietorships

b. partnerships

c. corporations

d. co-operatives

57. Chapter 1—Introduction to Accounting and Business Question MC #3 (1.0 point)
Which of the items below is not a business entity?

*a. entrepreneurship

b. proprietorship

c. partnership

d. corporation

58. Chapter 1—Introduction to Accounting and Business Question MC #4 (1.0 point)
An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

a. proprietorship

*b. corporation

c. partnership

d. governmental unit

59. Chapter 1—Introduction to Accounting and Business Question MC #5 (1.0 point)
Financial reports are used by

a. management

b. creditors

c. investors

*d. all are correct

60. Chapter 1—Introduction to Accounting and Business Question MC #6 (1.0 point)
Which of the following best describes accounting?

a. records economic data but does not communicate the data to users according to any specific rules.

*b. is an information system that provides reports to users regarding economic activities and condition of a business.

c. is of no use by individuals outside of the business.

d. is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements.

61. Chapter 1—Introduction to Accounting and Business Question MC #7 (1.0 point)
Two common areas of accounting that respectively provide information to internal and external users are:

a. forensic accounting and financial accounting

*b. managerial accounting and financial accounting

c. managerial accounting and environmental accounting

d. financial accounting and tax accounting systems

62. Chapter 1—Introduction to Accounting and Business Question MC #8 (1.0 point)
Which type of accountant typically practices as an individual or as a member of a public accounting firm?

*a. Certified Public Accountant

b. Certified Payroll Professional

c. Certified Internal Auditor

d. Certified Management Accountant

63. Chapter 1—Introduction to Accounting and Business Question MC #9 (1.0 point)
All of the following are general-purpose financial statements except:

a. balance sheet

b. income statement

c. statement of owner’s equity

*d. cash budget

64. Chapter 1—Introduction to Accounting and Business Question MC 2 (1.0 point)
Which of the following is a manufacturing business?

a. Amazon.com.

b. Wal-Mart.

*c. Ford Motors.

d. Delta Airlines

65. Chapter 1—Introduction to Accounting and Business Question MC 3 (1.0 point)
Which of the following group of companies are all examples of a merchandising business?

a. Delta Airlines, Marriott, Gap

b. Gap, Amazon, NIKE

c. GameStop, Sony, Dell

*d. GameStop, Best Buy, Gap

66. Chapter 1—Introduction to Accounting and Business Question MC 4 (1.0 point)
Which of the following would not normally operate as a service business?

a. Pet Groomers

*b. Grocers

c. Lawn Care Company

d. Styling Salon

67. Chapter 1—Introduction to Accounting and Business Question MC 5 (1.0 point)
Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

a. Partnership

*b. Corporation

c. Proprietorship

d. None are correct.

68. Chapter 1—Introduction to Accounting and Business Question MC 6 (1.0 point)
Which of the following is true in regards to a Limited Liability Company?

a. Makes up 10% of business organizations in the United States.

b. Combines the attributes of a partnership and a corporation.

c. Provides tax and liability advantages to the owners.

*d. All are correct.

69. Chapter 1—Introduction to Accounting and Business Question MC 7 (1.0 point)
On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller’s counteroffer of $125,000. On June 20, the land was assessed at a value of $95,000 for property tax purposes. On August 4, Gregg Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repair Service’s records?

a. $115,000

b. $95,000

c. $140,000

*d. $125,000

70. Chapter 1—Introduction to Accounting and Business Question MC 8 (1.0 point)
Which of the following groups are considered to be internal users of accounting information?

a. Employees and customers

b. Customers and vendors

*c. Employees and managers

d. Government and banks

71. Chapter 1—Introduction to Accounting and Business Question MC 9 (1.0 point)
The following are examples of external users of accounting information except:

a. government

b. customers

c. creditors

*d. all of the above

72. Chapter 1—Introduction to Accounting and Business Question MC 10 (1.0 point)
Due to various fraudulent business practices and accounting coverups in the early 2000’s, Congress enacted the Sarbanes-Oxley Act of 2002.  The Act was responsible for establishing a new oversight board for public accountants called the

a. Generally Accepted Accounting Practices for Public Accountants Board.

*b. Public Company Accounting Oversight Board.

c. Congressional Accounting Oversight Board.

d. None are correct.

73. Chapter 1—Introduction to Accounting and Business Question MC 11 (1.0 point)
Which of the following is the best description of accounting’s role in business?

a. Accounting provides stockholders with information regarding the market value of the company’s stocks.

*b. Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company.

c. Accounting helps in decreasing the credit risk of the company.

d. Accounting is not responsible for providing any form of information to users.  That is the role of the Information Systems Department.

74. Chapter 1—Introduction to Accounting and Business Question MC 12 (1.0 point)
Managerial accountants would be responsible for providing the following information:

a. Tax reports to government agencies.

b. Profit reports to owners and management.

*c. Expansion of a product line report to management.

d. Consumer reports to customers.

75. Chapter 1—Introduction to Accounting and Business Question MC 13 (1.0 point)
Which of the following is not a certification for accountants?

a. CIA

b. CMA

c. CISA

*d. All are certifications.

76. Chapter 1—Introduction to Accounting and Business Question MC 14 (1.0 point)
Which of the following is not a characteristic of a corporation?

a. Corporations are organized as a separate legal taxable entity

b. Ownership is divided into shares of stock.

c. Corporations experience an ease in obtaining large amounts of resources by issuing stock.

*d. A corporation’s resources are limited to their individual owners’ resources.

77. Chapter 1—Introduction to Accounting and Business Question MC 15 (1.0 point)
Which of the following is not a role of accounting in business?

a. To provide reports to users about the economic activities and conditions of a business.

*b. To personally guarantee loans of the business.

c. To provide information to other users to determine the economic performance and condition of the business.

d. To assess the various informational needs of users and design its accounting system to meet those needs.

78. Chapter 1—Introduction to Accounting and Business Question MC 16 (1.0 point)
Which of the following are guidelines for behaving ethically?

	I.	Identify the consequences of a decision and its effect on others.
	II.	Consider your obligations and responsibilities to those affected by the decision.
	III.	Identify your decision based on personal standards of honesty and fairness.

a. I and II.

b. II and III.

c. I and III.

*d. I, II, and III.

79. Chapter 1—Introduction to Accounting and Business Question MC 17 (1.0 point)
The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit of the client?

a. Indefinitely

*b. One year

c. Two years

d. There is no such prohibition.

80. Chapter 1—Introduction to Accounting and Business Question MC 18 (1.0 point)
The initials GAAP stand for

a. General Accounting Procedures

b. Generally Accepted Plans

*c. Generally Accepted Accounting Principles

d. Generally Accepted Accounting Practices

81. Chapter 1—Introduction to Accounting and Business Question MC 19 (1.0 point)
Within the United States, the dominant body in the primary development of accounting principles is the

a. American Institute of Certified Public Accountants (AICPA)

b. American Accounting Association (AAA)

*c. Financial Accounting Standards Board (FASB)

d. Institute of Management Accountants (IMA)

82. Chapter 1—Introduction to Accounting and Business Question MC 20 (1.0 point)
The business entity concept means that

a. the owner is part of the business entity

b. an entity is organized according to state or federal statutes

c. an entity is organized according to the rules set by the FASB

*d. the entity is an individual economic unit for which data are recorded, analyzed, and reported

83. Chapter 1—Introduction to Accounting and Business Question MC 21 (1.0 point)
For accounting purposes, the business entity should be considered separate from its owners if the entity is

a. a corporation

b. a proprietorship

c. a partnership

*d. all of the above

84. Chapter 1—Introduction to Accounting and Business Question MC 22 (1.0 point)
The objectivity concept requires that

a. business transactions must be consistent with the objectives of the entity

b. the Financial Accounting Standards Board must be fair and unbiased in its deliberations over new accounting standards

c. accounting principles must meet the objectives of the Security and Exchange Commission

*d. amounts recorded in the financial statements must be based on independently verifiable evidence

85. Chapter 1—Introduction to Accounting and Business Question MC 23 (1.0 point)
Denzel Jones owns and operates Crystal Cleaning Company.  Recently, Denzel withdrew $10,000 from Crystal Cleaning, and he contributed $6,000, in his name, to Habitat for Humanity.  The contribution of the $6,000 should be recorded on the accounting records of which of the following entities?

a. Crystal Cleaning and Habitat for Humanity

*b. Denzel Jones' personal records and Habitat for Humanity

c. Denzel Jones’ personal records and Crystal Cleaning

d. Denzel Jones’ personal records, Crystal Cleaning, and Habitat for Humanity

86. Chapter 1—Introduction to Accounting and Business Question MC 24 (1.0 point)
Equipment with an estimated market value of $30,000 is offered for sale at $45,000. The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is

a. $30,000

*b. $35,000

c. $15,000

d. $45,000

87. Chapter 1—Introduction to Accounting and Business Question MC 25 (1.0 point)
Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

*a. FASB

b. IRS

c. SEC

d. AICPA

88. Chapter 1—Introduction to Accounting and Business Question MC 26 (1.0 point)
Which of the following concepts relates to separating the reporting of business and personal economic transactions?

a. Cost Concept

b. Unit of Measure Concept

*c. Business Entity Concept

d. Objectivity Concept

89. Chapter 1—Introduction to Accounting and Business Question MC 27 (1.0 point)
Donner Company is selling a piece of land adjacent to their business premises.  An appraisal reported the market value of the land to be $220,000.  The Focus Company initially offered to buy the land for $177,000.  The companies settled on a purchase price of $212,000.  On the same day, another piece of land on the same block sold for $232,000.  Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?

a. $177,000

*b. $212,000

c. $220,000

d. $232,000

90. Chapter 1—Introduction to Accounting and Business Question MC 28 (1.0 point)
Which of the following is not true of accounting principles?

a. Financial accountants follow generally accepted accounting principles (GAAP).

b. Following GAAP allows accounting information users to compare one company to another.

*c. A new accounting principle can be adopted with stockholders approval.

d. The Financial Accounting Standards Board (FASB) has primary responsibility for developing accounting principles.

91. Chapter 1—Introduction to Accounting and Business Question MC 29 (1.0 point)
Assets are

a. always lower than liabilities

b. equal to liabilities less owner’s equity

c. the same as expenses because they are acquired with cash

*d. financed by the owner and/or creditors

92. Chapter 1—Introduction to Accounting and Business Question MC 30 (1.0 point)
Debts owed by a business are referred to as

a. accounts receivables

b. expenses

c. owner’s equity

*d. liabilities

93. Chapter 1—Introduction to Accounting and Business Question MC 31 (1.0 point)
The accounting equation may be expressed as

a. Assets = Equities - Liabilities

b. Assets + Liabilities = Owner's Equity

c. Assets = Revenues less Liabilities

*d. Assets - Liabilities = Owner's Equity

94. Chapter 1—Introduction to Accounting and Business Question MC 32 (1.0 point)
Which of the following is not an asset?

a. Investments

b. Cash

c. Inventory

*d. Owner’s Equity

95. Chapter 1—Introduction to Accounting and Business Question MC 33 (1.0 point)
The assets and liabilities of the company are $128,000 and $84,000, respectively.  Owner’s equity should equal

a. $212,000

*b. $44,000

c. $128,000

d. $84,000

96. Chapter 1—Introduction to Accounting and Business Question MC 34 (1.0 point)
If total liabilities decreased by $46,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is

a. $106,000 increase

*b. $14,000 increase

c. $14,000 decrease

d. $106,000 decrease

97. Chapter 1—Introduction to Accounting and Business Question MC 35 (1.0 point)
Which of the following is not a business transaction?

*a. make a sales offer

b. sell goods for cash

c. receive cash for services to be rendered later

d. pay for supplies

98. Chapter 1—Introduction to Accounting and Business Question MC 36 (1.0 point)
A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

a. increase one asset, decrease another asset

*b. decrease an asset, decrease a liability

c. increase an asset, increase a liability

d. increase an asset, increase owner's equity

99. Chapter 1—Introduction to Accounting and Business Question MC 37 (1.0 point)
Earning revenue

*a. increases assets, increases owner’s equity.

b. increases assets, decreases owner's equity

c. increases one asset, decreases another asset

d. decreases assets, increases liabilities

100. Chapter 1—Introduction to Accounting and Business Question MC 38 (1.0 point)
The monetary value charged to customers for the performance of services sold is called a(n)

a. asset

b. net income

c. capital

*d. revenue

101. Chapter 1—Introduction to Accounting and Business Question MC 39 (1.0 point)
Revenues are reported when

a. a contract is signed

b. cash is received from the customer

c. work is begun on the job

*d. work is completed on the job

102. Chapter 1—Introduction to Accounting and Business Question MC 40 (1.0 point)
Expenses are recorded when

a. cash is paid for services rendered

b. a bill is received in advance of services rendered

*c. assets are used in the process of earning revenue

d. none of these

103. Chapter 1—Introduction to Accounting and Business Question MC 41 (1.0 point)
Goods purchased on account for future use in the business, such as supplies, are called

a. prepaid liabilities

b. revenues

*c. prepaid expenses

d. liabilities

104. Chapter 1—Introduction to Accounting and Business Question MC 42 (1.0 point)
The asset created by a business when it makes a sale on account is termed

a. accounts payable

b. prepaid expense

c. unearned revenue

*d. accounts receivable

105. Chapter 1—Introduction to Accounting and Business Question MC 43 (1.0 point)
The debt created by a business when it makes a purchase on account is referred to as an

*a. account payable

b. account receivable

c. asset

d. expense payable

106. Chapter 1—Introduction to Accounting and Business Question MC 44 (1.0 point)
If total assets decreased by $88,000 during a period of time and owner's equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is

a. $17,000 increase

b. $88,000 decrease

c. $159,000 increase

*d. $159,000 decrease

107. Chapter 1—Introduction to Accounting and Business Question MC 45 (1.0 point)
Owner's withdrawals

a. increase expenses

b. decrease expenses

c. increase cash

*d. decrease owner's equity

108. Chapter 1—Introduction to Accounting and Business Question MC 46 (1.0 point)
How does paying a liability in cash affect the accounting equation?

a. assets increase; liabilities decrease

b. assets increase; liabilities increase

*c. assets decrease; liabilities decrease

d. liabilities decrease; owner's equity increases

109. Chapter 1—Introduction to Accounting and Business Question MC 47 (1.0 point)
How does receiving a bill to be paid next month for services received affect the accounting equation?

a. assets decrease; owner's equity decreases

b. assets increase; liabilities increase

c. liabilities increase; owner's equity increases

*d. liabilities increase; owner's equity decreases

110. Chapter 1—Introduction to Accounting and Business Question MC 48 (1.0 point)
How does the purchase of equipment by signing a note affect the accounting equation?

a. assets increase; assets decrease

b. assets increase; liabilities decrease

*c. assets increase; liabilities increase

d. assets increase; owner's equity increases

111. Chapter 1—Introduction to Accounting and Business Question MC 49 (1.0 point)
Land, originally purchased for $30,000, is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?

a. assets increase $62,000; owner's equity increases $62,000

*b. assets increase $32,000; owner's equity increases $32,000

c. assets increase $62,000; liabilities decrease $30,000; owner's equity increases $32,000

d. assets increase $30,000; no change for liabilities; owner's equity increases $62,000

112. Chapter 1—Introduction to Accounting and Business Question MC 50 (1.0 point)
Allen Marks is the sole owner and operator of Great Marks Company.  As of the end of its accounting period, December 31, 2013, Great Marks Company has assets of $940,000 and liabilities of $300,000.  During 2014, Allen Marks invested an additional $73,000 and withdrew $33,000 from the business. What is the amount of net income during 2014, assuming that as of December 31, 2014, assets were $995,000, and liabilities were $270,000?

*a. $ 45,000

b. $ 50,000

c. $106,000

d. $370,000

113. Chapter 1—Introduction to Accounting and Business Question MC 51 (1.0 point)
Transactions affecting owner's equity include

a. owner's investments and payment of liabilities

*b. owner's investments and owner's withdrawals, revenues, and expenses

c. owner's investments, revenues, expenses, and collection of accounts receivable

d. owner's withdrawals, revenues, expenses, and purchase of supplies on account

114. Chapter 1—Introduction to Accounting and Business Question MC 52 (1.0 point)
Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account.  Identify how the accounting equation will be affected.

a. Increase Assets (Cash) and increase Liabilities (Accounts Payable)

*b. Increase Assets (Cash) and increase Owner’s Equity (Clifford Moore, Capital)

c. Increase Assets (Accounts Receivable) and decrease Liabilities (Accounts Payable)

d. Increase Assets (Cash) and increase Assets (Accounts Receivable)

115. Chapter 1—Introduction to Accounting and Business Question MC 53 (1.0 point)
Gomez Service Company paid their first installment on their Notes Payable in the amount of $2,000.  How will this transaction affect the accounting equation?

a. Increase Liabilities (Notes Payable) and decrease Assets (Cash)

b. Decrease Assets (Cash) and decrease Owner’s equity (Note Payable Expense)

c. Decrease Assets (Cash) and decrease Assets (Notes Receivable)

*d. Decrease Assets (Cash) and decrease Liabilities (Notes Payable)