An account receivable is a claim against a customer arising from a sale on account.

True

False

A retained earnings statement reports all changes in cash for a period of time.

True

False

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

True

False

The balance sheet represents the accounting equation.

True

False

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

True

False

An example of an external user of accounting information is the federal government.

True

False

Proprietorships are owned by two or more individuals and provide only services to their customers.

True

False

No significant differences exist between the accounting standards issued by the FASB and the IASB.

True

False

Denzel Jones is the major stockholder of Crystal Cleaning Company. Recently, Denzel received $10,000 of dividends from Crystal Cleaning. After receiving the dividends, he contributed $6,000, in his name, to Habitat for Humanity.

The contribution of $6,000 should be recorded on the accounting records of which of the following entities?

A. Denzel Jones' personal records and Habitat for Humanity

B. Crystal Cleaning and Habitat for Humanity

C. Denzel Jones’ personal records and Crystal Cleaning

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

A. Denzel Jones' personal records and Habitat for Humanity

Which of the following concepts relate to separating the reporting of business and personal economic transactions?

A. cost concept

B. objectivity concept

C. unit of measure concept

D. business entity concept

Which of the following groups are considered to be internal users of accounting information?

A. Employees and customers

B. Employees and managers

C. Government and banks

D. Customers and vendors

Cash investments made by stockholders in exchange for capital stock in a business are reported on the statement of cash flows in the

A. supplemental statement

B. operating activities section

C. financing activities section

D. investing activities section

C. financing activities section

Two common areas of accounting that respectively provide information to internal and external users are

A. managerial accounting and financial accounting

B. financial accounting and tax accounting systems

C. forensic accounting and financial accounting

D. managerial accounting and environmental accounting

A. managerial accounting and financial accounting

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

A. the income statement

B. the balance sheet

C. the statement of cash flows

D. the retained earnings statement

Which of the following group of companies are all examples of a merchandising business?

A. GameStop, Best Buy, Gap

B. Delta Airlines, Marriott, Gap

C. GameStop, Sony, Dell

D. Gap, Amazon, NIKE

A. GameStop, Best Buy, Gap

Most businesses in the United States are

A. proprietorships

B. partnerships

C. limited liability companies

D. corporations

Which of the following would not normally operate as a service business?

A. pet groomer

B. supermarket

C. lawn care company

D. styling salon

The objectivity concept requires that

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

accounting standards

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

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

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

How does receiving a bill to be paid next month for services received affect the accounting equation?

A. assets increase; liabilities increase

B. liabilities increase; stockholders’ equity decreases

C. assets decrease; stockholders’ equity decreases

D. liabilities increase; stockholders’ equity increases

If total liabilities decreased by $46,000 during a period of time and stockholders’ 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 decrease

B. $14,000 decrease

C. $106,000 increase

D. $14,000 increase

D. $14,000 increase

stockholders’ equity increase by (+$60,000) - liabilities decreased by (-$46,000) = $14,000 increase

Which of the following is a manufacturing business?

A. Amazon.com.

B. Wal-Mart.

C. Ford Motors.

D. Delta Airlines

How does paying a liability in cash affect the accounting equation?

A. liabilities decrease; stockholders’ equity increases

B. assets decrease; liabilities decrease

C. assets increase; liabilities decrease

D. assets increase; liabilities increase

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

True

False

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

True

False

Expenses are assets that are used up during the process of earning revenue.

True

False

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, then the buyer would record the building at $85,000.

True

False

________ businesses sell products they purchase from other businesses to customers.

Example:

Walmart (general merchandise)

Amazon.com (Internet books, music, videos)

Merchandising Business

_________ businesses change basic inputs into products that are sold to customers.

Example:

Ford Motor Co. (cars, trucks, vans) 

Dell, Inc. (personal computers)

_________  businesses provide services rather than products to customers.

Example:

Delta Air Lines (transportation services)

The Walt Disney Company (entertainment services)

A _______ is a form of business entity that is owned by one

individual.

A _______ is a form of business entity that is owned by two or more individuals.

A _______ is a form of business entity that is organized under state or federal statutes as a separate legal taxable entity.

A _____ is a form entity that combines the attributes of a partnership and a corporation.