Accounting Chapter One Quiz

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Quizzes Created: 2 | Total Attempts: 319
Questions: 10 | Attempts: 108

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Accounting Chapter One Quiz - Quiz

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Questions and Answers
  • 1. 

    On November 23, Terrier Repair Service extended an offer of $50,000 for land that had been priced for sale at $58,500. On December 2, Terrier Repair Service accepted the seller’s counteroffer of $54,000. On December 27, the land was assessed at a value of $60,000 for property tax purposes. On April 1, Terrier Repair Service was offered $65,000 for the land by a national retail chain. At what value should the land be recorded in Terrier Repair Service’s records?

    Explanation
    The land should be recorded at a value of $54,000 in Terrier Repair Service's records. This is because on December 2, they accepted the seller's counteroffer of $54,000, which is the agreed-upon price for the land. The fact that the land was assessed at a higher value of $60,000 for property tax purposes and that they received a later offer of $65,000 from a retail chain does not impact the value at which it should be recorded in their records.

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  • 2. 

    Lynn Doyle is the owner and operator of Star LLC, a motivational consulting business. At the end of its accounting period, December 31, 2009, Star has assets of $650,000 and liabilities of $193,000. Using the accounting equation, determine the following amounts:  Calculate Owner’s equity, as of December 31, 2009

    Explanation
    The owner's equity can be calculated by subtracting the liabilities from the assets. In this case, the assets are $650,000 and the liabilities are $193,000. Therefore, the owner's equity is $650,000 - $193,000 = $457,000.

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  • 3. 

    Indicate whether the following company is primarily a service, merchandise, or manufacturing business. WALMART

    • A.

      Service

    • B.

      Merchandise

    • C.

      Manufacturing

    Correct Answer
    B. Merchandise
    Explanation
    Walmart is primarily a merchandise business because it operates as a retail store that sells a wide range of products to consumers. As one of the largest retailers in the world, Walmart focuses on offering a variety of merchandise, including groceries, clothing, electronics, household goods, and more. While Walmart does provide some services, such as pharmacy and financial services, its main business model revolves around the sale of merchandise to customers.

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  • 4. 

    Indicate whether the following company is primarily a service, merchandise, or manufacturing business. Ford Motor Co.

    • A.

      Service

    • B.

      Merchandise

    • C.

      Manufacturing

    Correct Answer
    C. Manufacturing
    Explanation
    Ford Motor Co. is primarily a manufacturing business. This is because Ford is a well-known automobile manufacturer that designs, produces, and sells vehicles on a large scale. They have manufacturing plants where they assemble the various components and parts to create the final product, which is the automobiles. While they may also offer some services such as vehicle maintenance and repairs, their main focus and core business is manufacturing automobiles.

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  • 5. 

    Indicate whether the following company is primarily a service, merchandise, or manufacturing business. JetBlue

    • A.

      Service

    • B.

      Merchandise

    • C.

      Manufacturing

    Correct Answer
    A. Service
    Explanation
    JetBlue is primarily a service business because it is an airline company that provides transportation services to its customers. They offer flights to various destinations, provide in-flight services such as meals and entertainment, and focus on delivering a positive travel experience to their passengers. While they may also engage in merchandise and manufacturing activities to some extent, their core business is centered around providing services in the form of air travel.

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  • 6. 

    Chalet Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Chalet Sports is owned and operated by Cliff Owen, a well-known sports enthusiast and hunter. Cliff’s wife, Judy, owns and operates Joliet Boutique, a women’s clothing store. Cliff and Judy have established a trust fund to finance their children’s college education. The trust fund is maintained by City Bank in the name of the children, John and Morgan. For the following transaction, identify which of the entities listed should record the transaction in its records.Judy purchased two dozen spring dresses from a Seattle designer for a special spring sale.

    • A.

      Chalet Sports

    • B.

      City Bank & Trust Fund

    • C.

      Joliet Boutique

    • D.

      None of the Above

    Correct Answer
    C. Joliet Boutique
    Explanation
    Judy purchased the dresses for her women's clothing store, Joliet Boutique, so Joliet Boutique should record the transaction in its records.

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  • 7. 

    Chalet Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Chalet Sports is owned and operated by Cliff Owen, a well-known sports enthusiast and hunter. Cliff’s wife, Judy, owns and operates Joliet Boutique, a women’s clothing store. Cliff and Judy have established a trust fund to finance their children’s college education. The trust fund is maintained by City Bank in the name of the children, John and Morgan. For  the following transaction, identify which of the entities listed should record the transaction in its records. Cliff paid a local doctor for his annual physical, which was required by the workmen’s compensation insurance policy carried by Chalet Sports.

    • A.

      Chalet Sports

    • B.

      City Bank Trust Fund

    • C.

      Joliet Boutique

    • D.

      None of the Above

    Correct Answer
    A. Chalet Sports
    Explanation
    Chalet Sports should record the transaction in its records because it is the entity that paid the local doctor for the annual physical. Since the physical was required by the workmen's compensation insurance policy carried by Chalet Sports, it is considered a business expense for the company. Therefore, Chalet Sports is responsible for recording and documenting this transaction in its financial records.

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  • 8. 

    The total assets and total liabilities of Coca-Cola and PepsiCo are shown below.                                                  Coca Cola (in mill.)              PepsiCo (in mill.) Assets                                                $29,936                                     $29,930Liabilities                                             13,043                                       14,483  Determine the owners’ equity:   Coca-Cola (in mill.) $   _________________      

    Correct Answer
    16920
    16,920
    $16920
    $16,920
    Explanation
    The owners' equity for Coca-Cola is $16,920 million.

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  • 9. 

    The total assets and total liabilities of Coca-Cola and PepsiCo are shown below.                                                         Coca-Cola (in mill.)       PepsiCo (in mill.)Assets                                                     $29,936                               $29,930Liabilities                                                  13,043                                  14,483   Determine the owners’ equity:     PepsiCo (in millions) $   _________________  

    Correct Answer
    15447
    15,447
    $15,447
    $15447
  • 10. 

    Determine the missing amount for each of the following:       Assets =   Liabilities +   Owners’ Equity $ 125,000 = $   _____________  + $ 39,500

    Correct Answer
    85500
    85,500
    $85500
    $85,500
    Explanation
    The missing amount for the liabilities is $85,500. This can be determined by subtracting the owners' equity ($39,500) from the total assets ($125,000).

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 02, 2010
    Quiz Created by
    Lelalenore
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