Chapter 1 Accounting
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- 1.All of the following statements are true except one. Which statement is false?
- A.
Bookeeping is only a part of accounting
- B.
A proprietorship is a business with several owners
- C.
Professional accountants are held to high standard of ethical conduct
- D.
The organization that formulates GAAP is the Financial Accounting Standards Board
- 2.The valuation of assets on the balance sheet is generally based on
- A.
Current fair market value as established by independent appraisers
- B.
What it would cost to replace the asset
- C.
Historical cost
- D.
Selling price
- 3.The accounting equation can be expressed as
- A.
Assets + Liabilities= OE
- B.
OE-A=L
- C.
A-L=OE
- D.
A=L-OE
- 4.The nature of an asset is best described as
- A.
Something owned by a business that has a ready market value
- B.
Something with physical form that's valued at cost in the accounting records
- C.
An economic resource representing cash or the right to receive cash for the future
- D.
An economic resource that's expected to benefit future operations
- 5.
- A.
Balance sheet
- B.
Income statement
- C.
Statement of cash flows
- D.
Both B and C
- 6.
- A.
Increase liabilities and decrease OE
- B.
Increase A Increase L
- C.
Decrease A Decrease L
- D.
Increase A Increase OE
- 7.During the year, ChemClean, Inc., has $140000 in revenues, $75,000 in expenses, and $3,000 in dividend payments. Stockholders' equity changed by
- A.
+ 62,000
- B.
+68,000
- C.
-62,000
- D.
-68,000
- 8.ChemClean inc. in question 7 had
- A.
NI of 62,000
- B.
NI of 140,000
- C.
Net loss of 75,000
- D.
Net loss of 65,000
- 9.Valor Corp. holds cash of $5,000 and owes $29,000 on accounts payable. Valor has accounts receivable of $40,000, inventory of $36,000 and land that costs $50000. How much are Valor's total assets and liabilities?
- A.
A= 126000 L= 29000
- B.
A= 29000 L= 131000
- C.
A= 131000 L= 29000
- D.
A= 131000 L= 84000
- 10.Which items are reported on the balance sheet?
- A.
Accounts payable
- B.
Inventory
- C.
Retained Earnings
- D.
All of the above
- 11.During the year, Diaz OE increased from $46,000 to $62,000. Diaz earned NI of $20,000. How much in dividends did Diaz declare during the year?
- A.
16,000
- B.
5,000
- C.
4,000
- D.
0
- 12.Hall Company had total assets of $360,000 and total stockholder's equity of $120,000 at the beginning of the year. During the year, assets increased by $60,000 and liabilities increased $35,000. Stockholders' equity at the end of the year was
- A.
95000
- B.
150000
- C.
145000
- D.
155000
- 13.Which of the following is a true statement about International Financial Reporting Standards?
- A.
They are converging gradually with US standards
- B.
THey are not needed for US business since the US already has the strongest accounting standards in the world.
- C.
They are more exact than GAAP
- D.
They are not being applied anywhere in the world yet, but soon they will be.
- 14.Which of the following is the most accurate statement regarding ethics as applied to decision making in accounting?
- A.
Ethics has no place in accounting, since accounting deals purely with numbers
- B.
It is impossible to learn ethical decision making since it is just something you decide to do or not to do
- C.
Ethics involves making difficult choices under pressure and should be kept in mind making every decision, including those involving accounting
- D.
Ethics is becoming less important as a field of study in business
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