Chapter 1 Accounting

1. During the year, ChemClean, Inc., has $140000 in revenues, $75,000 in expenses, and $3,000 in dividend payments. Stockholders' equity changed by

+ 62,000

+68,000

-62,000

-68,000

2. Which items are reported on the balance sheet?

Accounts payable

Inventory

Retained Earnings

All of the above

3. All of the following statements are true except one. Which statement is false?

Bookeeping is only a part of accounting

A proprietorship is a business with several owners

Professional accountants are held to high standard of ethical conduct

The organization that formulates GAAP is the Financial Accounting Standards Board

4. Which of the following is the most accurate statement regarding ethics as applied to decision making in accounting?

Ethics has no place in accounting, since accounting deals purely with numbers

Ethics involves making difficult choices under pressure and should be kept in mind making every decision, including those involving accounting

Ethics is becoming less important as a field of study in business

5. The valuation of assets on the balance sheet is generally based on

Current fair market value as established by independent appraisers

What it would cost to replace the asset

Historical cost

Selling price

6. The accounting equation can be expressed as

Assets + Liabilities= OE

OE-A=L

A-L=OE

A=L-OE

7. Which financial statement covers a period of time?

Balance sheet

Income statement

Statement of cash flows

Both B and C

8. Which of the following is a true statement about International Financial Reporting Standards?

They are converging gradually with US standards

THey are not needed for US business since the US already has the strongest accounting standards in the world.

They are more exact than GAAP

They are not being applied anywhere in the world yet, but soon they will be.

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= 126000 L= 29000

A= 29000 L= 131000

A= 131000 L= 29000

A= 131000 L= 84000

10. 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

95000

150000

145000

155000