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Exam 1: Accounting in Business

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Question 81

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Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

A) Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase.
B) Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect.
C) Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect.
D) Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase.
E) Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.

F) A) and D)
G) A) and B)

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Question 82

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From an accounting perspective, an event is a happening that affects the accounting equation, but cannot be measured.

A) True
B) False

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Question 83

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Identify the three basic forms of business organizations.

The International Accounting Standards Board (IASB) is an independent group which issues International Financial Reporting Standards (IFRS).

Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable.

Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or withdrawals by the owner.

FastForward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

A partnership is a business owned by two or more people.

Hal Burton began a Web Consulting practice and completed these transactions during September of the current year: Show the effects of the above transactions on the accounting equation of Halley Burton, Consultant. Use the following format for your answers. The first item is shown as an example. Increase = I Decrease = D No effect = N

Nick's had income of $350 million and average invested assets of $2,000 million. Its ROA is:

A disadvantage of a sole proprietorship is the fact that the owner has __________________.

Managerial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

Prepare a December 31 balance sheet in proper form for Surety Insurance using the following accounts and amounts:

What is the purpose of return on assets as an analytical tool?

Select the appropriate financial statement for each of the following accounts. (Note: Some items may appear on more than one financial statement.)

The difference between a company's assets and its liabilities, or net assets is:

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion is:

The excess of expenses over revenues for a period is:

Objectivity means that financial information is supported by independent unbiased evidence.

The three major types of business activities are operating, financing, and investing.