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Exam 1: Accounting in Business

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Question 101

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The primary objective of financial accounting is:

A) To serve the decision-making needs of internal users.
B) To provide financial statements to help external users analyze an organization's activities.
C) To monitor and control company activities.
D) To provide information on both the costs and benefits of looking after products and services.
E) To know what, when, and how much to produce.

F) C) and E)
G) C) and D)

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Question 102

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Owners of a corporation are called shareholders or stockholders.

A) True
B) False

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Question 103

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The following schedule reflects shows the first month's transactions of the Bill Blue Real Estate Company: Provide descriptions for each transaction.

A payment to an owner is called a(n) :

Identify the risk and the return in each of the following examples. a. Investing $500 in a CD at 4.5% interest. b. Placing a $100 bet on an NBA game. c. Investing $10,000 in Microsoft shares. d. Borrowing $20,000 in student loans.

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Revenue is properly recognized:

At the beginning of the year, a company had $120,000 worth of liabilities. During the year, assets increased by $160,000 and at year-end they equaled $360,000. Liabilities decreased $20,000 during the year. Calculate the beginning and ending values of equity.

What is the balance sheet? What is its purpose?

From the information given below, prepare a November income statement, a November statement of changes in equity, and a November 30 balance sheet. On November 1 of the current year, Lois Bell began Lois Bell, Interior Design with an initial investment of $50,000 cash. On November 30 her records showed the following (alphabetically arranged) items and amounts.

Della's Donuts owner made investments of $50,000 and withdrawals of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Bookkeeping is the recording of transactions and events and is only part of accounting.

A limited partnership:

Increases in equity from a company's earnings activities are:

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

The three common forms of business ownership include sole proprietorship, partnership, and non-profit.

______________________ is the recording of financial transactions and events, either manually or electronically.

The four basic financial statements include the income statement (statement of comprehensive income), statement of changes in equity, balance sheet (statement of financial position), and statement of cash flows.

External users include lenders, shareholders, customers, and regulators.

Accounting is an information and measurement system that does all of the following except: