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Exam 1: Introduction to Accounting and Business

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Question 61

True/False

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Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

A) True
B) False

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Question 62

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Which of the following are guidelines for behaving ethically?

A) I and II.
B) II and III.
C) I and III.
D) I, II, and III.

E) C) and D)
F) A) and C)

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Question 63

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Identify each of the following as an (1) increase in stockholders' equity, or a (2) decrease in stockholders' equity.

The accounting equation may be expressed as

All financial statements are identified by the name of the business, the title of the statement, and the date or period of time.

Which of the items below is not a business entity?

The assets and liabilities of S&P Day Spa at December 31, 2014 and expenses for the year are listed below. The retained earnings balance was $68,000 at January 1, 2014.

Which of the following is the best description of accounting's role in business?

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

Assets are

The assets and liabilities of the company are $128,000 and $84,000, respectively. Stockholders' equity should equal

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

Most businesses in the United States are

The principal financial statements for a corporation are the income statement, the retained earnings statement, the balance sheet, and the budget.

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

Donner Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block was sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?

A corporation is a business that is legally separate and distinct from its owners.

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

The main objective for all businesses is to maximize unrealized profits.

Collins Landscape Company purchased various landscaping supplies on account to be used for landscape designs for its customers. How will this business transaction affect the accounting equation?