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Exam 1: Introduction to Accounting and Business

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Question 21

Multiple Choice

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Owner's withdrawals

A) increase expenses
B) decrease expenses
C) increase cash
D) decrease owner's equity

E) A) and B)
F) All of the above

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Question 22

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An account receivable is a claim against a customer arising from a sale on account.

A) True
B) False

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Question 23

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Cash withdrawals by owners decrease assets and increase equity.

For accounting purposes, the business entity should be considered separate from its owners if the entity is

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

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

Bob Johnson is the sole owner of Johnson's Carpet Cleaning Service. Bob purchased a personal automobile for $10,000 cash plus he took out a loan for $20,000 in his name. Describe how this transaction is related to the business entity concept.

All of the following statements regarding the ratio of liabilities to owner's equity are true except:

select whether each of the following represents an asset, liability, or owner's equity:

Name and describe the four primary financial statements for a proprietorship.

Countries outside the U.S. use financial accounting standards issued by the:

Discuss the characteristics of a LLC (Limited liability company).

From the following list of accounts taken from Lamar's accounting records, identify those that would appear on the Income Statement. $\begin{array}{ll}\text { (a) } & \text { Rent Expense } \\\text { (b) } & \text { Land } \\\text { (c) } & \text { Capital } \\\text { (d) } & \text { Fees Earned } \\\text { (e) } & \text { Withdrwal } \\\text { (f) } & \text { Wages Expense } \\\text { (g) } & \text { Investment }\end{array}$

Managerial accounting information is used by external and internal users equally.

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

Which of the following is not a role of accounting in business?

Allen Marks is the sole owner and operator of Great Marks Company. As of the end of its accounting period, December 31, 2013, Great Marks Company has assets of $940,000 and liabilities of $300,000. During 2014, Allen Marks invested an additional $73,000 and withdrew $33,000 from the business. What is the amount of net income during 2014, assuming that as of December 31, 2014, assets were $995,000, and liabilities were $270,000?

Kim Hsu is the owner of Hsu's Financial Services. At the end of its accounting period, December 31, 2011, Hsu's has assets of $575,000 and owner's equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts. a. Hsu's liabilities as of December 31, 2011. b. Hsu's liabilities as of December 31, 2012, assuming that assets increased by $56,000 and owner's equity decreased by $32,000. c. Net income or net loss during 2012, assuming that as of December 31, 2012, assets were $592,000, liabilities were $450,000, and there were no additional investments or withdrawals.