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Exam 1: Accounting in Business

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Question 101

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Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

A) Going-concern assumption.
B) Expense recognition (Matching) principle.
C) Measurement (Cost) principle.
D) Business entity assumption.
E) Consideration assumption.

F) A) and B)
G) A) and C)

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Question 102

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Define risk and return and discuss the relation between them.

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Net income is often related to return,wh...

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Question 103

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Contessa Company collected $42,000 cash on its accounts receivable.The effects of this transaction as reflected in the accounting equation are:

A company's balance sheet shows: cash $22,000,accounts receivable $16,000,office equipment $50,000,and accounts payable $17,000.What is the amount of stockholders' equity?

Ethics is defined as maximizing personal wealth,regardless the cost.

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

The Superior Company acquired a building for $500,000.The building was appraised at a value of $575,000.The seller had paid $300,000 for the building 6 years ago.Which accounting principle would require Superior to record the building on its records at $500,000?

Planning is a part of each business activity (operating,investing,and financing),and gives each activity meaning and focus.

The assumption that requires that a business be accounted for separately from its owners is the ________ assumption.

Which of the following is not true regarding a Certified Public Accountant?

If a company is considering the purchase of a parcel of land that was acquired by the seller for $85,000,is offered for sale at $150,000,is assessed for tax purposes at $95,000,is considered by the purchaser as easily being worth $140,000,and is purchased for $137,000,the land should be recorded in the purchaser's books at:

If assets are $365,000 and equity is $120,000,then liabilities are:

If equity is $300,000 and liabilities are $192,000,then assets equal:

Match the following definitions with the terms 1 through 9.Place the letter that identifies the best definition in the blank space next to the term.

Net Income:

A partnership:

The following schedule reflects shows the first month's transactions of the Green Construction Company,owned by Jennifer Green,its sole stockholder: Provide descriptions for each transaction.

Match the following definitions with terms 1 through 8.Place the letter that identifies the best definition in the blank space next to the term.

Identify each of the following business activities 1 through 6 into the appropriate category a,b,and c. a.Operating b.Investing c.Financing ____ 1.Paid utilities expenses. ____ 2.Dividends paid to stockholders. ____ 3.Purchase of land. ____ 4.Sale of used equipment. ____ 5.Borrowed money from a bank on a long-term note. ____ 6.Paid employee wages. ____ 7.Received investment from stockholders in exchange for common stock. ____ 8.Paid an amount due on a long-term bank loan.

On December 15 of the current year,Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year.Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?