INTRODUCTION TO ACCOUNTING
TRUE/FALSE (NOTE: Show any required calculations in your answers)
1. A corporation is a business that is legally separate and distinct from its owners.
2. Primary users of accounting information are accountants.
3. Accounting is thought to be the "language of business" because business information is communicated to users.
4. The role of accounting is to provide many different users with financial information to make economic decisions.
5. Accounting information users need reports about the economic activities and condition of businesses.
6. The primary role of accounting is to determine the amount of taxes a business will be ...view middle of the document...
15. Generally accepted accounting principles regulate how and what financial information is reported by businesses.
16. The accounting equation can be expressed as Assets - Liabilities = Stockholders’ Equity.
17. The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of stockholders.
18. Stockholders’ rights to assets rank ahead of creditors' rights to assets.
19. If the liabilities owed by a business total $300,000 and stockholders’ equity is equal to $300,000, then the assets also total $300,000.
20. If total assets decreased by $30,000 during a specific period and stockholders’ equity decreased by $35,000 during the same period, the period's change in total liabilities was an $65,000 increase.
21. If the assets owned by a business total $250,000, and stockholders’ equity totals $200,000, liabilities total $50,000.
22. If the assets owned by a business total $75,000 and liabilities total $50,000, the total for stockholders’ equity is $125,000.
23. If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total stockholders’ equity was a $200,000 increase.
24. If net income for a corporation was $60,000 and $20,000 in cash dividends were declared and distributed, then retained earnings would increase by $40,000.
25. If net income for a business was $180,000 and $20,000 in cash dividends were declared and distributed, then the retained earnings account would increase by $200,000.
MULTIPLE CHOICE (NOTE: Show any required calculations in your answers)
1. Profit is the difference between
|a. |assets and liabilities |
|b. |the incoming cash and outgoing cash |
|c. |the assets purchased with cash spent by stockholders and the cash spent to operate the business |
|d. |the assets received for goods and services and the amounts used to provide the goods and services |
2. Financial reports are used by
|a. |management |
|b. |creditors |
|c. |investors |
|d. |all are correct |
3. Which of the following descriptions best describes accounting?
|a. |records economic data but does not communicate the data to users according to any specific rules |
|b. |is an information system that...