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Exam 1: Introduction to Accounting and Business

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Question 61

Multiple Choice

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Two common areas of accounting that respectively provide information to internal and external users are

A) forensic accounting and financial accounting
B) managerial accounting and financial accounting
C) managerial accounting and environmental accounting
D) financial accounting and tax accounting systems

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Question 62

Multiple Choice

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The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit of the client?

A) indefinitely
B) one year
C) two years
D) none of these

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Question 63

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The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

Purchasing supplies on account increases liabilities and decreases equity.

The total assets and the total liabilities of a business at the beginning and at the end of the year appear below.During the year,the company paid $55,000 in cash dividends and issued an additional $33,000 of capital stock. $\begin{array}{llll} & \text { Asssets } & \text { Liabilities } \\\text { Beginning of year }& \$ 305,000 & \$ 200,000 \\\text { End of year } & 365,000 & 230,000\end{array}$ Calculate the net income for the year.

Transactions affecting stockholders' equity include

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

Revenue is earned only when money is received.

If total assets decreased by $30,000 during a specific period and stockholder's equity decreased by $35,000 during the same period,the period's change in total liabilities was an $65,000 increase.

An account receivable is typically classified as a revenue.

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

Declaring and paying cash dividends

.Which of the following is true in regard to a Limited Liability Company?

The year-end balance of the retained earnings account appears in

Denzel Jones is the major stockholder of Crystal Cleaning Company.Recently,Denzel received $10,000 of dividends from Crystal Cleaning.After receiving the dividends,he contributed $6,000,in his name,to Habitat for Humanity.The contribution of $6,000 should be recorded on the accounting records of which of the following entities?

Owners' rights to assets rank ahead of creditors' rights to assets.

Earning revenue

If total liabilities decreased by $46,000 during a period of time and stockholders' equity increased by $60,000 during the same period,the amount and direction (increase or decrease) of the period's change in total assets is

How does receiving a bill to be paid next month for services received affect the accounting equation?

Donner Company is selling a piece of land adjacent to their business.An appraisal reported the market value of the land to be $220,000.The Focus Company initially offered to buy the land for $177,000.The companies settled on a purchase price of $212,000.On the same day,another piece of land on the same block sold for $232,000.Under the cost concept,what is the amount that will be used to record this transaction in the accounting records?