finance and accounting

Question 1

Businesses earn profits by converting financial, physical, and labor resources into goods and services that satisfy customer demands

Answer 1

true

Question 2

resource owners want to avoid consequences of taxation

Answer 2

true

Question 3

accounting provides a service to society by gathering and reporting information about a companies profit potential.

Answer 3

true

Question 4

Generally Accepted Accounting Principles

Answer 4

are designed to provide guidance for financial accounting

Question 5

For profit businesses, Governmental Entities, and nonprofit businesses, they all require information to operate effectively

Answer 5

true

Question 6

Public accountants conduct an audit to ensure that financial information provided by a company to investors is in accordance with gaap

Answer 6

true

Question 7

Paul Savage purchased a restaurant named burger Haven from Larry Jones

Answer 7

caused the number of entities to remain constant

Question 8

asset

Answer 8

A source that will be used to produce revenue

Question 9

creditors investors and operations

Answer 9

all assets

Question 10

if total assets increase

Answer 10

liabilities, common stock, or retained earnings must increase

Question 11

retained earnings

Answer 11

assets earned from operations that have been reinvested into the business

Question 12

accounting equation

Answer 12

assets=liabilities+common stock+expenses

Question 13

dividend

Answer 13

a distribution of the companies assets back to the owners of the business

Question 14

owners of the business who contribute money to the business take more risk than creditors who loan money to the business

Answer 14

true

Question 15

a decrease in assets indicate that the asset has been used

Answer 15

true

Question 16

paying cash to purchase land is an asset exchange event

Answer 16

true

Question 17

Paying cash for land would cause cash to decrease and land to increase

Answer 17

true

Question 18

a dividend is a distribution of assets obtained through earnings. It is a transfer of assets from the business to its owners. It is an asset use event.

Answer 18

(assets and retained earnings decrease)

Question 19

a cash revenue is an economic benefit that will cause assets and retained earnings to increase

Answer 19

true

Question 20

a cash expense is an economic sacrifice that will cause assets and retained earnings to decrease

Answer 20

true

Question 21

a cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease

Answer 21

true

Question 22

Payed cash for expenses incurred by the business. The event would cause the cash (asset) account to decrease and retained earnings to decrease

Answer 22

true

Question 23

an increase in assets and liabilities indicates that the company has borrowed 50k from creditors

Answer 23

true

Question 24

all accounting transactions entered in the accounting equations should result in the equation being balances. Assets should always equal liabilities plus stockholders equity for all acct transactions

Answer 24

true

Question 25

no recording is necessary for changes in the market value that result in an increase for the value of a long term asset

Answer 25

true

Question 26

market value is irrelevant

Answer 26

true

Question 27

GAAP

Answer 27

requires businesses to follow historical cost concept which dictates that assets be maintained in the accounting records at the amount of their original cost

Question 28

the market value of an asset is an opinion

Answer 28

true

Question 29

companies have a great deal of flexibility concerning the number of accounts included in their accounting records

Answer 29

true

Question 30

receiving cash from the issue of common stock

Answer 30

asset source transaction

Question 31

collecting cash from the issue of common stock causes assets cash and stockholders equity (common stock) to increase. Since the total amount of assets increase, this is an asset source transaction

Answer 31

true

Question 32

asset source transaction

Answer 32

total amount of assets increase

Question 33

receiving cash from the issue of a note payable to a bank is also an asset source transaction

Answer 33

true

Question 34

Earned Cash revenue, borrowed cash from creditor, and received cash from the issue of common stock is all an asset source event

Answer 34

true

Question 35

payed cash to purchase land

Answer 35

asset exchange transaction

Question 36

payed a cash dividend

Answer 36

asset use transaction

Question 37

accural accounting

Answer 37

a company using accrual accounting may report revenue on the income statement even if it does not collect cash

Question 38

accrual counting

Answer 38

the recognition of revenue in the period of which the work is done regardless of when the cash is collected

Question 39

if a company performs and completes all services in year one, but does not receive cash for services until year 2

Answer 39

revenue should be recorded in year 1

Question 40

under accrual accounting

Answer 40

a company should record revenue when earned

Question 41

When a company has completed a service, it has earned the revenue of that service, regardless of when payment is received

Answer 41

true

Question 42

when a company receives revenue on account

Answer 42

the assets, accounts receivable, and revenue increases. Liabilities are not effected

Question 43

when a company earns revenue on account, cash is not collected at the time of recognition therefore the statement of

Answer 43

cash flows is not effected

Question 44

when a company collects cash from accounts receivable,

Answer 44

total assets are not effected

Question 45

net income is the best measure of performance for an acct period

Answer 45

true

Question 46

accrued expense

Answer 46

an expense that is recognized prior to being paid

Question 47

if a company recognizes accrued salary expense the employees have completed work but have not been paid

Answer 47

true

Question 48

when a company incurs accrued expenses

Answer 48

liability, accts payable increases, stock holders decrease and assets are not effected.

Question 49

on account means that you do not pay cash at the time of purchase

Answer 49

true