Question 1

Any accounting period of twelve months' duration is usually referred to as a calendar year.

Accepted Answer

A) True 
 B)False

Question 2

Any accounting period of twelve months' duration is usually referred to as a(n)

Accepted Answer

A)   fiscal year.
B)   calendar year.
C)   physical year.
D)   operational year.E) C) and D)
F) B) and C)

Question 3

Match the terms with the definitions.
-Consists of the three basic accounting elements: assets = liabilities + owner's equity.

Accepted Answer

A)  account
B)  accounts payable
C)  accounts receivable
D)  accounting equation
E)  assetsF) balance sheetG) business entityH) business entity conceptI) business transactionJ) drawingK) expensesL) income statementM) liabilityN) net incomeO) net lossP) notes payableQ) owner's equityR) revenuesS) statement of owner's equityT) J) and Q)
U) B) and I)

Question 4

Match the terms with the definitions.
-Reports beginning capital, plus net income, less withdrawals to compute ending capital.

Accepted Answer

A)  account
B)  accounts payable
C)  accounts receivable
D)  accounting equation
E)  assetsF) balance sheetG) business entityH) business entity conceptI) business transactionJ) drawingK) expensesL) income statementM) liabilityN) net incomeO) net lossP) notes payableQ) owner's equityR) revenuesS) statement of owner's equityT) C) and M)
U) J) and S)

Question 5

A decrease in owner's equity may result from a(n)

Accepted Answer

A)   purchase of office supplies for cash.
B)   withdrawal of cash from the business by the owner.
C)   revenue that is derived from sales of goods or services.
D)   investment of cash in the business by the owner.E) A) and C)
F) A) and D)

Question 6

Meghan started her business by investing $30,000 in cash. This transaction would

Accepted Answer

A)   increase assets and increase owner's equity.
B)   increase assets and increase liabilities.
C)   increase one asset and decrease another asset.
D)   decrease assets and decrease liabilities.E) A) and B)
F) None of the above

Question 7

Match the terms with the definitions.
-An unwritten promise to pay a supplier for assets purchased or services rendered.

Accepted Answer

A)  account
B)  accounts payable
C)  accounts receivable
D)  accounting equation
E)  assetsF) balance sheetG) business entityH) business entity conceptI) business transactionJ) drawingK) expensesL) income statementM) liabilityN) net incomeO) net lossP) notes payableQ) owner's equityR) revenuesS) statement of owner's equityT) D) and M)
U) D) and L)

Question 8

Other terms used for owner's equity include net worth and capital.

Accepted Answer

A) True 
 B)False

Question 9

Match the terms with the definitions.
-A separate record used to summarize changes in each asset, liability, and owner's equity of a business.

Accepted Answer

A)  account
B)  accounts payable
C)  accounts receivable
D)  accounting equation
E)  assetsF) balance sheetG) business entityH) business entity conceptI) business transactionJ) drawingK) expensesL) income statementM) liabilityN) net incomeO) net lossP) notes payableQ) owner's equityR) revenuesS) statement of owner's equityT) K) and R)
U) E) and R)

Question 10

Any item a business owns that will provide future benefits is called owner's equity.

Accepted Answer

A) True 
 B)False

Question 11

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

Accepted Answer

A) True 
 B)False

Question 12

Since supplies last for several months, they are recorded as assets.

Accepted Answer

A) True 
 B)False

Question 13

According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.

Accepted Answer

A) True 
 B)False

Question 14

Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business?

Accepted Answer

A)   input
B)   processing
C)   output
D)   summarizingE) None of the above
F) B) and D)

Question 15

Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.

Accepted Answer

A) True 
 B)False  True

Question 16

Falana received $7,000 in cash from a client for professional services rendered. This transaction would

Accepted Answer

A)   increase assets and increase owner's equity.
B)   decrease assets and increase owner's equity.
C)   increase liabilities and decrease owner's equity.
D)   decrease assets and decrease owner's equity.E) C) and D)
F) A) and B)

Question 17

The financial statement that should be completed first is the

Accepted Answer

A)   balance sheet.
B)   statement of financial position.
C)   statement of financial condition.
D)   income statement.E) A) and B)
F) All of the above D

Question 18

Match the terms with the definitions.
-A formal written promise to pay a supplier or lender a specified sum of money at a definite future time.

Accepted Answer

A)  account
B)  accounts payable
C)  accounts receivable
D)  accounting equation
E)  assetsF) balance sheetG) business entityH) business entity conceptI) business transactionJ) drawingK) expensesL) income statementM) liabilityN) net incomeO) net lossP) notes payableQ) owner's equityR) revenuesS) statement of owner's equityT) A) and Q)
U) A) and P)

Question 19

If the revenue of a period exceeds the expenses, the excess represents a net loss.

Accepted Answer

A) True 
 B)False

Question 20

Expenses represent a decrease in liabilities.

Accepted Answer

A) True 
 B)False  False

Exam 2: Analyzing Transactions: the Accounting Equation

Any accounting period of twelve months' duration is usually referred to as a calendar year.

Correct AnswerverifiedShow Answer

Any accounting period of twelve months' duration is usually referred to as a(n)

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -Consists of the three basic accounting elements: assets = liabilities + owner's equity.

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -Reports beginning capital, plus net income, less withdrawals to compute ending capital.

Correct AnswerverifiedShow Answer

A decrease in owner's equity may result from a(n)

Correct AnswerverifiedShow Answer

Meghan started her business by investing $30,000 in cash. This transaction would

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -An unwritten promise to pay a supplier for assets purchased or services rendered.

Correct AnswerverifiedShow Answer

Other terms used for owner's equity include net worth and capital.

Correct AnswerverifiedShow Answer

Match the terms with the definitions. -A separate record used to summarize changes in each asset, liability, and owner's equity of a business.

Correct AnswerverifiedShow Answer

Any item a business owns that will provide future benefits is called owner's equity.

Correct AnswerverifiedShow Answer

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

Correct AnswerverifiedShow Answer

Since supplies last for several months, they are recorded as assets.

Correct AnswerverifiedShow Answer

According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.

Correct AnswerverifiedShow Answer

Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business?

Correct AnswerverifiedShow Answer

Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.

Correct AnswerverifiedTrue

Falana received $7,000 in cash from a client for professional services rendered. This transaction would

Correct AnswerverifiedShow Answer

The financial statement that should be completed first is the

Correct AnswerverifiedD

Match the terms with the definitions. -A formal written promise to pay a supplier or lender a specified sum of money at a definite future time.

Correct AnswerverifiedShow Answer

If the revenue of a period exceeds the expenses, the excess represents a net loss.

Correct AnswerverifiedShow Answer

Expenses represent a decrease in liabilities.

Correct AnswerverifiedFalse

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True

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D

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False