ACG 2021 Quiz Chapter 1 PDF

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Quiz Chapter 1...

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1. Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply). faithful representation relevance 2. All of the following are part of the FASB conceptual framework: (Select all that apply). Recognition and measurement Objectives Elements Qualitative characteristics 3. The _____ principle states that accounting information is based on actual cost. measurement 4. The revenue recognition principle states that revenue is recognized when: goods or services are provided to customers 5. Another name for the expense recognition principle is: matching principle 6. What are Generally Accepted Accounting Principles? The concepts and rules that govern financial accounting practice. 7. The FASB conceptual framework consists of all of the following except: Concepts 8. Which of the statement(s) below define(s) an asset? (Check all that apply.) An amount owned Resources with expected future benefits Resources controlled by the business 9. Which of the following statements best represents the reason for the accounting equation? The total of everything owned by a business must always equal the total of what the business owes to creditors and owners. 10. The principle which says that revenue is recognized when goods or services are provided to customers at an amount expected to be received from the customer is known as the revenue recognition principle

11. The principle which states that a company should record expenses it incurred in the same period as the revenue it generated is known as the expense recognition principle 12. When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.) After recording the transaction, total assets will always equal total liabilities plus equity. The accounting equation must always remain in balance. 13. Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply). relevance faithful representation 14. Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by: increasing Cash; increasing Common Stock 15. Identify the correct definition of an asset: An asset is something of value that a business owns or controls 16. Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The relation of assets, liabilities and equity is reflected in the equation. The equation states that Assets = Liabilities + Equity. The equation applies to all transactions. 17. To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to (Equipment/Supplies/Cash) and a decrease to (Equipment/Supplies/Cash) Cash 18. The revenue recognition principle states that revenue is recognized when: Goods or services are provided to customers 19. Which of the following statements below lists the rules of entering transactions into the accounting equation? The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

20. When using the accounting equation, recording the purchase of equipment for cash would include an increase to the Equipment account and a decrease to the Cash 21. Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation. Increase Cash by $4,000; Increase Common Stock by $4,000. 22. When supplies are purchased on credit it means that: (Check all that apply.) the business will pay for the supplies at a later time. a liability has been incurred. the Accounts Payable account will be increased.

23. Which of the statement(s) below define(s) an asset? (Check all that apply.) Resources controlled by the business An amount owned Resources with expected future benefits 24. Smith Company purchased $100 of supplies for her business and paid immediately. She would record this transaction in the accounting equation by which of the following? Decrease Cash; increase Supplies. 25. On 6/25, supplies costing $1,000 were purchased, but only $400 of this amount was paid on 6/25. The remainder of the bill went on account. To record this transaction on 6/25: Supplies would be increased by $ 1,000 Blank 1Blank 1 1,000 , Correct Unavailable (1,000/400/600); Cash would be decreased by $ 400

Blank 2Blank

2 400 , Correct

Unavailable (1,000/400/600) and Accounts Payable would be increased by $ 600

26. The principle which says that revenue is recognized when goods or services are provided to customers at an amount expected to be received from the customer is known as the

revenue recognition principle 27. Jackson's Catering Company provided cookies worth $3,000 to the local college. The college paid immediately. Record this transaction in Jackson's accounting equation by: increasing Cash; increasing Revenues

28. Jackson Company purchased office equipment costing $3,000 for his business and paid immediately. Record this transaction in the accounting equation by: decreasing Cash; increasing Equipment 29. Bob's Bakery receives its utility bill of $800 for the month and pays it immediately. Record this transaction in the accounting equation. Increase Expenses and decrease Cash. 30. liability

The Accounts Payable account is a(n) ______ account.

31. Melton's Door Company pays rent on the building facilities of $5,000 on May 1. Show how to record this transaction in the accounting equation of Melton's Door Company. Rent Expense will be increased. 32. From the following statements, select the one that describes the effect of dividends on equity. Dividends cause equity to decrease. 33. On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation by: increasing Supplies, and increasing Accounts Payable 34. True

True or false: Dividends are resources paid to the stockholders.

35. Russell's Consulting Services Company provided $1,000 of services to the local college and immediately collected $700, but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by: increasing both Cash and Accounts Receivable; and increasing Revenues

36. The definition of revenues includes which of the following statements? (Check all that apply.) Revenues are the sales of products or services to customers by a business. Revenues increase equity. 37. Jackson's Programming paid its June rent of $500 cash. Demonstrate how to use the accounting equation to record the transaction by completing the following sentence. Jackson would decrease (expenses/cash/revenues) and increase (expenses/equity/revenues) in the accounting equation.

38. An income statement reports a company's net income or net loss during a period. Which of the following accounts would appear on an income statement? (Check all that apply.) Rent Expense Wages Expense Service Revenue Rent Revenue 39. Johna's Plant Nursery Company pays the salaries of its two employees. How will this transaction affect the accounting equation? Select all that apply. Salaries expense will be increased. Equity will be decreased.

40. Net income is calculated using the following formula: Revenues - expenses = net income

41. Dividends cause a(n) (increase/decrease) in equity and are recorded directly in the (retained earnings/dividends/equity) account.

42. Identify which of the following lists of accounts would belong on the statement of retained earnings. Retained earnings and Dividends Given the statements below, choose the most accurate definition of dividends. 43.

Outflow of resources to stockholders. 44. The correct definition of a balance sheet includes which of the following statements? (Check all that apply.) The statement reports the equality of the accounting equation at any point in time. The statement reports the financial position of a company at a point in time. The statement reports assets, liabilities and equity at a point in time.

45. The correct definition of revenues is: Revenues increase equity and are earned from the sale of products and services. 46. Each of the financial statements on the left are described on the right. Identify the description that goes with each financial statement. Balance Sheet: Reports the balance of assets, liabilities and equity at a point in time Reports the balance of assets, liabilities and equity at a point in time Income Statement: Reports the revenues and expenses incurred by a business for a period of time Statement of Retained Earnings: Reports the changes in equity during a period of time Statement of Cash Flows: Identifies the cash inflows and outflows over a period of time 47. Define what the income statement reports by completing the following sentence: The income statement describes a company’s revenues and expenses along with the resulting net income or loss over a period of time due to earnings related activities.

48. Given that Jacob's Chocolates Company had beginning retained earnings of $4,000; net income during the period of $10,000; and dividends of $300 calculate the ending balance in the retained earnings account. $13,700

49. Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all that apply.) Supplies Cash Retained earnings, 12/31 Equipment Accounts Payable 50. Identify the main sections on a statement of cash flows. (Check all that apply.) Cash flows from operating activities Cash flows from financing activities Cash flows from investing activities

51. The organization that is primarily responsible for developing GAAP for use by all U.S. companies is the: FASB 52. The organization that is responsible for issuing International Financial Reporting Standards is the: IASB

53. The four basic financial statements are: Income Statement, Statement of retained earnings, Balance sheet, and Statement of cash flows. 54. Identify which items belong on the income statement.

Revenue, expenses and net income 55. Identify which items belong on the statement of retained

earnings. Dividends, beginning retained earnings, ending retained earnings 56. Identify which items belong on the balance sheet.

Cash, accounts receivable, and common stock 57. Identify which items belong on the statement of cash flows.

Cash flows from investing, operating and financing activities

58. During its first year of operations, Mario Lupo formed Lupo

Company as a corporation and personally invested $15,000 in the business in exchange for common stock. Lupo Company also paid dividends of $2,000. The company earned $35,000 of revenues and incurred $23,000 of expenses. At the end of the year, the company's equity totaled: 25,000

59. Classify the following business activities using the drop-down

list.

60. Identify the correct assumption for each of the following

activities using the drop-down list.

61. Identify the correct principle for each of the following activities

using the drop-down list.

62. Analyze the following transaction and select the best answer.

The business pays $2,000 in cash to the landlord for office space rent. Equity reduces by $2,000 Correct

63. On January 31, Jean Consulting Company receives a bill for that

month’s utilities in the amount of $500. Jean sets it aside because she does not plan to pay the bill until its due date of February 15. What effect, if any, does this event have on the company’s accounting equation as of January 31? The business must record this event, which would increase liabilities and decrease equity on January 31.

64. Select the aspect of accounting associated with this activity.

65. [The following information applies to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,780 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Retained earnings, October 1 as $0. Cash $ 8,990 Accounts receivable 16,540 Office supplies 3,930 Land 45,980 Office equipment 18,660 Accounts payable 9,170 Common stock 84,780

Cash dividends $ 2,830 Consulting revenue 16,540 Rent expense 4,300 Salaries expense 7,740 Telephone expense 850 Miscellaneous expenses 670

Using the above information prepare an October income statement for the business.

66. On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,780 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Retained earnings, October 1 as $0.

Cash $ 8,990 Accounts receivable 16,540 Office supplies 3,930 Land 45,980 Office equipment 18,660 Accounts payable 9,170 Common stock 84,780

Cash dividends $ 2,830 Consulting revenue 16,540 Rent expense 4,300 Salaries expense 7,740 Telephone expense 850 Miscellaneous expenses 670

Using the above information prepare an October 31 balance sheet for Ernst Consulting.

67. On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,780 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Retained earnings, October 1 as $0. Cash $ 8,990 Accounts receivable 16,540 Office supplies 3,930 Land 45,980 Office equipment 18,660 Accounts payable 9,170 Common stock 84,780

Cash dividends $ 2,830 Consulting revenue 16,540 Rent expense 4,300 Salaries expense 7,740 Telephone expense 850 Miscellaneous expenses 670

Using the above information prepare an October statement of retained earnings for Ernst Consulting.

68. Match each of the descriptions with the term or phrase it best

reflects.

69. Match each transaction or event to one of the following

activities of an organization: financing activities, investing activities, or operating activities.

70. On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,780 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items

and amounts. Retained earnings, October 1 as $0. Cash $ 8,990 Accounts receivable 16,540 Office supplies 3,930 Land 45,980 Office equipment 18,660 Accounts payable 9,170 Common stock 84,780

Cash dividends $ 2,830 Consulting revenue 16,540 Rent expense 4,300 Salaries expense 7,740 Telephone expense 850 Miscellaneous expenses 670

Also assume the following: a. The owner’s initial investment consists of $38,800 cash and $45,980 in land in exchange for its common stock. b. The company’s $18,660 equipment purchase is paid in cash. c. The accounts payable balance of $9,170 consists of the $3,930 office supplies purchase and $5,240 in employee salaries yet to be paid. d. The company’s rent, telephone, and miscellaneous expenses are paid in cash. e. No cash has been collected on the $16,540 consulting fees earned. Using the above information prepare an October 31 statement of cash flows for Ernst Consulting. (Cash outflows should be indicated by a minus sign.)...