MGMT 200[PURDUE] EXAM 1 WTH
CORRECT ANSWERS .
Preparing a budget for a business is considered
A. financial accounting.
B. managerial accounting - CORRECT ANSWERS-B
Accounting is the information system that
A. measures business activities
B. communicates the results to decision makers
C. pr...
,Preparing a budget for a business is considered
A. financial accounting.
B. managerial accounting - CORRECT ANSWERS-B
Accounting is the information system that
A. measures business activities
B. communicates the results to decision makers
C. processes information into reports
D. all of the above. - CORRECT ANSWERS-D
Which of the following is not an external user of a business's financial information?
A. Taxing authorities B. Customers
C. Employees
D. Investors - CORRECT ANSWERS-C
Which statement below best describes the accounting equation?
A. The change in retained earnings equals net income less dividends.
B. Equality of revenue and expense transactions over time.
C. Financing activities equal investing and operating activities.
D. Resources of the company equal creditors' and owners' claims to those resources. -
CORRECT ANSWERS-D
Owners' claims to the company's resources are referred to as:
A. Liabilities.
B. Assets.
C. Stockholders' equity.
D. Net liabilities. - CORRECT ANSWERS-C
If total assets of a company equal $25,000 and total stockholders' equity equals
$10,000, then total liabilities equal $15,000.
A. True
,B. False - CORRECT ANSWERS-A
Amounts owed to suppliers for supplies purchased on account are defined as a(n):
A. Revenue.
B. Asset.
C. Liability.
D. Expense - CORRECT ANSWERS-C
If total liabilities of a company equal $29,000 and total stockholders' equity equals
$15,000, then total assets equal $14,000.
A. True
B. False - CORRECT ANSWERS-B
Financial accounting does not deal with which of the following?
A. Measuring a company's economic activity.
B. Providing information to internal users.
C. Preparing financial reports.
D. Communicating financial results to investors. - CORRECT ANSWERS-B
The accounting equation shows that a company's resources equal creditors' and
owners' claims to those resources.
A. True
B. False - CORRECT ANSWERS-A
An alternative form of the accounting equation is:
A. Assets ‐ Liabilities = Stockholders' Equity.
B. Net Income = Revenues ‐ Expenses.
C. Stockholders' Equity = Assets + Liabilities.
D. Assets = Liabilities ‐ Stockholders' Equity. - CORRECT ANSWERS-A
Which of the following does not represent an asset of a company?
A. Supplies held by the company.
B. Amounts owed to suppliers.
C. Equipment owned and used for
operations.
, D. Amounts receivable from customers. - CORRECT ANSWERS-B
The amounts recorded when the company sells products or provides services to
customers are referred to as:
A. Liabilities
B. Revenues
C. Assets
D. Expenses - CORRECT ANSWERS-B
If a company has stockholders' equity of $25,000 at the end of the year, which of the
following statements must be true?
A. The company has issued $25,000 of common stock.
B. Net income for the year equals $25,000.
C. The company's assets exceed liabilities by $25,000.
D. Total revenues during the year equal $25,000. - CORRECT ANSWERS-C
The costs of providing goods and services to customers are referred to as:
A. Assets
B. Expenses
C. Liabilities
D. Revenues - CORRECT ANSWERS-B
Which of the following best describes revenue?
A. Resources of a company.
B. Sales of goods and services to a customer.
C. Cash received from a customer.
D. Dividends paid to stockholders. - CORRECT ANSWERS-B
The difference between revenues and expenses is referred to as net income or net loss.
A. True
B. False - CORRECT ANSWERS-A
Use the following amounts to calculate net income: Revenues, $12,000; Liabilities,
$5,000; Expenses, $4,000; Assets, $19,000; Dividends, $4,000
A. $6,000.
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