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Accounting, Exam #1, Ch 1-4 Questions with Verified Answers
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Accounting, Exam #1, Ch 1-4 Questions with Verified Answers
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Accounting, Exam #1, Ch 1-4 Questionswith Verified Answers
T/F Accounting information is useful only to the owners of a business. - Answer-False
Which of the following branches of accounting is concerned primarily with external
reporting or communicating the results of economic activities to parties outside the firm?
- Answer-Financial Accounting
T/F Many accounting measurements are based on the historical-cost principle, which
holds that assets and liabilities are initially entered into the accounting records at
acquisition cost, but subsequently change as market values change. - Answer-False
Which of the following areas of the accounting profession is sometimes referred to as
industry accounting? - Answer-Private Accounting
T/F Accountants have developed ethical standards that pertain to financial record
keeping and reporting. - Answer-True
The economic resources owned by a company that are expected to benefit future
periods are: - Answer-Assets
The residual ownership share of a particular entity may be referred to as: - Answer-
Owner's Equity
Withdrawals of assets by the stockholders ("dividends") causes retained earnings to: -
Answer-Decrease
T/F The term "revenues" means net income. - Answer-False
T/F A company could experience a net loss and have dividends during the same
accounting period. - Answer-True
Purchase of assets for cash cause total assets to: - Answer-Remain the same
Payment of accounts payable with cash cause retained earnings to: - Answer-Remain
the same
The income statement is a statement: - Answer-For a period of time
Which financial statement most closely corresponds to the accounting equation? -
Answer-Balance sheet
, _____________ is a set of concepts and techniques that are used to measure and
report financial information about an economic unit. - Answer-Accounting
_____________ accounting involves reporting results of operating activity to
administrators within an organization. - Answer-Managerial
The private sector agency that currently oversees external financial reporting is the
_____________ _____________ _____________ _____________ . - Answer-Financial
Accounting Standards Board
Public accounting firms perform numerous services including auditing, income tax, and
_____________ . - Answer-Consulting
The shortened form of the accounting equation is assets equals _____________ plus
owners' equity. - Answer-Liabilities
The historical cost principle holds that accounting valuations be tied to objective and
_____________ past transactions. - Answer-verifiable
_____________ is the excess of a company's revenues over expenses for a given time
period. - Answer-Income
The four primary financial statements are the balance sheet, income statement,
statement of retained earnings, and _____________ _____________ _____________
_____________ . - Answer-Statement of Cash Flow
_____________ appears in both the income statement and the statement of retained
earnings. - Answer-Net income
The accounting profession can be divided into three major categories; specifically, the
practice of public accounting, private accounting, and governmental accounting. A
somewhat unique and important service of public accountants is: - Answer-Auditing
The primary private sector agency that oversees external financial reporting standards
is the: - Answer-Financial Accounting Standards Board
Which of the following equations properly represents a derivation of the fundamental
accounting equation? - Answer-Assets=Liabilities+Owners' Equity or Assets-
Liablities=Owners' Equity
Wilson Company owns land which cost $100,000. If a "quick sale" of the land was
necessary to generate cash, the company feels it would receive only $80,000. The
company continues to report the asset on the balance sheet at $100,000. This is
justified under which of the following concepts? - Answer-The historical cost principle
and the value is tied to objective and verifiable past transactions.
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