Businesses earn profits by converting financial, physical, and labor resources into goods and services that satisfy consumer demands. This statement is - Answer- true
Resource owners want to provide resources to businesses with high profit potential because those businesses will pay higher taxes...
CFA Exam 1 Questions And Answers
Businesses earn profits by converting financial, physical, and labor resources into
goods and services that satisfy consumer demands. This statement is - Answer- true
Resource owners want to provide resources to businesses with high profit potential
because those businesses will pay higher taxes. This statement is - Answer- false
Accounting provides a service to society by gathering and reporting information about a
company's profit potential. This statement is - Answer- true
Generally Accepted Accounting Principles (GAAP) are designed to provide guidance for
- Answer- financial accounting
Hector Lopez owns Hector Company. If Hector has 100% ownership interest in the
company, the Company's accountant will prepare only one set of statements that
reflects the combined assets of Hector and his company. This statement is - Answer-
false
Ellen Elder and her brother, Buster started Elder Company when they each invested
$600 in the company. After the investments there will be - Answer- three reporting
entities
Paul Savage purchased a restaurant named Burger Haven from Larry Jones. The
purchase would cause the number of reporting entities to - Answer- remains constant
Which of the following is an accurate definition of the term asset? - Answer- A resource
that will be used to produce revenue
Which of the following is not a source of assets? - Answer- none. (creditors, investors,
and operations are all a source)
If total assets increase then - Answer- liabilities, common stock, or retained earnings
must increase.
Liabilities - Answer- represent obligations to repay debts, may increase when assets
increase, and have priority in business liquidations
Which of the following is an accurate depiction of the accounting equation? - Answer-
Assets = Liabilities + Common Stock + Retained Earnings
Juarez Company acquired $1,200 from the issue of common stock. Which of the
following shows how this event will affect the company's accounting equation? The
letters "NA" indicate that the component of the equation is not affected. - Answer-
assets=1,200
, liabilities= NA
common stock= 1,200
Retained earnings= NA
Morrison Company experienced a business event that had the following effect on its
accounting equation:
Assets= 25,000
Liabilities= 25,000
common stock= NA
Retained earnings= NA - Answer- Paid off debt
Daemon Company paid cash to purchase land. Which of the following shows how this
event will affect the company's accounting equation? The letters "NA" indicate that the
component of the equation is not affected. - Answer- Assets= +-
Liabilities= NA
Common stock= NA
Retained earnings= NA
Fen Company paid a $300 cash dividend. Which of the following shows how this event
will affect the company's accounting equation? The letters "NA" indicate that the
component of the equation is not affected. - Answer- Assets= 300
Liabilities= NA
Common stock= NA
Retained earnings= 300
Which of the following is a true statement? - Answer- All are true:
A cash revenue is an economic benefit that will cause assets and retained earnings to
increase.
A cash expense is an economic sacrifice that will cause assets and retained earnings to
decrease.
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.
The accounting records of Coastal Company contained the following account balances.
Cash $ 500
Land $ 800
Notes Payable $ 200
Common Stock $ 400
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