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Exam 1: Introducing Accounting in Business

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Question 111

Multiple Choice

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The financial statement that describes where a company's cash came from and where it went during the period is the:

A) Statement of financial position
B) Statement of cash flows
C) Balance sheet
D) Income statement
E) Statement of retained earnings

F) A) and D)
G) B) and E)

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Question 112

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The International Accounting Standards Board (IASB) issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices.

A) True
B) False

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Question 113

Multiple Choice

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The Maximum Experience Company acquired a building for $500,000. Maximum Experience had an appraisal done and found that the building was worth $575,000. The seller had paid $300,000 for the building 6 years ago. Which accounting principle would prescribe that Maximum Experience record the building on its records at $500,000?

The legitimate claims of a business's creditors take precedence over the claims of its stockholders.

A company paid its employees $90,000 in cash for wages earned during the past two weeks. Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below. $\begin{array} { | c | c | c | } \hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \\\hline & & \\\hline\end{array}$

Recording the items on the financial statements in dollars is:

A financial statement providing information that helps users understand a company's financial status and which lists the types and amounts of assets, liabilities and equity as of a specific date is called a(n) :

Accounting is an information and measurement system that identifies records and communicates financial information to users.

A company acquires equipment for $75,000 cash. This represents a(n) :

The private board that currently has the authority to establish U.S. generally accepted accounting principles is the:

Auditors are banned from direct investments with their clients.

On May 1, Chuck Taylor formed Fast-Forward, a shoe consulting business as a corporation. To start the business he invested $750,000 in cash. Enter the appropriate amounts reflecting the transaction into the accounting equation format shown below. $\begin{array} { | c | c | c | } \hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \\\hline & & \\\hline\end{array}$

A company has twice as much owner's equity as it does liabilities. If total liabilities are $50,000, what amounts of assets are owned by the company?

Lorton's Web Services has assets of $265,000 and liabilities of $130,000. Calculate the amount of equity.

Risk is the amount of uncertainty about the return we expect to earn in the future.

An external audit report is a professional opinion about whether the financial statements are prepared according to generally accepted accounting principles.

Ending Liabilities are 67,000, Beginning Equity was $87,000, Common Stock sold during year totaled $31,000, Expenses for the year were $22,000, Dividends declared totaled $13,000, Ending Equity for the year is $181,000 and Beginning Assets for the year were $222,000. What was Revenue for the year?

The Financial Accounting Standards Board is a private group that sets both broad and specific accounting principles.

Sara Bloom has prepared the following analysis of September transactions for her business, Blooming Florist. Unfortunately, she has lost some information. Determine the missing amounts (a) through (c) below.

The statement of cash flows reports on cash flows separated into operating, investing and financing activities over a period of time.