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Exam 1: Accounting in Business

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Question 91

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The Financial Accounting Standards Board is the governmental agency that sets both broad and specific accounting principles.

A) True
B) False

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Question 92

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If a company purchases equipment costing $4,500 on credit,the effect on the accounting equation would be:

A) Assets increase $4,500 and liabilities decrease $4,500.
B) Equity decreases $4,500 and liabilities increase $4,500.
C) Liabilities decrease $4,500 and assets increase $4,500.
D) Assets increase $4,500 and liabilities increase $4,500.
E) Equity increases $4,500 and liabilities decrease $4,500.

F) B) and D)
G) B) and C)

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Question 93

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Internal operating activities include research and development,distribution,and human resources.

The income statement shows the financial position of a business on a specific date.

Return on assets is also known as return on investment.

From an accounting perspective,an event is a happening that affects the accounting equation,but cannot be measured.

Risk is the _________________ about the return an investor expects to earn.

Strategic management is the process of determining the right mix of operating activities for the type of organization,its plans,and its market.

A ____________________ is a business that is owned by only one person.

Accounting is an information and measurement system that does all of the following except:

As a general rule,revenues should not be recognized in the accounting records when earned,but rather when cash is received.

If assets are $365,000 and equity is $120,000,then liabilities are:

Resources a company owns or controls that are expected to yield future benefits are:

Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable.

The accounting concept that requires every business to be accounted for separately from other business entities,including its owner or owners is known as the:

An example of an investing activity is:

The private-sector group that currently has the authority to establish generally accepted accounting principles in the United States is the:

The business entity assumption means that a business is accounted for separately from other business entities,including its owner or owners.

The ____________________ describes a company's revenues and expenses along with the resulting net income or net loss over a period of time due to earnings activities.

A balance sheet covers activities over a period of time such as a month or year.