Question 1

The principal source of equity is amounts paid in by shareholders.

Accepted Answer

A) True 
 B)False

Question 2

All of the financial statements are for a period of time except the

Accepted Answer

A)  income statement.
B)  retained earnings statement.
C)  statement of financial position.
D)  statement of cash flows.E) B) and C)
F) A) and D)

Question 3

At October 1, Smithson Enterprises reported equity of $70,000.During October, capital shares of $10,000 were issued and the company posted a net loss of $6,000.If equity at October 31 totals $70,000, what amount of dividends were paid during the month?

Accepted Answer

A)  $0
B)  $4,000
C)  $6,000
D)  $10,000E) All of the above
F) B) and D)

Question 4

The use of computers in recording business events

Accepted Answer

A)  has made the recording process more efficient.
B)  does not use the same principles as manual accounting systems.
C)  has greatly impacted the identification stage of the accounting process.
D)  is economical only for large businesses.E) A) and C)
F) A) and B)

Question 5

The accounting process is correctly sequenced as

Accepted Answer

A)  identification, communication, recording.
B)  recording, communication, identification.
C)  identification, recording, communication.
D)  communication, recording, identification.E) A) and B)
F) All of the above

Question 6

Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation.

Accepted Answer

A) True 
 B)False

Question 7

Revenues would not result from

Accepted Answer

A)  sale of merchandise.
B)  issuance of common stock.
C)  performance of services.
D)  rental of property.E) A) and B)
F) A) and C)

Question 8

At October 1, Smithson Enterprises reported equity of $70,000.During October, capital shares of $4,000 were issued and the company earned net income of $12,000.If equity at October 31 totals $80,000, what amount of dividends were paid during the month?

Accepted Answer

A)  $0
B)  $6,000
C)  $8,000
D)  $10,000E) B) and C)
F) A) and D)

Question 9

On June 6, Wing Wah Inc.purchased supplies on account for HK$50,000.On June 30, the company paid half of the balance due.The June 30 payment will

Accepted Answer

A)  decrease Cash and increase Supplies Expense by HK$ 50,000.
B)  increase Cash and decrease Accounts Receivable by HK$25,000
C)  decrease Cash and decrease Accounts Payable by HK$25,000
D)  decrease Supplies and increase Supplies Expense by HK$25,000.E) None of the above
F) A) and D)

Question 10

The process of recording transactions has become more efficient because

Accepted Answer

A)  fewer events can be quantified in financial terms.
B)  computers are used in processing business events.
C)  more people have been hired to record business transactions.
D)  business events are recorded only at the end of the year.E) All of the above
F) A) and B)

Question 11

The cost principle requires that companies record assets at their

Accepted Answer

A)  appraisal value.
B)  cost.
C)  market price.
D)  list price.E) None of the above
F) B) and D)

Question 12

When assets are distributed to the shareholders of a corporation, these distributions are termed

Accepted Answer

A)  depletions.
B)  consumptions.
C)  dividends.
D)  a credit line.E) C) and D)
F) B) and C)

Question 13

Convergence refers to

Accepted Answer

A)  using the same accounting principles from one period to the next.
B)  use of the same accounting principles by all companies.
C)  the elimination of all accounting standard-setting bodies except the International Accounting Standards Board.
D)  the process of reducing the differences between IFRS and GAAP.E) C) and D)
F) A) and B)

Question 14

Equity is decreased by

Accepted Answer

A)  assets.
B)  revenues.
C)  expenses.
D)  liabilities.E) None of the above
F) A) and D)

Question 15

During October, Mica Inc.sold ordinary shares for €200,000, earned revenue of €22,000, incurred expenses of €12,000, and paid dividends of €1,000.Net income for the month is

Accepted Answer

A)  €9,000
B)  €10,000
C)  €209,000
D)  €210,000E) A) and B)
F) None of the above

Question 16

Use the following information for questions O' Hara Company began operations on December 1,2011 . Presented below is selected information related to O' Hara Company at December 31,  2011. 2011 . 2011.

-At December 31, 2011, liabilities total

Accepted Answer

A)  £16,000.
B)  £26,000.
C)  £37,000.
D)  £41,000. E) All of the above
F) A) and C)

Question 17

The retained earnings section of the statement of financial position is determined by

Accepted Answer

A)  assets,liabilities anad share capital.
B)  revenues, expenses and share capital.
C)  share capital.dividends and residual equity.
D)  revenues,expenses and dividends.E) B) and C)
F) A) and B)

Question 18

Communication of economic events is the part of the accounting process that involves

Accepted Answer

A)  identifying economic events.
B)  quantifying transactions into dollars and cents.
C)  preparing accounting reports.
D)  recording and classifying information.E) B) and C)
F) A) and C)

Question 19

External users of accounting information include the

Accepted Answer

A)  lnternational Accounting Standards Board.
B)  shareholders of Ferragamo.
C)  Marketing department at Olivetti.
D)  CEO of Air Italy.E) All of the above
F) A) and B)

Question 20

If total liabilities decreased by ¥30,000 and equity increased by ¥10,000 during a period of time, then total assets must change by what amount and direction during that same period?

Accepted Answer

A)  ¥40,000 increase
B)  ¥20,000 decrease
C)  ¥20,000 increase
D)  ¥30,000 decreaseE) A) and C)
F) A) and B)

Exam 1: Accounting in Action

When assets are distributed to the shareholders of a corporation, these distributions are termed

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The cost principle requires that companies record assets at their

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The principal source of equity is amounts paid in by shareholders.

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The process of recording transactions has become more efficient because

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On June 6, Wing Wah Inc.purchased supplies on account for HK$50,000.On June 30, the company paid half of the balance due.The June 30 payment will

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External users of accounting information include the

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At October 1, Smithson Enterprises reported equity of $70,000.During October, capital shares of $10,000 were issued and the company posted a net loss of $6,000.If equity at October 31 totals $70,000, what amount of dividends were paid during the month?

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At October 1, Smithson Enterprises reported equity of $70,000.During October, capital shares of $4,000 were issued and the company earned net income of $12,000.If equity at October 31 totals $80,000, what amount of dividends were paid during the month?

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The retained earnings section of the statement of financial position is determined by

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The use of computers in recording business events

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Equity is decreased by

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The accounting process is correctly sequenced as

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Revenues would not result from

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Communication of economic events is the part of the accounting process that involves

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Use the following information for questions O' Hara Company began operations on December 1,2011 . Presented below is selected information related to O' Hara Company at December 31, 2011. 2011 . 2011. -At December 31, 2011, liabilities total

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If total liabilities decreased by ¥30,000 and equity increased by ¥10,000 during a period of time, then total assets must change by what amount and direction during that same period?

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All of the financial statements are for a period of time except the

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During October, Mica Inc.sold ordinary shares for €200,000, earned revenue of €22,000, incurred expenses of €12,000, and paid dividends of €1,000.Net income for the month is

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Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation.

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Convergence refers to

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Use the following information for questions O' Hara Company began operations on December 1,2011 . Presented below is selected information related to O' Hara Company at December 31, $2011 .$ -At December 31, 2011, liabilities total

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