Resources owned or controlled by a company that are expected to yield future benefits are:

Resources owned or controlled by a company that are expected to yield future benefits are:

a. Assets.
b. Revenues.
c. Liabilities.
d. Owner's Equity.
e. Expenses.




Answer: A

If equity is $300,000 and liabilities are $192,000, then assets equal:

If equity is $300,000 and liabilities are $192,000, then assets equal:

a. $108,000.
b. $192,000.
c. $300,000.
d. $492,000.
e. $792,000.





Answer: D

Net Income:

Net Income:

a. Decreases equity.
b. Represents the amount of assets owners put into a business.
c. Equals assets minus liabilities.
d. Is the excess of revenues over expenses.
e. Represents owners' claims against assets.

Answer: D

An example of an investing activity is

An example of an investing activity is

a. Paying wages of employees.
b. Withdrawals by the owner.
c. Purchase of land.
d. Selling inventory.
e. Contribution from owner.

Answer: C

Operating activities:

Operating activities:

a. Are the means organizations use to pay for resources like land, buildings and equipment.
b. Involve using resources to research, develop, purchase, produce, distribute and market products and services.
c. Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
d. Are also called asset management.
e. Are also called strategic management.

Answer: B

An example of an operating activity is:

An example of an operating activity is:

a. Paying wages.
b. Purchasing office equipment.
c. Borrowing money from a bank.
d. Selling stock.
e. Paying off a loan.

Answer: A

An example of a financing activity is:

An example of a financing activity is:

a. Buying office supplies.
b. Obtaining a long-term loan.
c. Buying office equipment.
d. Selling inventory.
e. Buying land.

Answer: B

Which of the following accounting principles would require that all goods and services purchased should be recorded at cost?

Which of the following accounting principles would require that all goods and services purchased should be recorded at cost?

a. Going-concern principle.
b. Continuing-concern principle.
c. Cost principle.
d. Business entity principle.
e. Consideration principle.

Answer: C

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

a. Going-concern principle.
b. Business entity principle.
c. Objectivity principle.
d. Cost Principle.
e. Monetary unit principle.

Answer: A

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

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

a. Objectivity principle.
b. Business entity assumption.
c. Going-concern assumption.
d. Revenue recognition principle.
e. Cost principle.






Answer: B

External users of accounting information include:

External users of accounting information include:

a. Shareholders.
b. Customers.
c. Creditors.
d. Government regulators.
e. All of these.





Answer: E

Internal users of accounting information include:

Internal users of accounting information include:

a. Shareholders.
b. Managers.
c. Lenders.
d. Suppliers.
e. Customers.

Answer: B

Accounting is an information and measurement system that:

Accounting is an information and measurement system that:

a. Identifies business activities.
b. Records business activities.
c. Communicates business activities.
d. Helps people make better decisions.
e. All of these.





Answer: E

Lomax Enterprises purchased a depreciable asset for $20,000 on January 1, 2008. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on June 30, 2011?

Lomax Enterprises purchased a depreciable asset for $20,000 on January 1, 2008. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on June 30, 2011?

a. $18000
b. $4500
c. $13500
d. $20,000
e. $15750

Answer: E

Thomas Enterprises purchased a depreciable asset on January 1, 2008 at a cost of $100,000. The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life. Balance of accumulated depreciation of this asset at the end of 2009 is

Thomas Enterprises purchased a depreciable asset on January 1, 2008 at a cost of $100,000. The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life. Balance of accumulated depreciation of this asset at the end of 2009 is

a. $27540
b. $21600
c. $34000
d. $17000
e. $90000





Answer: C

Orange Company purchased equipment on July 1 for $28,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $4,500, the amount of monthly depreciation expense Nelson should recognize is:

Orange Company purchased equipment on July 1 for $28,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $4,500, the amount of monthly depreciation expense Nelson should recognize is:

a. $2,400
b. $ 200
c. $4800
d. $400
e. $ 450

Answer: D

A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000, and had a five-year useful life. What is the depreciation expense for one year?

A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000, and had a five-year useful life. What is the depreciation expense for one year?

a. $1000.
b. $1800.
c. $2400.
d. $2000.
e. $2160.






Answer: D

A vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. The depreciation expense (using straight line method) for a year is:

A vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. The depreciation expense (using straight line method) for a year is:

a. $ 2687.50.
b. $ 3546.50.
c. $ 2875.00.
d. $10,750.00.
e. $ 2,856.25.

Answer: A

The company has $1679 credit sales at year end. Experiences show that 4% of credit sales may not be collectable. What is the estimated bad debt expense to be record at year end?

The company has $1679 credit sales at year end. Experiences show that 4% of credit sales may not be collectable. What is the estimated bad debt expense to be record at year end?

a. $1200
b. $419
c. $67.16
d. $100
e. None of these





Answer: C

The amount due on the maturity date of a $12,000, 60-day 8%, note receivable is:

The amount due on the maturity date of a $12,000, 60-day 8%, note receivable is:

a. $6,000.
b. $12,000.
c. $160.
d. $12,160.
e. $5,920.





Answer: B