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Exam 1: Accounting in Business

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Question 91

Multiple Choice

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

A) Going concern principle
B) Currency principle
C) Historical cost principle
D) Business entity principle
E) Revenue recognition principle

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Question 92

Multiple Choice

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The rules adopted by the accounting profession as guides in measuring, recording, and reporting the financial affairs and activities of a business are

A) both broad and specific principles
B) known as generally accepted accounting principles
C) abbreviated as GAAP
D) intended to make information in financial statements relevant and faithfully represented.
E) All of these

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Question 93

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The currency principle means that transactions are expressed using units of money as the common denominator.

A corporation

An individual or organization that owes an amount to a business is known to the business as a

The primary qualitative characteristics of financial information are relevance and faithful representation.

You are the accountant for Klemmer Corporation. At the company's year end, December 31, 2020, you discover there is an amount of $30,000 that has been earned by Klemmer but not yet billed to its customers by the year end. Laura Klemmer, the owner, tells you not to bill the customers as it is company policy not to bill customers until February 2020, well after the Christmas holidays. Klemmer has sales staff that are paid a bonus at year end on sales revenue billed. -Are there any ethical issues involved in not billing the customers? Explain.

A corporation is responsible for its actions and any debts incurred. It can enter into its own contracts, and it can buy, own, and sell property.

Caps Lock has liabilities of $100,000 and $150,000 in equity. What is the value of its assets?

Which of the following items does not appear on the balance sheet?

From the following information taken from the records of Peach Company at December 31 of this year, calculate equity.

Chuck Taylor invested $8,000 in cash in FastForward. This amount would be reported in the statement of cash flows under financing.

A statement of financial position is another name for

In Canada, Chartered Professional Accountants of Canada is the national organization that has been established to train and monitor its highly qualified professionals.

Individuals and organizations who own the right to receive payments from a business are called its debtors.

Revenue is recognized in most businesses

Dividends represent distributions of profits to the partners of a business.

At the end of its first year of operations, Lockerbie and Role Company has total assets of $3,000,000 and total liabilities of $1,200,000. The owner originally invested $200,000 in the business, but has not made any further investments or taken any withdrawals. What is the first year's profit for Lockerbie and Role Company?

Blu Lightning Co. paid its employees $2,000 in cash for two weeks' wages. Enter the appropriate amounts into the accounting equation format.

Which financial statement shows whether the business earned a profit or loss, and also lists the types and amounts of the revenues and expenses?