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Exam 1: Accounting in Action

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Question 91

Multiple Choice

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The assumption that enables accounting to quantify (measure) economic events is the

A) economic entity assumption.
B) cost principle.
C) historical cost principle.
D) monetary unit assumption.

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Question 92

Multiple Choice

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Burgundy Inc. purchased supplies on account for €26,000. This transaction will

A) increase liabilities and decrease equity by €26,000.
B) increase assets and decrease equity by €26,000.
C) increase assets and increase liabilities by €26,000.
D) have no effect on the accounting equation.

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Question 93

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The framework used to record and summarize the economic activities of a business enterprise is referred to as the accounting equation. State the basic accounting equation and define its major components. How are business transactions and financial statements related to the accounting equation?

Liabilities of a company are owed to

Financial statements are the major means of communicating accounting information to interested parties.

If total liabilities decreased by ¥30,000 and equity increased by ¥5,000 during a period of time, then total assets must change by what amount and direction during that same period?

Use the following information for questions Metzger Company compiled the following financial information as of December 31, 2014: -Metzger's assets on December 31, 2014 are

If total liabilities decreased by ¥35,000 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?

Accountants refer to an economic event as a

Indicate which of these items is an asset (A), liability (L) or equity (E) account ______(1) Supplies ______ (2) Dividends ______ (3) Buildings ______ (4) Note Payable ______ (5) Taxes Payable

The first step in solving an ethical dilemma is to

At October 1, Smithson Enterprises reported equity of $210,000. During October, capital shares of $30,000 were issued and the company posted a net loss of $18,000. If equity at October 31 totals $210,000, what amount of dividends were paid during the month?

The State Administration of Taxation in the People's Republic of China is an example of an internal user of accounting information.

On its December 31, 2014 statement of financial position, Adaro Corporation reported liabilities of Rp5,132,000,000, share capital of Rp2,662,000,000 and retained earnings of Rp4,202,000,000. Total assets as of December 31, 2014 are

An income statement

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

The partnership form of business organization

Use the following information for questions EI Greco Corporation began operations on January 1, 2014. Presented below is selected information related to EI Greco at December 31, 2014. -Net income (loss) reported on the income statement for the month of December is

Match the following definitions and terms.

Accountants do not have to worry about issues of ethics.