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Exam 1: Introducing Accounting in Business

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Question 1

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A partnership:

A) Is also called a sole proprietorship
B) Has unlimited liability
C) Has to have a written agreement in order to be legal
D) Is a legal organization separate from its owners
E) Has owners called shareholders

F) B) and D)
G) All of the above

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Question 2

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Marian Mosely is the owner of Mosely Accounting Services.Which accounting assumption requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?

A) Monetary unit assumption
B) Going-concern assumption
C) Cost assumption
D) Business entity assumption
E) None of these.Since Marian is a sole proprietor,she is not required to separate her personal financial information from the financial information of Mosely Accounting Services

F) A) and E)
G) None of the above

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Question 3

Multiple Choice

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

Identify the three basic forms of business organizations.

The records of Skymaster Airplane Rentals show the following information as of December 31,2011 $\begin{array}{|l|r|l|r|}\hline\text { Accounts payable } & \$ 36,000 & \text { 2011 Wages expense } & \$ 75,000 \\\hline \text { Insurance expense } & 2,000 & \text { 2011 Advertising expense } & 22,000 \\\hline \text { Accounts receivable } & 24,00 & \text { Cash } & 11,000 \\\hline \text { Retained earnings, } & & \text { Common stock } & 20,000 \\\text { December 31,2010 } & 130,000 & \text { Office furniture } & 15,000\\\hline\text { Airplanes } & 150,000 & 2011 \text { Maintenance expense } & 39,000 \\\hline \text { Notes payable } & 47,000 & 2011 \text { Revenues } & 217,000 \\\hline \text { Hangar } & 60,000 & &\\\hline \end{array}$ Dividends of $52,000 were paid during 2011. Using the above information,prepare a statement of retained earnings for 2011

Reebok's net income of $119 million and average assets of $1,400 million results in a return on assets of 8.5%.

Accounting is one way important information about businesses are reported to decision makers.

A company had total equity of $89,000 on January 1,2011.The following information is available for the year ended December 31,2011: $\begin{array} { | l | r | } \hline \text { 2011 Revenues } & \$ 350,000 \\\hline 2011 \text { Expenses } & 403,000 \\\hline \text { Liabilities, at December } 31,2011 & 27,000 \\\hline\end{array}$ What are the total assets of the company at December 31,2011?

Technological advancement

The statement of retained earnings:

Which of the following elements are found on the Balance Sheet?

Nike had income of $350 million and average assets of $2,000 million.Its return on assets is:

An exchange of value between two entities is called:

The International Accounting Standards Board (IASB)has the authority to impose its standards on companies around the world.

The statement of cash flows reports information on:

Match each of the following with the appropriate section of the Statement of Cash Flows

Internal users of accounting information include:

Below is accounting information for Cascade Company for 2010: $\begin{array} { | l | l | } \hline \text { Revenuse } & \$ 416,000 \\\hline \text { Cash } & \$ 120,000 \\\hline \text { Common Stock } & \$ 200,000 \\\hline \text { Experses } & \$ 300,000 \\\hline \text { Equipment } & \$ 240,000 \\\hline \text { Accounts Receivable } & \$ 35,000 \\\hline \text { Notes Payable } & \$ 50,000 \\\hline \text { Notes Receivable } & \$ 62,000 \\\hline\end{array}$ What were the Total Assets for the year?

Accounts payable appear on which of the following statements?

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n) :