Chapter 1

1. 1Which of the following is not a step in the accounting process?

   1. AIdentification
   2. BVerification
   3. CRecording
   4. DCommunication
2. 2Which of the following statements about users of accounting information is incorrect?

   1. AManagement is an internal user.
   2. BTaxing authorities are external users.
   3. CPresent creditors are external users.
   4. DRegulatory authorities are internal users.
3. 3The historical cost principle states that:

   1. Aassets should be initially recorded at cost and adjusted when the fair value changes.
   2. Bactivities of an entity are to be kept separate and distinct from its owner.
   3. Cassets should be recorded at their cost.
   4. Donly transaction data capable of being expressed in terms of money be included in the accounting records.
4. 4Which of the following statements about basic assumptions is correct?

   1. ABasic assumptions are the same as accounting principles.
   2. BThe economic entity assumption states that there should be a particular unit of accountability.
   3. CThe monetary unit assumption enables accounting to measure employee morale.
   4. DPartnerships are not economic entities.
5. 5The three types of business entities are:

   1. Aproprietorships, small businesses, and partnerships.
   2. Bproprietorships, partnerships, and corporations.
   3. Cproprietorships, partnerships, and large businesses.
   4. Dfinancial, manufacturing, and service companies.
6. 6Net income will result during a time period when:

   1. Aassets exceed liabilities.
   2. Bassets exceed revenues.
   3. Cexpenses exceed revenues.
   4. Drevenues exceed expenses.
7. 7As of December 31, 2014, Kent Company has assets of $3,500 and owner's equity of $2,000. What are the liabilities for Kent Company as of December 31, 2014?

   1. A$1,500
   2. B$1,000
   3. C$2,500
   4. D$2,000
8. 8Performing services on account will have the following effects on the components of the basic accounting equation:

   1. Aincrease assets and decrease owner's equity.
   2. Bincrease assets and increase owner's equity.
   3. Cincrease assets and increase liabilities.
   4. Dincrease liabilities and increase owner's equity.
9. 9Which of the following events is not recorded in the accounting records?

   1. AEquipment is purchased on account.
   2. BAn employee is terminated.
   3. CA cash investment is made into the business.
   4. DThe owner withdraws cash for personal use.
10. 10During 2014, Bruske Company's assets decreased $50,000 and its liabilities decreased $90,000. Its owner's equity therefore:
    

    1. Aincreased $40,000.
    2. Bdecreased $140,000.
    3. Cdecreased $40,000.
    4. Dincreased $140,000.

11. 11Payment of an account payable affects the components of the accounting equation in the following way.

    1. ADecreases owner's equity and decreases liabilities.
    2. BIncreases assets and decreases liabilities.
    3. CDecreases assets and increases owner's equity.
    4. DDecreases assets and decreases liabilities.
12. 12Which of the following statements is false?

    1. AA statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time.
    2. BA balance sheet reports the assets, liabilities, and owner's equity at a specific date.
    3. CAn income statement presents the revenues, expenses, changes in owner's equity, and resulting net income or net loss for a specific period of time.
    4. DAn owner's equity statement summarizes the changes in owner's equity for a specific period of time.
13. 13On the last day of the period, Alan Cesska Company buys a $900 machine on credit. This transaction will affect the:

    1. Aincome statement only.
    2. Bbalance sheet only.
    3. Cincome statement and owner's equity statement.
    4. Dincome statement, owner's equity statement, and balance sheet.
14. 14The financial statement that reports assets, liabilities, and owner's equity is the:

    1. Aincome statement.
    2. Bowner's equity statement.
    3. Cbalance sheet.
    4. Dstatement of cash flows.
15. 15Services performed by a public accountant include:

    1. Aauditing, taxation, and management consulting.
    2. Bauditing, budgeting, and management consulting.
    3. Cauditing, budgeting, and cost accounting.
    4. Dinternal auditing, budgeting, and management consulting.

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221 Principles of Accounting I Quiz on Chapter 1, created by Emily Christisen on 09/05/2016.

Author

Emily Christisen

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