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ACC 557
Quiz 1 Chapter 1 Week 2 perfect Solution
Owners
of business firms are the only people who need accounting information.
LO1 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Transactions
that can be measured in dollars and cents are recorded in the financial
information system.
Ans: LO1
BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
hiring of a new company president is an economic event recorded by the
financial information system.
LO1 BT:
C Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Management
of a business enterprise is the major external user of information.
LO2 BT:
K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Accounting
communicates financial information about a business enterprise to both internal
and external users.
Ans: LO2
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
Accounting
information is used only by external users with a financial interest in a
business enterprise.
LO2 BT:
C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Financial
statements are the major means of communicating accounting information to
interested parties.
Ans: LO2
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
Bookkeeping
and accounting are one and the same because the bookkeeping function includes
the accounting process.
LO2 BT:
C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
origins of accounting are attributed to Luca Pacioli, a famous mathematician.
Ans: LO2
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
study of accounting will be useful only if a student is interested in working
for a profit-oriented business firm.
LO2 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Private
accountants are accountants who are not employees of business enterprises.
LO2 BT:K
Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
study of accounting is not useful for a business career unless your career
objective is to become an accountant.
LO2 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
A
working knowledge of accounting is not relevant to a lawyer or an architect.
LO2 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Expressing
an opinion as to the fairness of the information presented in financial
statements is a service performed by CPAs.
Ans: LO2
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
Accountants
rely on a fundamental business concept—ethical behavior—in reporting financial
information.
Ans: LO3
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
primary accounting standard-setting body in the United States is the
International Accounting Standards Board.
LO4 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
Financial Accounting Standards Board is a part of the Securities and Exchange
Commission.
LO4 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
Securities and Exchange Commission oversees U.S. financial markets and
accounting standard-setting bodies.
Ans: LO4
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The cost
and fair value of an asset are the same at the time of acquisition and in all
subsequent periods.
LO4 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Even though
a partnership is not a separate legal entity, for accounting purposes the
partnership affairs should be kept separate from the personal activities of the
owners.
Ans: LO5
BT: C Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
A
partnership must have more than one owner.
Ans: LO5
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
economic entity assumption requires that the activities of an entity be kept
separate and distinct from the activities of its owner and all other economic
entities.
Ans: LO5
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
monetary unit assumption states that transactions that can be measured in terms
of money should be recorded in the accounting records.
Ans: LO5
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
In order
to possess future service potential, an asset must have physical substance.
LO6 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Owners'
claims to total business assets take precedence over the claims of creditors
because owners invest assets in the business and are liable for losses.
LO6 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
basic accounting equation states that Assets = Liabilities.
LO6 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Accountants
record both internal and external transactions.
Ans: LO7
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
Internal
transactions do not affect the basic accounting equation because they are
economic events that occur entirely within one company.
LO7 BT:
C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
purchase of store equipment for cash reduces stockholders’ equity by an equal
amount.
LO7 BT:
C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
purchase of office equipment on credit increases total assets and total
liabilities.
Ans: LO7
BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
primary purpose of the statement of cash flows is to provide information about
the cash receipts and cash payments of a company during a period.
Ans: LO8
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
Net
income for the period is determined by subtracting total expenses and drawings
from total revenues.
LO8 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
income statement is sometimes referred to as the statement of operations.
Ans: LO8
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
A
balance sheet reports the assets and liabilities of a company for a specific
period of time.
LO8 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
ending retained earnings balance is reported on both the retained earnings
statement and the balance sheet.
Ans: LO8
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
Identifying
is the process of keeping a chronological diary of events measured in dollars
and cents.
LO1 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Management
consulting includes examining the financial statements of companies and
expressing an opinion as to the fairness of their presentation.
LO2 BT:
K Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
Accountants
do not have to worry about issues of ethics.
LO3 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA BB: Critical Thinking AICPA
FN: Reporting
At the
time an asset is acquired, cost and fair value should be the same.
Ans: LO4
BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
The
monetary unit assumption requires that all dollar amounts be rounded to the
nearest dollar.
LO5 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
The
basic accounting equation is in balance when the creditor and ownership claims
against the business equal the assets.
Ans: LO6
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
External
transactions involve economic events between the company and some other enterprise
or party.
Ans: LO7
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB:
Critical Thinking AICPA FN: Reporting
In the
retained earnings statement, revenues are listed first, followed by expenses,
and net income (or net loss).
LO8 BT:
K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical
Thinking AICPA FN: Reporting
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