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| 1.
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Net income is the result of the balance sheet reporting revenues that are larger than operating expenses. |
| | A) | True |
| | B) | False |
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| 2.
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Assets are the economic resources that are expected to produce future benefits. |
| | A) | True |
| | B) | False |
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| 3.
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Land, buildings, and equipment are examples of business expenses. |
| | A) | True |
| | B) | False |
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| 4.
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Assets include cash, land, equipment, buildings, accounts receivable and other resources owned and controlled by the company. |
| | A) | True |
| | B) | False |
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| 5.
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Another name for net assets is liabilities. |
| | A) | True |
| | B) | False |
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| 6.
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GASS are the rules that govern auditing procedures for financial statements. |
| | A) | True |
| | B) | False |
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| 7.
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The cost principle states that if $5,000 is spent for equipment that has a market value of $6,000, The value listed on the records is the actual $5,000 cost. |
| | A) | True |
| | B) | False |
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| 8.
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Assets are equal to liabilities plus owner's equity. |
| | A) | True |
| | B) | False |
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| 9.
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If assets total $21,000 and liabilities total $6,000, then owner's equity is $27,000. |
| | A) | True |
| | B) | False |
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| 10.
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Assume assets total $24,000, liabilities total $5,000, and owner's equity is $19,000. If assets increase by $3,000 and equity decreases by $1,000, then liabilities must increase by $4,000. |
| | A) | True |
| | B) | False |
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| 11.
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The revenue recognition principle (realization) states that revenues should be recognized when the cash for the transaction is received. |
| | A) | True |
| | B) | False |
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| 12.
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When cash is received on account, the Accounts Receivable account is decreased. |
| | A) | True |
| | B) | False |
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| 13.
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When the owner withdraws cash from the business, the Cash account will decrease and the Withdrawals account will decrease. |
| | A) | True |
| | B) | False |
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| 14.
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Totals for the net income, additional investment, and withdrawals are found on the Statement of Owner's Equity. |
| | A) | True |
| | B) | False |
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| 15.
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The financial condition of the business is shown on the Income Statement. |
| | A) | True |
| | B) | False |
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| 16.
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The financial statement that shows the results of a firm's operations over a specific time period is called the balance sheet. |
| | A) | True |
| | B) | False |
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| 17.
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Inflows of cash or other properties received in exchange for goods or services provided to customers as part of the major or central operations of the business are called revenues. |
| | A) | True |
| | B) | False |
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| 18.
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Every business transaction has an affect on one or more of the elements of the accounting equation. |
| | A) | True |
| | B) | False |
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| 19.
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After every business transaction is correctly recorded and reported, the accounting equation will be in balance. |
| | A) | True |
| | B) | False |
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| 20.
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During the accounting period, the assets increased by $4,000 and the equity increased by $1,000. For the balance sheet equation to balance, the liabilities must increase by $5,000. |
| | A) | True |
| | B) | False |
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| 21.
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Under the revenue recognition principle revenue is recognized only after services have been provided and cash has been received. |
| | A) | True |
| | B) | False |
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| 22.
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When the owner withdraws cash from the business, the transaction should be recorded as a decrease in the Capital account and an increase in the Withdrawals account. |
| | A) | True |
| | B) | False |
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| 23.
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When a business owner includes personal expenses in the business operations, it violates the business entity principle. |
| | A) | True |
| | B) | False |
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| 24.
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The balance sheet reports the financial position of a business for a specific time period. |
| | A) | True |
| | B) | False |
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| 25.
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The financial statement that describes the sources and uses of cash for a reporting period is called the cash flow statement. |
| | A) | True |
| | B) | False |
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| 26.
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Owner investments are recorded as revenue and are therefore reported on the income statement. |
| | A) | True |
| | B) | False |
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| 27.
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Owner's investments and net income will increase and owner withdrawals and net loss will decrease owner's equity. |
| | A) | True |
| | B) | False |
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| 28.
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An account receivable is a liability created by buying products or services on credit. |
| | A) | True |
| | B) | False |
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| 29.
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The statement of financial position is also called the cash flow statement. It reports the financial position of a business at a point in time. |
| | A) | True |
| | B) | False |
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| 30.
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Cash received from the selling of products or services should be recorded in the Cash account in the Income Statement. |
| | A) | True |
| | B) | False |
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