Question 1

Ryder Company purchases $600 of equipment from Montez Inc. for cash. The effect of this transaction on the components of the basic accounting equation of Ryder Company is
A) an increase in assets and liabilities.
B) a decrease in assets and liabilities.
C) no change in total assets.
D) an increase in assets and a decrease in liabilities.

Accepted Answer

The answer of Ryder Company purchases $600 of equipment from...

Question 2

A proprietorship is a business
A) owned by one person.
B) owned by two or more persons.
C) organized as a separate legal entity under state corporation law.
D) owned by a governmental agency.

Accepted Answer

A proprietorship is a business owned by one person. B is incorrect because that would be a partnership. C would be a corporation, and D would be a government-owned business.

Question 3

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.

-The statement of financial position at December 31, 2014 reports total liabilities of
A) €60,000.
B) €120,000.
C) €156,000.
D) €238,000.

Accepted Answer

The statement of financial position reports total liabilities of €156,000. This can be verified by adding up all the liabilities listed on the statement of financial position. The liabilities are: trade payables (€48,000), bank overdraft (€22,000), loans payable (€56,000), and tax payable (€30,000), which total €156,000.

Question 4

The Roy's Downtown Diner received a bill of $400 from the Emeril Advertising Agency. The owner, Roy James, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is
A) a decrease in Cash and an increase in Accounts Payable.
B) a decrease in Cash and an increase in Retained Earnings.
C) an increase in Accounts Payable and a decrease in Retained Earnings.
D) a decrease in Accounts Payable and an increase in Retained Earnings.

Accepted Answer

The answer of The Roy's Downtown Diner received a bill...

Question 5

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
A) €252,000.
B) €180,000.
C) €162,000.
D) €96,000.

Accepted Answer

The answer of Use the following information for questions

EI...

Question 6

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called
A) communicating.
B) identifying.
C) processing.
D) recording.

Accepted Answer

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called recording. Recording refers to the process of entering financial transaction data into a bookkeeping system or software, typically in chronological order.

Question 7

Which of the following is not part of the accounting process?
A) Recording
B) Identifying
C) Financial decision making
D) Communicating

Accepted Answer

While financial decision making may involve using accounting information, it is not a direct part of the accounting process. The accounting process typically includes identifying, recording, classifying, summarizing, and communicating financial information.

Question 8

Which list below best describes the major services performed by public accountants?
A) Bookkeeping, mergers, budgets.
B) Employee training, auditing, bookkeeping.
C) Auditing, taxation, management consulting.
D) Cost accounting, production scheduling, recruiting.

Accepted Answer

Public accountants mainly perform auditing services to ensure the accuracy and integrity of financial statements, taxation services to help individuals and businesses comply with tax laws, and management consulting services to advise clients on improving their operations and achieving their business goals. Bookkeeping, mergers, budgets, employee training, cost accounting, production scheduling, and recruiting are either not major services provided by public accountants or are only a small part of what they do.

Question 9

Most companies in the United States follow standards issued by the
A) Financial Accounting Standards Board.
B) International Accounting Standards Board.
C) Internal Revenue Service.
D) Securities and Exchange Commission.

Accepted Answer

The Financial Accounting Standards Board (FASB) sets the accounting standards for U.S. companies. The International Accounting Standards Board (IASB) sets international accounting standards, but they are not mandatory for U.S. companies. The Internal Revenue Service (IRS) is responsible for enforcing tax laws, not accounting standards. The Securities and Exchange Commission (SEC) is a regulatory body that oversees financial reporting by publicly traded companies, but they do not set accounting standards.

Question 10

Use the following information for questions

O' Hara Company began operations on December 1, 2014. Presented below is selected information related to O' Hara Company at December 31, 2014.

-Retained earnings at December 31, 2014 is
A) £30,000.
B) £44,000.
C) £54,000.
D) £110,000.

Accepted Answer

Retained earnings at December 31, 2014 can be calculated by adding the net income for the year with the beginning balance of retained earnings and subtracting any dividends paid. 
Beginning retained earnings: £20,000 
Net income for the year: £34,000 
Dividends paid: £-2,000 
£20,000 + £34,000 - £2,000 = £52,000 
Therefore, the closest answer choice is C) £54,000.

Question 11

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.

-The statement of financial position at December 31, 2014 reports total assets of
A) €320,000.
B) €404,000.
C) €456,000.
D) €486,000.

Accepted Answer

The statement of financial position lists the following assets: 
- Property, plant, and equipment: €250,000 
- Intangible assets: €45,000 
- Inventories: €75,000 
- Trade and other receivables: €50,000 
- Cash and cash equivalents: €66,000 
Total assets = €250,000 + €45,000 + €75,000 + €50,000 + €66,000 = €486,000. Therefore, the correct answer is D.

Question 12

The first part of the accounting process is
A) communicating.
B) identifying.
C) processing.
D) recording.

Accepted Answer

The first part of the accounting process is identifying economic events relevant to the business.

Question 13

Use the following information for questions

O' Hara Company began operations on December 1, 2014. Presented below is selected information related to O' Hara Company at December 31, 2014.

-Equity at December 31, 2014, is
A) £296,000.
B) £242,000.
C) £186,000.
D) £110,000.

Accepted Answer

The answer of Use the following information for questions

O'...

Question 14

Preparing tax returns and engaging in tax planning is performed by
A) public accountants only.
B) private accountants only.
C) both public and private accountants.
D) IRS accountants only.

Accepted Answer

Both public and private accountants can prepare tax returns and engage in tax planning. Public accountants often specialize in tax preparation and may work for accounting firms or as independent consultants. Private accountants may work for businesses or individuals and also have tax preparation and planning responsibilities. IRS accountants are responsible for reviewing tax returns and enforcing tax laws, but do not typically assist with tax planning or preparation for individuals or businesses.

Question 15

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.

-The statement of financial position at December 31, 2014 reports equity of
A) €420,000.
B) €330,000.
C) €180,000.
D) €162,000.

Accepted Answer

The equity section on the statement of financial position shows that the company has share capital of €150,000 and retained earnings of €180,000. Therefore, the total equity is €330,000.

Question 16

Internal users of accounting information include all of the following except
A) company officers.
B) investors.
C) marketing managers.
D) production supervisors.

Accepted Answer

Internal users of accounting information typically include individuals within the organization who use the information for planning, controlling, and decision-making purposes. This includes company officers, marketing managers, and production supervisors. Investors, however, are considered external users because they are not part of the company's day-to-day operations and use the information for investment decisions.

Question 17

A private accountant can perform many activities in a business organization but would not work in
A) budgeting.
B) accounting information systems.
C) external auditing.
D) tax accounting.

Accepted Answer

A private accountant works exclusively for a particular organization and is responsible for managing its financial records, preparing financial statements, providing financial advice, and creating budgets. However, external auditing involves examining the financial records of an organization by an independent third party to verify their accuracy and compliance with accounting standards. Therefore, a private accountant would not be involved in external auditing as it requires an independent and objective perspective.

Question 18

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.

-Retained earnings reported on the statement of financial position at December 31, 2014 is
A) €330,000.
B) €252,000.
C) €168,000.
D) €162,000.

Accepted Answer

The answer of Use the following information for questions

EI...

Question 19

Fontaine Fox Company buys a $12,000 van on credit. This transaction will affect the
A) income statement only.
B) statement of financial position only.
C) income statement and retained earnings statement only.
D) income statement, retained earnings statement, and statement of financial position.

Accepted Answer

The answer of Fontaine Fox Company buys a $12,000 van...

Question 20

All of the following are services offered by public accountants except
A) budgeting.
B) auditing.
C) tax planning.
D) consulting.

Accepted Answer

Budgeting is typically not a service offered by public accountants. They may, however, provide financial planning or forecasting services that can be related to budgeting.

Quiz 1: Accounting in Action

Ryder Company purchases $600 of equipment from Montez Inc. for cash. The effect of this transaction on the components of the basic accounting equation of Ryder Company is

A proprietorship is a business

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. -The statement of financial position at December 31, 2014 reports total liabilities of

The Roy's Downtown Diner received a bill of $400 from the Emeril Advertising Agency. The owner, Roy James, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is

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

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called

Which of the following is not part of the accounting process?

Which list below best describes the major services performed by public accountants?

Most companies in the United States follow standards issued by the

Use the following information for questions O' Hara Company began operations on December 1, 2014. Presented below is selected information related to O' Hara Company at December 31, 2014. -Retained earnings at December 31, 2014 is

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. -The statement of financial position at December 31, 2014 reports total assets of

The first part of the accounting process is

Use the following information for questions O' Hara Company began operations on December 1, 2014. Presented below is selected information related to O' Hara Company at December 31, 2014. -Equity at December 31, 2014, is

Preparing tax returns and engaging in tax planning is performed by

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. -The statement of financial position at December 31, 2014 reports equity of

Internal users of accounting information include all of the following except

A private accountant can perform many activities in a business organization but would not work in

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. -Retained earnings reported on the statement of financial position at December 31, 2014 is

Fontaine Fox Company buys a $12,000 van on credit. This transaction will affect the

All of the following are services offered by public accountants except