Question 1

The primary accounting standard-setting body in the United States is the

Accepted Answer

The Financial Accounting Standards Board (FASB) is the primary accounting standard-setting body in the United States. The International Accounting Standards Board (IASB) sets global accounting standards, but FASB is responsible for GAAP (Generally Accepted Accounting Principles) in the United States. The Internal Revenue Service (IRS) is responsible for tax regulations and enforcement, not accounting standards. The Securities and Exchange Commission (SEC) oversees financial reporting for publicly traded companies but does not set accounting standards.

Question 2

A proprietorship is a business

Accepted Answer

A proprietorship is owned by one person.

Question 3

At October 1 Flambo Company reported owner's equity of $70000. During October the owner made additional investments of $4000 and the company earned net income of $14000. If owner's equity at October 31 totals $78000 what amount of owner drawings were made during the month?

Accepted Answer

The answer of At October 1 Flambo Company reported owner's...

Question 4

The first part of the accounting process is

Accepted Answer

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

Question 5

Mirah Company compiled the following financial information as of December 31 2016: $$\begin{array} { l r } 
\text { Revenues } & \$ 340,000 \
\text { Owner's Capital (1/1/16) } & 140,000 \
\text { Equipment } & 80,000 \
\text { Expenses } & 240,000 \
\text { Cash } & 90,000 \
\text { Owner's Drawings } & 20,000 \
\text { Supplies } & 20,000 \
\text { Accounts payable } & 40,000 \
\text { Accounts receivable } & 70,000
\end{array}$$ Mirah's owner's equity on December 31 2016 is

Accepted Answer

Owner's equity on December 31, 2016, can be calculated by starting with the Owner's Capital at the beginning of the year, adding the net income (Revenues - Expenses), and subtracting the Owner's Drawings. This gives: $140,000 + ($340,000 - $240,000) - $20,000 = $220,000.

Question 6

Teamboo Company's owner's equity at the beginning of August 2016 was $740000. During the month the company earned net income of $175000 and owner's drawings were $80000. At the end of August 2016 what is the balance in owner's equity?

Accepted Answer

Owner's equity at the beginning of August = $740000
Adding net income earned in August = $175000
Total = $915000
Subtracting owner's drawings = $80000
Owner's equity at the end of August = $835000

Question 7

The organization(s) primarily responsible for establishing generally accepted accounting principles is(are) the $\begin{array}{lrr} \underline{\text { FASB }} & \underline{\text { SEC }}\\end{array}$ 
A)$\begin{array}{lrr}
  \text { no } && \text { no } &\
\end{array}$

B)$\begin{array}{lrr}
  \text { yes  } && \text { no } &\
\end{array}$

C)$\begin{array}{lrr}
  \text {no } &&& \text { no } &\
\end{array}$

D)$\begin{array}{lrr}
  \text {yes } && \text { yes} &\
\end{array}$

Accepted Answer

The answer of The organization(s) primarily responsible for establishing generally...

Question 8

At October 1 Flambo Company reported owner's equity of $76000. During October no additional investments were made and the company posted a net loss of $8000. If owner's equity at October 31 totals $64000 what amount of owner drawings were made during the month?

Accepted Answer

The change in owner's equity can be calculated as follows:
Beginning owner's equity + additional investments - net income - owner drawings = Ending owner's equity
$76,000 + $0 - $8,000 - owner drawings = $64,000
Solving for owner drawings, we get:
Owner drawings = Beginning owner's equity - Ending owner's equity + Net income
Owner drawings = $76,000 - $64,000 + (-$8,000) = $4,000
Therefore, option B is the correct answer.

Question 9

Luis Consulting started the year with total assets of $60000 and total liabilities of $17000. During the year the business recorded $48000 in consulting revenues and $36000 in expenses. Luis made an additional investment of $8000 and withdrew cash of $9000 during the year. The net income reported by Luis Consulting for the year was:

Accepted Answer

Net income is calculated as revenues minus expenses. Therefore, for Luis Consulting, the net income is $48,000 (revenues) - $36,000 (expenses) = $12,000.

Question 10

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

Accepted Answer

While financial decision making may be informed by accounting data and reports, it is not typically considered a part of the accounting process itself. The primary elements of the accounting process are recording financial transactions, identifying and measuring economic events, and communicating this information to stakeholders.

Question 11

At October 1 Flambo Company reported owner's equity of $68000. During October the owner made additional investments of $10000 and the company posted a net loss of $4000. If owner's equity at October 31 totals $70000 what amount of owner drawings were made during the month?

Accepted Answer

The answer of At October 1 Flambo Company reported owner's...

Question 12

Big Bite Diner received a bill of $800 from the Blackstone Wine Advertising Agency. The owner K. T. Lang is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is

Accepted Answer

The answer of Big Bite Diner received a bill of...

Question 13

Luis Consulting started the year with total assets of $60000 and total liabilities of $17000. During the year the business recorded $48000 in consulting revenues and $36000 in expenses. Luis made an additional investment of $8000 and withdrew cash of $9000 during the year. Owner's equity changed by what amount from the beginning of the year to the end of the year?

Accepted Answer

The change in owner's equity can be calculated by adding the net income (revenues - expenses) and the additional investment by the owner, then subtracting the owner's withdrawals. Net income = $48000 - $36000 = $12000. Change in owner's equity = $12000 (net income) + $8000 (additional investment) - $9000 (withdrawals) = $11000.

Question 14

At October 1 Flambo Company reported owner's equity of $70000. During October no additional investments were made and the company earned net income of $18000. If owner's equity at October 31 totals $80000 what amount of owner drawings were made during the month?

Accepted Answer

The owner's equity increased by $10,000 ($80,000 - $70,000) due to the net income of $18,000. Therefore, drawings must have been $8,000 to reduce the increase to $10,000.

Question 15

During the year 2016 Dallas Company earned revenues of $90000 had expenses of $62000 purchased assets with a cost of $10000 and had owner drawings of $6000. Net income for the year is

Accepted Answer

The answer of During the year 2016 Dallas Company earned...

Question 16

Internal users of accounting information include all of the following except

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

On January 1 2016 Utah Utility Company reported owner's equity of $705000. During the year the owner withdrew cash of $30000. At December 31 2016 the balance in owner's equity was $795000. What amount of net income or net loss would the company report for 2016?

Accepted Answer

To find the net income or net loss, we need to take into account the owner's withdrawals and the change in owner's equity.

Starting owner's equity = $705,000 
Owner's withdrawals = $30,000

Therefore, the initial owner's equity available for the company's operations = $705,000 - $30,000 = $675,000

At the end of the year, the owner's equity balance = $795,000

Therefore, the change in owner's equity = $795,000 - $675,000 = $120,000

This change in owner's equity can be attributed to two factors:

1. Net income or net loss 
2. Any investments made by the owner into the company

Since we know that there were no investments made by the owner into the company, we can safely assume that the entire change in owner's equity is due to the net income or net loss of the company.

Therefore, the net income or net loss = $120,000

Since the owner's equity increased from $705,000 to $795,000, we know that the company made a net income.

Therefore, the answer is C) Net income of $120,000.

Question 18

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

Accepted Answer

Keeping a systematic chronological diary of events that are measured in dollars and cents is called recording. Recording involves journalizing transactions to maintain a systematic chronological diary of events.

Question 19

A net loss will result during a time period when

Accepted Answer

A net loss occurs when expenses exceed revenues. This means that the company is spending more money than it is making, resulting in a negative overall profit for the time period.

Question 20

Luis Consulting started the year with total assets of $60000 and total liabilities of $17000. During the year the business recorded $48000 in consulting revenues and $36000 in expenses. Luis made an additional investment of $8000 and withdrew cash of $9000 during the year. The owner's equity at the end of the year was

Accepted Answer

The owner's equity at the end of the year can be calculated as follows: Start with the initial owner's equity, which is total assets minus total liabilities ($60,000 - $17,000 = $43,000). Add the net income for the year, which is revenues minus expenses ($48,000 - $36,000 = $12,000). Then, add the additional investment ($8,000) and subtract the withdrawals ($9,000). So, the calculation is $43,000 + $12,000 + $8,000 - $9,000 = $54,000.

Quiz 1: Accounting in Action