Accounting Principles - first chapter - 1 Quiz

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

A. identification.

B. verification.

C. recording.

D. communication.

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* 2. Financial accounting provides internal reports to help users make decisions about their companies.

A. True

B. False

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* 3. Which of the following statements about users of accounting information is incorrect?

A. Management is an internal user.

B. Taxing authorities are external users.

C. Present creditors are external users.

D. Regulatory authorities are internal users.

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* 4. Which of the following would not be considered an internal user of accounting data for a company?

A. president of the company

B. controller of the company

C. production manager

D. Internal Revenue Service

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* 5. Ethics are the standards of conduct by which one's actions are judged as

A. honest or dishonest.

B. right or wrong.

C. fair or unfair.

D. all of these.

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* 6. The cost principle states that

A. assets should be initially recorded at cost and adjusted when the fair value changes.

B. activities of an entity are to be kept separate and distinct from its owner.

C. assets should be recorded at their cost.

D. only transaction data capable of being expressed in terms of money be included in the accounting records.

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* 7. The three types of business entities are

A. proprietorships, small businesses, and partnerships.

B. proprietorships, partnerships, and corporations.

C. proprietorships, partnerships, and large businesses.

D. financial, manufacturing, and service companies.

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* 8. At the beginning of the year, Kimball Company had total assets of $700,000 and total liabilities of $400,000. If the total assets increased $100,000 and the total liabilities decreased $80,000, what is the amount of owner's equity at the end of the year?

A. $300,000

B. $480,000

C. $20,000

D. cannot be determined from the data given.

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* 9. Performing services on account will have the following effects on the components of the basic accounting equation:

A. increase assets and decrease owner's equity.

B. increase assets and increase owner's equity.

C. increase assets and increase liabilities.

D. increase liabilities and increase owner's equity.

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* 10. The statement of cash flows provides information on the cash receipts and payments for a specific period of time.

A. True

B. False