A01V Exam 1 Answers Attempt 1 - Ashworth

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A01V Introduction to Accounting Exam 1 Answers Attempt 1 (Ashworth)

Lesson 1

Question 1

5 / 5 points

Katie's Vegetarian Restaurant, with total assets of $90,000, borrows $15,000 from the bank. Which of the following is a true statement upon borrowing the money?

Question options:

	Total assets are now $105,000.
	Total assets are now $80,000.
	Total assets are now $15,000.
	Total assets are now $75,000.
Question 2		5 / 5 points

Logan's Motor Sports buys $30,000 of equipment on credit. Which of the following is a true statement?

Question options:

	Total assets increase.
	Total assets are unchanged.
	Total liabilities decrease.
	Total liabilities are unchanged.
Question 3		5 / 5 points

The balance sheet contains __________.

Question options:

	liabilities, expenses and capital
	assets, liabilities and revenues
	expenses, assets and cash
	assets, liabilities and owner's equity
Question 4		5 / 5 points

Bonnie's Baskets purchases $4,000 worth of office equipment on account. This causes

Question options:

	Cash and Capital to decrease.
	Office Equipment and Accounts Payable to increase.
	Office Equipment to decrease and Accounts Payable to increase.
	Accounts Payable to increase and Capital to decrease.
Question 5		5 / 5 points

Mary invested cash in her new business. What effect will this have?

Question options:

	increase an asset and increase a liability
	decrease an asset and increase a liability
	increase an asset and increase owner's equity
	increase an asset and decrease owner's equity
Question 6		5 / 5 points

Which of the following would result if a business purchased Equipment paying a 40% down payment in cash?

Question options:

	Equipment would increase and Cash would decrease.
	Accounts Payable would increase.
	Since the equipment has not been paid in full, there is nothing to record.
	Both A and B are correct.
Question 7		5 / 5 points

If total assets are $30,000 and total liabilities are $18,000, Capital must equal __________.

Question options:

	$12,000
	$28,000
	$8,000
	$20,000
Question 8		5 / 5 points

If total liabilities increased by $6,000 and the assets increased by $8,000 during the accounting period, what is the change in the owner's equity amount?

Question options:

	increase of $2,000
	decrease of $2,000
	increase of $10,000
	decrease of $10,000
Question 9		5 / 5 points

A partnership is a business that is __________.

Question options:

	easy to form
	ends with the death of a partner
	owned by more than one person
	All of these answers are correct.
Question 10		0 / 5 points

Which is an advantage of a sole proprietorship form of business?

Question options:

	There is limited personal risk.
	The business can continue indefinitely.
	The owner makes all the decisions.
	All of these answers are correct.
Question 11		5 / 5 points

A legal firm would be considered a __________.

Question options:

	merchandise company
	manufacturer
	service company
	None of the above answers are correct.
Question 12		5 / 5 points

A purchase of a vehicle for cash would have what effect on the accounting equation?

Question options:

	Total asset amount remains the same.
	Total liabilities are overstated.
	Total owner's equity is overstated.
	Both A and B are correct.
Question 13		5 / 5 points

If total liabilities are $18,000 and owner's equity is $21,000, the total assets must be __________.

Question options:

	$39,000
	$5,000
	$20,000
	$17,000
Question 14		5 / 5 points

The purpose of the accounting process is to provide financial information about __________.

Question options:

	sole proprietorships
	small businesses
	large corporations
	All of these answers are correct.
Question 15		5 / 5 points

Which of the following will be recorded in the owner's equity column as an increase?

Question options:

	an exchange of assets
	the purchase of an asset on credit
	an investment by the owner
	a withdrawal by the owner
Question 16		5 / 5 points

If total liabilities are $1,000 and total assets are $8,000, owner's equity must be __________.

Question options:

	$7,000
	$3,000
	$10,000
	$13,000
Question 17		5 / 5 points

The Sarbanes-Oxley Act was passed to __________.

Question options:

	prevent fraud at public companies
	replace all of the old accounting procedures with new ones
	improve the accuracy of the company's financial reporting
	Both A and C are correct.
Question 18		5 / 5 points

Strum Hardware has total assets of $50,000. What are the total assets if new equipment is purchased for $10,000 cash?

Question options:

	$45,000
	$50,000
	$55,000
	$60,000
Question 19		5 / 5 points

Which of the following transactions would cause one asset to increase and another asset to decrease?

Question options:

	The owner invested cash in the business.
	The business paid a creditor.
	The business incurred an expense on credit.
	The business bought supplies for cash.
Question 20		5 / 5 points

Which of the following is a characteristic of a sole proprietorship?

Question options:

	business owned by more than one person
	easy to form
	each stockholder acts as an owner of the company
	can continue indefinitely