A01V Exam 1 Answers Attempt 1 - Ashworth

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


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