Question: Which element of the accounting equation represents the rights of owners?

Answer Choices:
Liabilities
Owner’s equity
Assets
None of these choices are correct

Answer: Owner’s equity

Question: The area of accounting that provides external users with information is called _____.

Answer Choices:
Managerial accounting
Financial accounting
Tax accounting
None of these choices are correct

Answer: Financial accounting

Question: Determine the value at which Easy Repair Service should record the land it purchased for $155,000.

Answer Choices:
$143,000
$155,000
$233,000
$248,000

Answer: $155,000

Question: The financial statement that lists assets, liabilities, and owner’s equity as of a specific date is called _____.

Answer Choices:
Income statement
Statement of owner’s equity
Balance sheet
Statement of cash flows

Answer: Balance sheet

Question: Burr Publishers purchased a building on March 20, 20X1, for $160,000. Which amount related to this purchase should be recorded in the accounting records?

Answer Choices:
$220,000
$180,000
$140,000
$160,000

Answer: $160,000

Question: _____ are expenses that have been paid but are yet to be recognized.

Answer Choices:
Accounts receivables
Accounts payable
Accrued expenses
Prepaid expenses

Answer: Prepaid expenses

Question: The numerator in the calculation of the ratio of liabilities to owner’s equity is _____.

Answer Choices:
Total Assets
Total Liabilities – Total Owner’s Equity
Total Owner’s Equity
Total Liabilities

Answer: Total Liabilities

Question: Corporations refer to total owner’s equity as _____.

Answer Choices:
Total stockholders’ equity
Total revenue
Total liabilities
Total assets

Answer: Total stockholders’ equity

Question: Which of the following best explains the change in creditors’ risk from 20Y6 to 20Y7, given an increase in the ratio of liabilities to owner’s equity from 1.40 to 1.51?

Answer Choices:
Risk decreased.
Risk did not change.
Risk increased.
Not enough information is provided to answer this question.

Answer: Risk increased.

Question: The resources owned by a business are its _____.

Answer Choices:
Liabilities
Owner’s equity
Assets
None of these choices are correct

Answer: Assets

Question: The rights and claims of creditors on a company’s assets are represented by _____.

Answer Choices:
Liabilities
Stockholders’ equity
Assets
None of these choices are correct

Answer: Liabilities

Question: Which type of business is owned by one individual?

Answer Choices:
Corporation
Partnership
Proprietorship
Limited Liability Company (LLC)

Answer: Proprietorship

Question: Which organization has the overall authority with the accounting and financial disclosures for companies whose shares of ownership (stock) are traded and sold to the public?

Answer Choices:
FASB
SEC
IASB
GAAP

Answer: SEC

Question: The financial statement that summarizes the changes in the owner’s equity during a specific period is called _____.

Answer Choices:
Income statement
Statement of owner’s equity
Balance sheet
Statement of cash flows

Answer: Statement of owner’s equity

Question: Which of the following is not a guideline of ethical conduct?

Answer Choices:
Identify an ethical decision using your personal ethical standards of honesty and fairness.
Identify the consequences of the decision and its effect on others.
Make a decision that is in the best interests of the company; other parties affected are not important.
None of these choices are correct.

Answer: Make a decision that is in the best interests of the company; other parties affected are not important.

Question: The financial statement that reports revenues and expenses for a period of time is called _____.

Answer Choices:
Income statement
Statement of owner’s equity
Balance sheet
Statement of cash flows

Answer: Income statement

Question: What is the ratio of liabilities to owner’s equity for Lincoln Company given liabilities of $1,000 and owner’s equity of $12,000?

Answer Choices:
0.0833
1.0833
12.00
None of these choices are correct

Answer: 0.0833

Question: A claim against a customer is called _____.

Answer Choices:
Accounts receivable
Accounts payable
Expense
All of these choices are correct

Answer: Accounts receivable