Chapter 01 – Accounting and Business
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ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
78. Which one of the following is the authoritative body in the United States having the primary responsibility for
developing accounting principles?
a.
FASB
b.
IRS
c.
SEC
d.
AICPA
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
79. Which of the following items relates to separating the reporting of business and personal economic transactions?
a.
cost principle
b.
monetary unit assumption
c.
business entity assumption
d.
measurement principle
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
80. Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value
of the land to be $220,000. The Focus Company initially offered to buy the land for $177,000. The companies settled on
a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the
cost principle, at what amount should the land be recorded in the accounting records of Focus Company?
Chapter 01 – Accounting and Business
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Page 32
a.
b.
c.
d.
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
81. Many countries outside the United States use financial accounting standards issued by the
a.
AICPA
b.
SEC
c.
IASB
d.
FASB
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
82. The monetary unit assumption
a.
is only used in the financial statements of manufacturing companies
b.
is not important when applying the cost principle
c.
requires that different units be used for assets and liabilities
d.
requires that economic data be reported in yen in Japan or dollars in the United States
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
Chapter 01 – Accounting and Business
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Page 34
a.
always lower than liabilities
b.
equal to liabilities less stockholders’ equity
c.
the same as expenses because they are acquired with cash
d.
financed by the stockholders and/or creditors
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
86. Debts owed by a business are referred to as
a.
accounts receivables
b.
expenses
c.
stockholders’ equity
d.
liabilities
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.16 – Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
87. The accounting equation may be expressed as
a.
Assets = Expenses − Liabilities
b.
Assets + Liabilities = Stockholders’ Equity
c.
Assets = Revenues − Liabilities
d.
Assets − Liabilities = Stockholders’ Equity
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
Chapter 01 – Accounting and Business
Copyright Cengage Learning. Powered by Cognero.
Page 38
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
95. The asset created by a business when it makes a sale on account is termed
a.
accounts payable
b.
prepaid expense
c.
interest revenue
d.
accounts receivable
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.12 – Receivables Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
96. The debt created by a business when it makes a purchase on account is referred to as an
a.
account payable
b.
account receivable
c.
asset
d.
expense payable
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
Copyright Cengage Learning. Powered by Cognero.
Page 40
99. How does paying a liability in cash affect the accounting equation?
a.
assets increase; liabilities decrease
b.
assets increase; liabilities increase
c.
assets decrease; liabilities decrease
d.
liabilities decrease; stockholders’ equity increases
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
100. How does receiving a bill to be paid next month for services received affect the accounting equation?
a.
assets decrease; stockholders’ equity decreases
b.
assets increase; liabilities increase
c.
liabilities increase; stockholders’ equity increases
d.
liabilities increase; stockholders’ equity decreases
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
101. How does the payment of rent for equipment affect the accounting equation?
a.
assets increase; assets decrease
b.
assets decrease; stockholders’ equity decreases
c.
assets decrease; liabilities increase
d.
assets increase; stockholders’ equity increases
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate