Ramirez company received their first electric bill in the

Assignment Help Accounting Basics

Reference no: EM13482196

1. Ramirez Company received their first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

Increase Liabilities (Accounts Payable) and decrease Owner's Equity (Utilities Expense)
Increase Liabilities (Accounts Receivable) and decrease Owner's Equity (Utilities Expense)
Decrease Assets (Cash) and decrease Liabilities (Accounts Payable)
Decrease Assets (Cash) and decrease Owner's Equity (Utilities Expense)

2. Earning revenue:

increases assets, increases owner's equity.
increases assets, decreases owner's equity
increases one asset, decreases another asset
decreases assets, increases liabilities

3. How does the purchase of equipment by signing a note affect the accounting equation?

assets increase; assets decrease
assets increase; liabilities decrease
assets increase; liabilities increase
assets increase; owner's equity increases

4. The objectivity principle requires that:

business transactions must be consistent with the objectives of the entity
the Financial Accounting Standards Board must be fair and unbiased in its deliberations over new accounting standards
accounting principles must meet the objectives of the Security and Exchange Commission
amounts recorded in the financial statements must be based on independently verifiable evidence

5. Which of the following is not true of accounting principles?

Financial accountants follow generally accepted accounting principles (GAAP).
Following GAAP allows accounting information users to compare one company to another.
A new accounting principle can be adopted with stockholders approval.
The Financial Accounting Standards Board (FASB) has primary responsibility for developing accounting principles.
Accounting principles develop from research, accepted accounting practices, and pronouncements of authoritative bodies.

6. Profit is the difference between:

assets and liabilities
the incoming cash and outgoing cash
the assets purchased with cash contributed by the owner and the cash spent to operate the business
the assets received for goods and services and the amounts used to provide the goods and services

7. Presently, the dominant body in the development of accounting principles is the:

American Institute of Certified Public Accountants (AICPA)
American Accounting Association (AAA)
Financial Accounting Standards Board (FASB)
Institute of Management Accountants (IMA)

8. Owned resources of a business are referred to as:

Assets
Liabilities
Equities
Revenues

9. The assets and liabilities of the company are $175,000 and $40,000, respectively. Owner's equity should equal:

$215,000
$135,000
$175,000
$40,000

10. How does paying a liability in cash affect the accounting equation?

assets increase; liabilities decrease
assets increase; liabilities increase
assets decrease; liabilities decrease
liabilities decrease; owner's equity increases

Reference no: EM13482196

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