Accounting Exam 1-Fall 2003: Discussion Questions
Accounting 221
Exam 1 -- Fall 2003
Multiple Choice (10 points). Select the correct answer for each of the following multiple choice questions.
1. Assets may best be defined as:
a. Economic resources invested by the owners of a business.
b. Tangible economic resources of value.
c. Economic resources invested by the creditors of a business.
d. Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
e. Probable future economic benefits obtained or controlled by a particular entity as the result of future transactions or events.
2. Which of the following equations is NOT true?
a. Assets - Liabilities - Owners' Equity = Zero
b. Assets = Liabilities + Owners' Equity
c. Assets - Liabilities = Owners' Equity
d. Assets - Owners' Equity = Liabilities
e. Assets + …show more content…
The cost of manufacturing a product is reported as the expense "Cost of Goods Sold" in the period that the product is sold, not in the period when the cash was paid.
_____ 9. Even though the company has not collected the cash from customers, it shows revenue on its financial statements because it has delivered the goods to those customers.
_____ 10. Prediction of next month's cash needs calls for information such as last period's sales and the rate of sales growth.
_____ 11. Accountants have a guideline to use whenever multiple allowable procedures exist. This guideline says, "When in doubt choose the procedure that will be least likely to overstate assets and income."
_____ 12. Financial accountants prepare the statements assuming that the company will continue to operate in the future.
_____ 13. Following this principle has lead to voluminous footnotes in annual reports. 14. (15 points). For each of the transactions below, indicate whether the event would change total assets, total liabilities, or total owners' equity and in what direction. Use these abbreviations:
I - Increase
D - Decrease
U -
Exam 1 -- Fall 2003
Multiple Choice (10 points). Select the correct answer for each of the following multiple choice questions.
1. Assets may best be defined as:
a. Economic resources invested by the owners of a business.
b. Tangible economic resources of value.
c. Economic resources invested by the creditors of a business.
d. Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
e. Probable future economic benefits obtained or controlled by a particular entity as the result of future transactions or events.
2. Which of the following equations is NOT true?
a. Assets - Liabilities - Owners' Equity = Zero
b. Assets = Liabilities + Owners' Equity
c. Assets - Liabilities = Owners' Equity
d. Assets - Owners' Equity = Liabilities
e. Assets + …show more content…
The cost of manufacturing a product is reported as the expense "Cost of Goods Sold" in the period that the product is sold, not in the period when the cash was paid.
_____ 9. Even though the company has not collected the cash from customers, it shows revenue on its financial statements because it has delivered the goods to those customers.
_____ 10. Prediction of next month's cash needs calls for information such as last period's sales and the rate of sales growth.
_____ 11. Accountants have a guideline to use whenever multiple allowable procedures exist. This guideline says, "When in doubt choose the procedure that will be least likely to overstate assets and income."
_____ 12. Financial accountants prepare the statements assuming that the company will continue to operate in the future.
_____ 13. Following this principle has lead to voluminous footnotes in annual reports. 14. (15 points). For each of the transactions below, indicate whether the event would change total assets, total liabilities, or total owners' equity and in what direction. Use these abbreviations:
I - Increase
D - Decrease
U -