D196 QUESTIONS AND VERIFIED ANSWERS
What is the effect of a company's accounting department maintaining high ethical
standards?
The company can hire fewer accountants to do the same amount of work.
The company's accounting information will decrease in value.
The company can report more favorable results in its financial statements.
The company's accounting information will increase in value. - Answers - The
company's accounting information will increase in value.
Why might employees be interested in their company's financial accounting
information?
Financial statement data are used to record long term liabilities.
Financial statement data provide item-by-item product cost information.
Financial statement data provide detailed internal budget information.
Financial statement data are often used in determining employee bonuses. - Answers -
Financial statement data are often used in determining employee bonuses.
Which group establishes financial accounting rules in the United States?
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
International Accounting Standards Board (IASB)
Internal Revenue Service (IRS) - Answers - Financial Accounting Standards Board
(FASB)
Which report is one of the three primary financial statements?
Statement of the accounting cycle
Statement of management accounting
Statement of cash flows
Statement of stakeholder funds - Answers - Statement of cash flows
A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation?
Assets decrease by $5,000; expenses increase by $5,000.
Assets increase by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; revenues increase by $5,000.
Assets decrease by $5,000; liabilities increase by $5,000. - Answers - Assets decrease
by $5,000; expenses increase by $5,000.
What is a transaction?
A type of commonly used accounting software
A category of merchandiser or retailer
Two parties exchanging something of value
, An example of an online business document - Answers - Two parties exchanging
something of value
A company borrowed $80,000 cash from a bank.
How does this transaction affect the accounting equation of the borrowing company?
Assets increase by $80,000; owners' equity increases by $80,000.
Assets increase by $80,000; liabilities decrease by $80,000.
Assets increase by $80,000; liabilities increase by $80,000.
Assets increase by $80,000; revenues increase by $80,000. - Answers - Assets
increase by $80,000; liabilities increase by $80,000.
What is the impact of expenses on the accounting equation?
Expenses increase owners' equity.
Expenses decrease liabilities.
Expenses decrease owners' equity.
Expenses increase liabilities. - Answers - Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of?
Liability
Asset
Expense
Equity - Answers - Liability
What is the purpose of the financial accounting cycle?
To collect confidential information for management to use as a competitive tool
To turn information about transactions into financial statements
To gather information related to the expenses and income generated by a company
To produce and analyze a company's monthly bank statement - Answers - To turn
information about transactions into financial statements
According to the accounting equation, the amount of liabilities and equity must always
be equal to another amount.
What is that other amount?
Cash
The sum of revenues and expenses
Assets
The sum of expenses and dividends - Answers - Assets
Which item is an expense item?
Cost of goods sold
Loans payable
Accounts receivable
Accounts payable - Answers - Cost of goods sold
How is gross profit computed?
Total revenues minus total expenses
What is the effect of a company's accounting department maintaining high ethical
standards?
The company can hire fewer accountants to do the same amount of work.
The company's accounting information will decrease in value.
The company can report more favorable results in its financial statements.
The company's accounting information will increase in value. - Answers - The
company's accounting information will increase in value.
Why might employees be interested in their company's financial accounting
information?
Financial statement data are used to record long term liabilities.
Financial statement data provide item-by-item product cost information.
Financial statement data provide detailed internal budget information.
Financial statement data are often used in determining employee bonuses. - Answers -
Financial statement data are often used in determining employee bonuses.
Which group establishes financial accounting rules in the United States?
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
International Accounting Standards Board (IASB)
Internal Revenue Service (IRS) - Answers - Financial Accounting Standards Board
(FASB)
Which report is one of the three primary financial statements?
Statement of the accounting cycle
Statement of management accounting
Statement of cash flows
Statement of stakeholder funds - Answers - Statement of cash flows
A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation?
Assets decrease by $5,000; expenses increase by $5,000.
Assets increase by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; revenues increase by $5,000.
Assets decrease by $5,000; liabilities increase by $5,000. - Answers - Assets decrease
by $5,000; expenses increase by $5,000.
What is a transaction?
A type of commonly used accounting software
A category of merchandiser or retailer
Two parties exchanging something of value
, An example of an online business document - Answers - Two parties exchanging
something of value
A company borrowed $80,000 cash from a bank.
How does this transaction affect the accounting equation of the borrowing company?
Assets increase by $80,000; owners' equity increases by $80,000.
Assets increase by $80,000; liabilities decrease by $80,000.
Assets increase by $80,000; liabilities increase by $80,000.
Assets increase by $80,000; revenues increase by $80,000. - Answers - Assets
increase by $80,000; liabilities increase by $80,000.
What is the impact of expenses on the accounting equation?
Expenses increase owners' equity.
Expenses decrease liabilities.
Expenses decrease owners' equity.
Expenses increase liabilities. - Answers - Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of?
Liability
Asset
Expense
Equity - Answers - Liability
What is the purpose of the financial accounting cycle?
To collect confidential information for management to use as a competitive tool
To turn information about transactions into financial statements
To gather information related to the expenses and income generated by a company
To produce and analyze a company's monthly bank statement - Answers - To turn
information about transactions into financial statements
According to the accounting equation, the amount of liabilities and equity must always
be equal to another amount.
What is that other amount?
Cash
The sum of revenues and expenses
Assets
The sum of expenses and dividends - Answers - Assets
Which item is an expense item?
Cost of goods sold
Loans payable
Accounts receivable
Accounts payable - Answers - Cost of goods sold
How is gross profit computed?
Total revenues minus total expenses
