Question

1.Which of the following is not a goal of the internal controls implemented by owners and managers?

Multiple Choice

• to safeguard assets

• to ensure reliability of accounting data

• to promote compliance with management policies and applicable laws

• to reduce expenses through the use of efficient processes

2.The three major legal forms of business entity are the sole proprietorship, the partnership, and the __________.

Multiple Choice

• merchandiser

• corporation

• service business

• small business

3.The financial statements submitted to the SEC by a corporation must be __________ by an independent accountant to ensure their fairness and adherence to generally accepted accounting principles.

Multiple Choice

• audited

• reviewed

• created

• read

4.A form of business entity owned by two or more people is called a(n) __________.

Multiple Choice

• corporation

• sole proprietorship

• partnership

• limited liability company

5.An example of an economic entity is

Multiple Choice

• a town.

• a business.

• a politician.

• a church.

6.The form of a business organization that is not affected by the withdrawal or death of an owner and can continue indefinitely is the

Multiple Choice

• sole proprietorship.

• partnership.

• corporation.

• nonprofit organization.

7.Tax planning includes

Multiple Choice

• preparing tax returns.

• auditing tax returns.

• correcting tax returns.

• suggesting actions to reduce tax liability.

8.Which of the following did NOT result from the Sarbanes-Oxley Act?

Multiple Choice

• the creation of a five-member Public Company Accounting Oversight Board

• the reduction of the “Big Five” accounting firms to the “Big Four”

• the requirement that chief executives and chief financial officers of publicly-traded corporations certify their financial statements

• the requirement that accounting firms maintain the same lead auditor for a company for at least ten years

9.The Sarbanes-Oxley Act includes rules on

Multiple Choice

• auditor retention.

• auditor reliability.

• auditor rotation.

• auditor reporting.

10.The debts or obligations of a business are known as its __________.

Multiple Choice

• assets

• liabilities

• owner's equity

• capital

12.When a business sells services for cash, assets increase and revenue __________.

Multiple Choice

• increases

• decreases

• is unchanged

• may either increase or decrease

13.Which of the following equations is the Fundamental Accounting Equation?

Multiple Choice

• Assets + Liabilities = Owner’s Equity

• Assets + Owner’s Equity = Liabilities

• Assets = Liabilities + Owner’s Equity

• Assets = Liabilities − Owner’s Equity

14.The balance sheet shows:

Multiple Choice

• the results of business operations.

• all revenues and expenses.

• the amount of net income or loss.

• the financial position of a business at a given time.

15.When analyzing the effect of a business transaction, which of the following is not a step taken to describe the financial event?

Multiple Choice

• identify the property

• identify who owns the property

• determine the location of the property

• determine the amount of the increase or decrease

16.If during the year total assets increase by $75,000 and total liabilities decrease by $16,000, by how much did owner's equity increase/decrease?

Multiple Choice

• $91,000 increase

• $59,000 decrease

• $91,000 decrease

• $75,000 increase

17.When an electric bill is paid, which of the following increases?

Multiple Choice

• assets

• expenses

• liabilities

• owner's equity

18.At the end of its first year of operations, Shapiro’s Consulting Services reported net income of $31,300. They also had account balances of: Cash, $18,900; Office Supplies, $3,200, Equipment, $25,800 and Accounts Receivable, $8,000. The owner’s total investment for this first year was $20,400 and the owner withdrew $2,740 for personal use.

Calculate the ending balance to be reported on the Statement of Owner’s Equity in the Owner’s Capital account.

Multiple Choice

• $70,600

• $31,300

• $50,500

• $48,960

19.Which of these accounts would appear on a firm’s income statement?

Multiple Choice

• assets and liabilities

• revenues and expenses

• assets and revenues

• liabilities and expenses

20.The Balance Sheet heading includes each of the following except:

Multiple Choice

• firm's name.

• firm's address.

• title of the report.

• date of the report.

21.Separate written records called ____________________ are kept for each asset and liability and for the owner's equity of a business.

Multiple Choice

• accounts

• classifications

• trial balances

• financial statements

23.A business purchases equipment costing $7,300. They pay $1,400 right away and charge the remaining amount. To record this transaction, the business would:

Multiple Choice

• Debit Equipment $5,900; Credit Accounts Payable $5,900

• Debit Equipment $1,400; Credit Cash $1,400

• Debit Equipment $7,300; Credit Cash $1,400 and Credit Accounts Payable $5,900

• Debit Equipment $7,300; Credit Accounts Payable $7,300

24.Which of the following entries records the withdrawal of cash for personal use by Ty Knott, the owner of a business?

Multiple Choice

• debit Cash and credit Ty Knott, Capital

• debit Ty Knott, Drawing and credit Salary Expense

• debit Salary Expense and credit Cash

• debit Ty Knott, Drawing, and credit Cash

25.Debits are used to record:

Multiple Choice

• increases in assets.

• increases in revenue.

• decreases in expenses.

• increases in liabilities.

26.When recording a transaction in a T account, which of the following is not accurate?

Multiple Choice

• multiple debits may be used

• it is not necessary to record a credit for every transaction

• asset and expense accounts are increased via a debit

• liability and revenue accounts are decreased via a debit

27.Credits are used to record:

Multiple Choice

• decreases in assets and liabilities.

• increases in assets, liabilities, and owner's equity.

• decreases in liabilities and increases in assets and expenses.

• increases in liabilities and revenues.

28.Debits are used to record increases in:

Multiple Choice

• assets and expenses.

• assets and capital accounts.

• assets and revenue.

• assets and liabilities.

29.When cash is spent to purchase supplies, the accountant:

Multiple Choice

• debits an asset account and credits a liability account

• debits an asset account and credits an asset account

• debits an owner’s equity account and credits a liability account

• debits a liability account and credits an asset account

30.Which of the following types of accounts normally have debit balances?

Multiple Choice

• assets and revenue

• assets, liabilities, and owner's equity

• expenses and assets

• liabilities and owner's equity

31.Which of the following groups of accounts all have the same normal balance?

Multiple Choice

• cash, supplies expense, accounts payable

• accounts payable, fees income, John Smith, drawing

• accounts receivable, rent expense, John Smith, drawing

• accounts receivable, accounts payable, John Smith, capital

32.Which of the accounts below would ALL appear on the balance sheet

Multiple Choice

• Cash, Accounts Payable, Owner's Capital (ending balance)

• Accounts Receivable, Accounts Payable, Fee Income

• Utility Expense, Salary Expense, Cash

• Owner's Capital (beginning), Owner's Drawing, Supplies Expense

Answer 1

Q1. Ans- to reduce expenses through the use of efficient processes

Explanation:- Internal Control provide reasonable assurance

1. reliability of financial reporting

2. effectiveness and efficiency of operation

3. safeguarding of assests

4. compaliance with company policies and applicable law and regulation.

In this question all are the goal of internal control except the point to reduce expenses through the use of efficient process.

Q2.Ans.- Corporation

Explanation:- There are three major forms of business

!. Sole Trader- it is the easiet form of business, it is run by individual.

2.Partnership - it is a form of business in which two or more person jointly manage aud run a business which is bind by a legal or formal agreement.

3. Corporation:- in this type of business corporate entity owned by its shareholder(s), who elects a board of directors to supervise the operations of the organisation.

Q3. Ans:- Audited.

The financial statements submitted to the SEC by a corporation must be audited by an independent accountant to ensure their fairness and adherence to generally accepted accounting principles and also a independent auditor;s report is attechted therewith which state the opinion of auditor on Financial Statement that this Financial statement is gives true and fair view and it is as per applicable financial reporting framework.

Q4. Ans:- Partnership

A form of business entity owned by two or more people is called a partneship business. In partnership there is agreement between two or more persons who jointly manage the business.

Sole proprietorship is managed by individual whereas company(corporation) is managed by shareholders with board of directors.

Limited Liability Company is a type of company where owners are not personally liable for the company's liabilty.