1. Indicate whether the following statements are true or false. a. ...........The three steps in the accounting process are identification, recording, and communication. ...........Bookkeeping encompasses all steps in the accounting process C. ............Accountants prepare, but do not interpret, financial reports d. ...........The two most common types of external users are investors and company officers e. ...........Managerial accounting activities focus on reports for internal users 2. Ethics are the standards of conduct by which one's actions are judged as: a. right or wrong b. honest or dishonest. c. fair or not fair d. all of these options 3. Combining the activities of Kellogg and General Mills would violate the a. cost principle. b. economic entity assumption. C. monetary unit assumption. d. ethics principle 4. A business organized as a separate legal entity under state law having ownership divided into shares of stock is a a. proprietorship b. partnership C. corporation d. sole proprietorship 5. indicate whether each of the following statements presented below is true or false. a..Congress passed the Sarbanes-Oxley Act to reduce unethical behavior and decrease the likelihood of future corporate scandals. Financial Accounting Standards Board (FASB). cost. In later periods, however, the fair value of the asset must be used if fair value is The primary accounting standard-setting body in the United States is the C. ...........The historical cost principle dictates that companies record assets at their higher than its cost. the information is factual. the business to comply with accounting's economic entity assumption. d. Relevance means that financial information matches what really happened: e........ A business owner's personal expenses must be separated from expenses of 6. Combining the activities of Kellogg and General Mills would violate the a. cost principle b. economic entity assumption. c. monetary unit assumption. d. ethics principle 7. A business organized as a separate legal entity under state law having ownership divided into shares of stock is a a. proprietorship b. partnership. C. corporation d. sole proprietorship 8. Classify the following items as investment by owner, owner's drawings, revenue, or expenses. Then indicate whether each item increases or decreases owner's equity Classification Effect on Equity Rent Expense Service Revenue Drawings Salaries and Wages Expense... 9. TRANSACTION 1. INVESTMENT BY OWNER Ray Neal decides to start a smartphone app development company which he names Softbyte. On September 1, 2017, he invests $15,000 cash in the busine ss. This transaction results in an equal increase in assets and owner's equity 10. Transactions made by Virmari & Co., a public accounting firm, for the month of August are shown below. Prepare a tabular analysis which shows the effects of these transactions on the expanded accounting equation, similar to that shown in Illustration 1-8. 1. The owner invested $25,000 cash in the business. 2. The company purchased $7,000 of office equipment on credit. 3. The company received $8,000 cash in exchange for services performed. 4. The company paid $850 for this month's rent 5. The owner withdrew $1,000 cash for personal use 11. The owner invested $25,000 cash in the business. 12. The company purchased $7,000 of office equipment on credit. 13. The company received $8,000 cash in exchange for services performed. 14. The company paid $850 for this month's rent. 15. The owner withdrew $1,000 cash for personal use. 16. Net income will result during a time period when: a. assets exceed liabilities. b. assets exceed revenues. c. expenses exceed revenues. d. revenues exceed expenses. 17. Presented below is selected information related to Flanagan Company at December 31, 2017. Flanagan reports financial information monthly. Equipment $10,000 Utilities Expense $ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Owner's Drawings 5,000 (a) Determine the total assets of at December 31, 2017. (b) Determine the net income reported for December 2017. (c) Determine the owner's equity at December 31, 2017 18. Presented below is selected information related to Flanagan Company at December 31, 2017 Flanagan reports financial information monthly. Equipment $10,000 Utilities Expense $ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Payable 2,000 Owner's Drawings (a) Determine the total assets of at December 31, 2017 The total assets are $27,000, comprised of Cash $8,000, Accounts Receivable S9,000, and Equipment $10,000. 19. Presented below is selected information related to Flanagan Company at Decembeir 31, 2017. Flanagan reports financial information monthly. Equipment $10,000 Utilities Expense $ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Owner's Drawings 5,000 (b) Determine the net income reported for December 2017. 20. Presented below is selected information related to Flanagan Company at December 31, 2017. Flanagan reports financial information monthly. Equipment $10,000 Utilities Expense $ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Owner's Drawings 5,000 (c) Determine the owner's equity at December 31, 2017. 21. Which of the following is not a reason why a single set of high-quality international accounting standards would be beneficial? a. Mergers and acquisition activity. b. Financial markets. c. Multinational corporations d. GAAP is widely considered to be a superior reporting system 22. The Sarbanes-Oxley Act determines: a. international tax regulations. b. internal control standards as enforced by the IASB c. internal control standards of U.S. publicly traded companies. d. U.S. tax regulations. 23. IFRS is considered to be more: a. principles-based and less rules-based than GAAP. b. rules-based and less principles-based than GAAP. c. detailed than GAAP. d. None of the above