1.

The common goal shared by all businesses is to earn a profit.

A) True B) False

2.

Financial accounting systems provide managers with the information they need to plan, organize, and operate their business profitably.

A) True B) False

3.

CPA's have a solid foundation for careers in many different business fields.

A) True B) False

4.

The FASB is an agency of the US government with authority over the accounting and financial disclosure requirements of corporations whose stock is publicly traded.

A) True B) False

5.

The business entity concept and the cost principle are two specific examples of GAAP.

A) True B) False

6.

Mathematically, from an accounting point of view, the dollar value of the assets of a business must always add up to dollar value of the sum its debt and equity.

A) True B) False

7.

The accounting equation applies to all businesses, even not-for-profits.

A) True B) False

8.

Receiving cash for providing services to clients would increase both the assets and earnings of a proprietorship.

A) True B) False

9.

A business with assets of A and liabilities of B would have a net income equal to A minus B.

A) True B) False

10.

A business with Revenue of X and expenses of Y would have a net worth equal to X minus Y.

A) True B) False

11.

When the reveune a business earns exceeds the expenses it incurs, the business is profitable.

A) True B) False

12.

When the assets of a business are greater that its liabilities, the business is solvent.

A) True B) False

13.

Both assets and earnings are reported on balance sheets.

A) True B) False

14.

A statement of owner's equity shows changes in net worth over time.

A) True B) False

15.

Cash is reported on an income statement as revenue.

A) True B) False

16.

Analysis of the statement of cash flows in Exhibit 6 on page 17 indicates Chris Clark invested $25,000 into NetSolutions during November.

A) True B) False

17.

The buisiness in EX 1-14 on page 34 incurred an $8,000 net loss during the month.

A) True B) False

18.

Our text suggests that executive management at Enron acted ethically.

A) True B) False

19.

Bernie Madoff behaved unethically.

A) True B) False

20.

In EX 1-22 on page 36, Exxon Mobil would classify its long-term debt, accounts payable, and exploration expenses as liabilities.

A) True B) False

21.

Income statements report profitability over a period of time.

A) True B) False

22.

Only assets, liabilities, and equity are reported on balance sheets.

A) True B) False

23.

Amounts owed by a business would be classified as liabilities on its balance sheet .

A) True B) False

24.

Cash, accounts receivable, supplies and land are all examples of assets.

A) True B) False

25.

According to GAAP, buildings are liabilities.

A) True B) False

26.

When a business buys supplies "on account" it owes payment for the supplies purchased.

A) True B) False

27.

We-Sell Realty earned a $25,000 profit in EX 1-25 on page 37.

A) True B) False

28.

We-Sell's net worth (in EX 12-5) was $72,600.

A) True B) False

29.

Transaction e in PR 1-1A on page 38 would increase accounts payable by $750.

A) True B) False

30.

Analysis of PR 1-3A on page 39 indicates that Reliance Financial Services earned $34,500 "on account" during July.

A) True B) False