1. What is the effect of a companys accounting department maintaining high ethical standards?

• The companys accounting information will increase in value.
• The company can report more favorable results in its financial statements.
• The companys accounting information will decrease in value.
• The company can hire fewer accountants to do the same amount of work.

2 Why might employees be interested in their companys financial accounting information?

• Financial statement data provide item-by-item product cost information.
• Financial statement data are often used in determining employee bonuses.
• Financial statement data are used to record long term liabilities.
• Financial statement data provide detailed internal budget information.

3 Which group establishes financial accounting rules in the United States?

• Internal Revenue Service (IRS)
• Financial Accounting Standards Board (FASB)
• American Institute of Certified Public Accountants (AICPA)
• International Accounting Standards Board (IASB)

4 Which report is one of the three primary financial statements?

• Statement of management accounting
• Statement of cash flows
• Statement of stakeholder funds
• Statement of the accounting cycle

5 A company paid $5,000 cash in advertising costs.

How does this transaction affect the paying companys accounting equation?

• Assets decrease by $5,000; revenues increase by $5,000.
• Assets decrease by $5,000; liabilities increase by $5,000.
• Assets decrease by $5,000; expenses increase by $5,000.
• Assets increase by $5,000; expenses increase by $5,000.

6 What is a transaction?

• An example of an online business document
• Two parties exchanging something of value
• A category of merchandiser or retailer
• A type of commonly used accounting software

7 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; liabilities increase by $80,000.
• Assets increase by $80,000; revenues increase by $80,000.
• Assets increase by $80,000; owners equity increases by $80,000.
• Assets increase by $80,000; liabilities decrease by $80,000.

8 What is the impact of expenses on the accounting equation?

• Expenses decrease liabilities.
• Expenses decrease owners equity.
• Expenses increase liabilities.
• Expenses increase owners equity.

9 Which type of account are accounts payable and notes payable both examples of?

• Expense
• Equity
• Liability
• Asset