Question 1

An entity that is organized according to state or federal statutes and which ownership is divided into shares of stock is a:

proprietorship

corporation

governmental unit

partnership

Question 2

Which of the following types of business is popular for its ease and low cost organizing?

not-for-profit

corporation

partnership

proprietorship

Question 3

Which of the following are business stakeholders?

customers

suppliers

stockholders

all of these

Question 4

The basic financial statements donotinclude the:

income statement.

tax return.

statement of cash flows.

balance sheet.

Question 5

Which of the following isnotconsidered to be a liability?

Accounts receivable

Accounts payable

Note payable

Unearned revenues

Question 6

A ___________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

Transaction

Framework

Control

Set of Rules

Question 7

Unearned revenue is what type of an account?

Liability

Revenue

Stockholders' equity

Asset

Question 8

A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounts?

Increase accounts receivable and unearned revenues by $1,000,000 each

Increase cash and decrease accounts receivable by $1,000,000 each

Increase accounts receivable and cash by $1,000,000 each

Increase accounts receivable and revenues by $1,000,000 each

Question 9

X&Y Co. received $4,000 in payments from clients for services billed in a previous month. What effects does this transaction have on the accounts under the accrual basis of accounting?

Total assets increase by $4,000.

The net effect on assets is zero.

Total assets will decrease by $4,000

Assets will increase by $4,000 and revenues will increase $4,000.

Question 10

Fees receivable would appear on the balance sheet as a(n):

unearned revenue.

fixed asset.

asset.

liability.