Ashworth A01 exam 1 (All Correct)

Question 1 of 20                                                                                             5.0/ 5.0 Points

A partnership is a business that is __________.

A. easy to form

B. ends with the death of a partner

C. owned by more than one person

D. All of these answers are correct

Question 2 of 20                                                                                             5.0/ 5.0 Points

Bonnie's Baskets purchases $4,000 worth of office equipment on account. This causes

A. Cash and Capital to decrease

B. Office Equipment and Accounts Payable to increase.

C. Office Equipment to decrease and Accounts Payable to increase

D. Accounts Payable to increase and Capital to decrease

Question 3 of 20                                                                                             5.0/ 5.0 Points

A legal firm would be considered a __________.

A. merchandise company

B. manufacturer

C. service company

D. None of the above answers are correct.

Question 4 of 20                                                                                             5.0/ 5.0 Points

Which is an advantage of a sole proprietorship form of business?

A. There is limited personal risk

B. The business can continue indefinitely

C. The owner makes all the decisions

D. All of these answers are correct

Question 5 of 20                                                                                             5.0/ 5.0 Points

Logan's Motor Sports buys $30,000 of equipment on credit. Which of the following is a true statement?

A. Total assets increase

B. Total assets are unchanged

C. Total liabilities decrease

D. Total liabilities are unchanged

Question 6 of 20                                                                                             5.0/ 5.0 Points

Which of the following is a characteristic of a sole proprietorship?

A. business owned by more than one person

B. easy to form

C. each stockholder acts as an owner of the company

D. can continue indefinitely

Question 7 of 20                                                                                             5.0/ 5.0 Points

Katie's Vegetarian Restaurant, with total assets of $90,000, borrows $15,000 from the bank. Which of the following is a true statement upon borrowing the money?

A. Total assets are now $105,000.

B. Total assets are now $80,000.

C. Total assets are now $15,000.

D. Total assets are now $75,000.

Question 8 of 20                                                                                             5.0/ 5.0 Points

If total liabilities increased by $6,000 and the assets increased by $8,000 during the accounting period, what is the change in the owner's equity amount?

A. increase of $2,000

B. decrease of $2,000

C. increase of $10,000

D. decrease of $10,000

Question 9 of 20                                                                                             5.0/ 5.0 Points

Assets are equal to __________.

A. liabilities + owner's equity

B. liabilities - owner's equity

C. liabilities – revenues

D. revenues – expenses

Question 10 of 20                                                                                           5.0/ 5.0 Points

Which of the following would result if the business purchased supplies on credit?

A. Supplies would increase and Cash would decrease

B. Supplies would increase and Capital would increase

C. Supplies would increase and Accounts Payable would increase

D. The purchase of supplies is not a business transaction

Question 11 of 20                                                                                           5.0/ 5.0 Points

Strum Hardware has total assets of $50,000. What are the total assets if new equipment is purchased for $10,000 cash?

A. $45,000

B. $50,000

C. $55,000

D. $60,000

Question 12 of 20                                                                                           5.0/ 5.0 Points

How does the purchase of office equipment on account affect the accounting equation?

A. assets increase; liabilities decrease

B. assets increase; owner's equity increases

C. assets increase; liabilities increase

D. liabilities increase; owner's equity decreases

Question 13 of 20                                                                                           5.0/ 5.0 Points

Which of the following will be recorded in the owner's equity column as an increase?

A. an exchange of assets

B. the purchase of an asset on credit

C. an investment by the owner

D. a withdrawal by the owner

Question 14 of 20                                                                                           5.0/ 5.0 Points

A corporation __________.

A. can continue indefinitely

B. is owned by stockholders

C. has limited risk to stockholders

D. All of these answers are correct

Question 15 of 20                                                                                           5.0/ 5.0 Points

Which of the following would result if a business purchased Equipment paying a 40% down payment in cash?

A. Equipment would increase and Cash would decrease

B. Accounts Payable would increase

C. Since the equipment has not been paid in full, there is nothing to record

D. Both A and B are correct

Question 16 of 20                                                                                           5.0/ 5.0 Points

A purchase of a vehicle for cash would have what effect on the accounting equation?

A. Total asset amount remains the same

B. Total liabilities are overstated

C. Total owner's equity is overstated

D. Both A and B are correct

Question 17 of 20                                                                                           5.0/ 5.0 Points

The purchase of supplies for cash would affect which account category?

A. assets

B. liabilities

C. capital

D. expense

Question 18 of 20                                                                                           5.0/ 5.0 Points

If total liabilities are $18,000 and owner's equity is $21,000, the total assets must be

A. $39,000

B. $5,000

C. $20,000

D. $17,000

Question 19 of 20                                                                                           5.0/ 5.0 Points

The claims of creditors against the assets are __________.

A. expenses

B. revenues

C. liabilities

D. owner's equity

Question 20 of 20                                                                                           5.0/ 5.0 Points

Accounting provides information to __________.

A. managers

B. government

C. investors

D. All of these answers are correct