Financial Accounting Test Chapter 1

1.The origins of accounting are generally attributed to the work of

Luca Pacioli.

2.The first step in solving an ethical dilemma is to

recognize an ethical situation and the ethical issues involved.

3.The private sector organization involved in developing accounting principles is the

Financial Accounting Standards Board.

4.The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that

the SEC often mandates guidelines when no accounting principles exist.

5.Deb Smith is the proprietor (owner) of Smitty's, a retailer of athletic apparel. When recording the financial transactions of Smitty's, Deb does not record an entry for a car she purchased for personal use. Deb took out a personal loan to pay for the car. What accounting concept guides Deb's behavior in this situation?

Economic entity assumption

6.A dividend is

a distribution of the company's earnings to its stockholders.

7.Stockholders' equity is decreased by all of the following except

Sales of stock.

8.If services are rendered for credit, then

stockholders' equity will increase.

9.Net income results when

Revenues > Expenses.

10.If the retained earnings account increases from the beginning of the year to the end of the year, then

net income is greater than owner dividends.

11. All of the financial statements are for a period of time except the

balance sheet.

12.Benny's Repair Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and paid dividends of $20,000. Stockholders' equity at the end of the year was

$100,000.

13.Keeping a systematic, chronological diary of events that are measured in dollars and cents is called

recording.

14.Internal users of accounting information include all of the following except

investors.

15.The

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