The Sarbanes-Oxley Act was passed to
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A. prevent fraud at public companies. |
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B. replace all of the old accounting procedures with new ones. |
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C. improve the accuracy of the company’s financial reporting. |
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D. Both A and C |
Which of the following would result if the business purchased supplies on credit?
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A. Supplies would increase, and Cash would decrease. |
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B. Supplies would increase, and Capital would increase. |
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C. Supplies would increase, and Accounts Payable would increase. |
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D. The purchase of supplies isn’t a business transaction. |
How does the purchase of office equipment on account affect the accounting equation?
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A. Assets increase, and liabilities decrease. |
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B. Assets increase, and owner’s equity increases. |
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C. Assets increase, and liabilities increase. |
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D. Liabilities increase, and owner’s equity decreases. |
Logan’s Motor Sports buys $30,000 of equipment on credit. Which of the following is a true statement?
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A. Total assets increase. |
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B. Total assets are unchanged. |
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C. Total liabilities decrease. |
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D. Total liabilities are unchanged. |
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Question 5 of 20 |
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Bob purchased a new computer for the company on account. The transaction will
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A. increase Computer and increase Capital. |
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B. decrease Cash and increase Accounts Payable. |
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C. decrease Cash and increase Computer. |
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D. increase Computer and increase Accounts Payable. |
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Question 6 of 20 |
5.0 Points |
If total liabilities are $1,000 and total assets are $8,000, owner’s equity must be
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A. $7,000. |
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B. $3,000. |
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C. $10,000. |
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D. $13,000. |
Assets are equal to
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A. liabilities + owner’s equity. |
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B. liabilities – owner’s equity. |
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C. liabilities – revenues. |
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D. revenues – expenses. |
Strum Hardware has total assets of $50,000. What are the total assets if new equipment is purchased for $10,000 cash?
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A. $45,000 |
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B. $50,000 |
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C. $55,000 |
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D. $60,000 |
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?
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A. Total assets are now $105,000. |
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B. Total assets are now $80,000. |
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C. Total assets are now $15,000. |
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D. Total assets are now $75,000. |
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Question 10 of 20 |
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Which transaction would cause one asset to increase and another asset to decrease?
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A. The owner invested cash in the business. |
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B. The business paid a creditor. |
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C. The business incurred an expense on credit. |
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D. The business bought supplies for cash. |
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Question 11 of 20 |
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Which of the following is an advantage of a sole proprietorship form of business?
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A. There’s limited personal risk. |
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B. The business can continue indefinitely. |
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C. The owner makes all the decisions. |
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D. All of the above |
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Question 12 of 20 |
5.0 Points |
A legal firm would be considered a
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A. merchandise company. |
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B. manufacturer. |
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C. service company. |
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D. None of the above |
Which of the following is not a type of business organization?
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A. Corporation |
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B. Partnership |
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C. Sole proprietorship |
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D. Operation |
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Question 14 of 20 |
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Mary invested cash in her new business. Which effect will this have?
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A. Increase an asset; increase a liability |
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B. Decrease an asset; increase a liability |
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C. Increase an asset; increase owner’s equity |
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D. Increase an asset; decrease owner’s equity |
Which of the following would result if a business purchased equipment with a 40% down payment in cash?
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A. Equipment would increase, and Cash would decrease. |
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B. Accounts Payable would increase. |
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C. Since the equipment hasn’t been paid in full, there’s nothing to record. |
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D. Both A and B |
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Question 16 of 20 |
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The claims of creditors against the assets are
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A. expenses. |
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B. revenues. |
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C. liabilities. |
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D. owner’s equity. |
Bonnie’s Baskets purchases $4,000 worth of office equipment on account. This causes
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A. Cash and Capital to decrease. |
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B. Office Equipment and Accounts Payable to increase. |
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C. Office Equipment to decrease and Accounts Payable to increase. |
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D. Accounts Payable to increase and Capital to decrease. |
The purchase of supplies for cash would affect which account category?
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A. Assets |
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B. Liabilities |
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C. Capital |
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D. Expense |
If total liabilities are $18,000 and owner’s equity is $21,000, the total assets must be
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A. $39,000. |
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B. $5,000. |
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C. $20,000. |
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D. $17,000. |
The balance sheet contains
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A. liabilities, expenses, and capital. |
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B. assets, liabilities, and revenues. |
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C. expenses, assets, and cash. |
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D. assets, liabilities, and owner’s equity. |
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