Financial Accounting 9th Edition by Miller-Nobles Test bank

Learning Objective: 1 Explain why accounting is important
A-Head: Why is accounting important?

Multiple choice: Choose the alternative(s) that best completes the statement or answers the question.

11. The owners' claims to the assets of the business are called:

1. owners' equity.
2. expenses.
3. revenues.
4. liabilities.

Answer: A
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

12. Which of the following is the CORRECT accounting equation?

1. Assets + Revenue = Liabilities + Expenses
2. Assets = Liabilities + Owners' equity
3. Assets + Revenue = Owners' equity
4. Assets + Liabilities = Owners' equity

Answer: B
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

13. A debt that a business owes to an outside party is called:

1. revenue.
2. a liability.
3. an asset.
4. owners' equity.

Answer: B
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

14. The economic resources of a business such as furniture, building and land are its:

1. assets.
2. revenues.
3. liabilities.
4. drawings.

Answer: A
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

15. Keira’s antiques shop started the year with total assets of $90,000 and total liabilities of $60,000. During the year, the business earned revenues of $150,000 and incurred expenses of $60,000. Keira made no additional capital contributions during the year, but did make drawings of $70,000. What is the amount of owners' equity at the end of the year?

1. $150,000
2. $70,000
3. $50,000
4. $60,000

Answer: C
Difficulty: Complex
AACSB: Analytical Thinking
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

16. Sruthi's Camera Shop started the year with total assets of $90,000 and total liabilities of $55,000. During the year, the business earned revenues of $120,000 and incurred expenses of $50,000. Sruthi made no additional capital contributions during the year, but did make drawings of $70,000.

Calculate Sruthi's profit for the year.

1. $120,000
2. $90,000
3. $70,000
4. $50,000

Answer: C
Difficulty: Moderate
AACSB: Analytical Thinking
Full download link: https://reurl.cc/leDDMQ
 
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

17. The profit of a business is $21,000. The beginning and ending capital balances were $34,000 and $50,000, respectively. No capital contributions were made by the owner during the year.

Calculate the amount of owner's drawings.

1. $15,000
2. $12,000
3. $13,000
4. $5000

Answer: D
Difficulty: Moderate
AACSB: Analytical Thinking
Learning Objective: 2 Describe the accounting equation, and define assets, liabilities and equity
A-Head: What is the accounting equation?

True/False: Write 'T' if the statement is true and 'F' if the statement is false.