1. Which of the following concepts relates to separating the reporting of busine
ID: 2552594 • Letter: 1
Question
1. Which of the following concepts relates to separating the reporting of business and personal economic transactions? a. cost concept b. unit of measure concept c. business entity concept d. objectivity concept Which of the following is not true of accounting principles? a. Financial accountants follow generally accepted accounting principles (GAAP). b. Following GAAP allows accounting information users to compare one company to 2. another e. A new accounting principle can be adopted with stockholders' approval. d. The Financial Accounting Standards Board (FASB) has primary responsibility for developing accounting principles. 3. Assets are a. always lower than liabilities b. equal to liabilities less owner's equity c. the same as expenses because they are acquired with cash d. financed by the owner and/or creditors The accounting equation may be expressed as a. Assets - Equities - Liabilities b. Assets + Liabilities Owner's Equity c. Assets- Revenues-Liabilities d. Assets-Liabilities Owner's Equity 4. 5. If total liabilities decreased by $46,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a. $106,000 increase b. $14,000 increase c. $14,000 decrease d. $106,000 decrease 6. Earning revenue a. increases assets, increases owner's equity b. increases assets, decreases owners equity c. increases one asset, decreases another asset d. decreases assets, increases liabilities Revenues are reported when a. a contract is signed 7.Explanation / Answer
1.] c. , company has a separate business entity from its owner that means transaction of these two will be recorded separately
2.] c ,No changes in GAAP or new accounting policies can be adopted from any approval by shareholders
3.] d , assets = total liabilities + total shareholder's equity
4.] d , assets = total liabilities + total shareholder's equity
total shareholder's equity = assets - total liabilities
5.] b , assets = total liabilities + total shareholder's equity
= (46000) + 60000
= 14000 increase
6.] a , earning will bring cash ,so increase in assets and revenue will increase net income
7.] d , revenue will be reported on accrual basis on completion of work
8.] c , expenses will be reported on accrual basis on time of incurring the expenses for earning
9.] c , outgoing of cash decreases assets and decreases liabilities
10.] c outgoing of cash decreases assets and decreases liabilities
11].] c , equipment will increase the total assets assets , and purchased by signing a note will increase total liabilities
12.] b , net increase in total assets = 62000 - 30000 = $32000
increase in owner's equity(Profit on sale) = $32000
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