Choose the best answer for the following questions:
1. The cost principle requires that when assets are acquired, they be recorded at a.appraisal value.
b. historical cost.
d. exchange price paid.
2. The economic entity assumption requires that the activities a.
of different entities can be combined if all the entities are corporations. b.
must be reported to the Securities and Exchange Commission. c.
of a sole proprietorship cannot be distinguished from the personal economic events of its owners. d.
of an entity be kept separate from the activities of its owner. 3. Owner's equity is best depicted by the following:
Assets = Liabilities.
Liabilities + Assets.
Residual equity + Assets.
Assets – Liabilities.
4. The basic accounting equation cannot be restated as
Assets – Liabilities = Owner's Equity.
Assets – Owner's Equity = Liabilities.
Owner's Equity + Liabilities = Assets.
Assets + Liabilities = Owner's Equity.
5. If total liabilities increased by $15,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a.
b. $20,000 increase
c. $25,000 increase
d. $30,000 increase
6. If total liabilities decreased by $15,000 and owner’s equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a.
b. $10,000 decrease
d. $15,000 decrease
7. As of June 30, 2009, Dallas Company has assets of $100,000 and owner’s equity of $5,000. What are the liabilities for Dallas Company as of June 30, 2009? a.
8. If total liabilities increased by $4,000, then
assets must have decreased by $4,000.
owner's equity must have increased...
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