109. Revenue is properly recognized: A. When the customer's order is received.
B. Only if the transaction creates an account receivable. C. At the end of the accounting period.
D. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. E. When cash from a sale is received.
110. If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land account transaction amount to handle the sale of the land in the seller's books is: A. $85,000 increase. B. $85,000 decrease. C. $137,000 increase. D. $137,000 decrease. E. $140,000 decrease.
111. If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. What is the effect of the sale on the accounting equation for the seller?
A. Assets increase $52,000; owner's equity increases $52,000. B. Assets increase $85,000; owner's equity increases $85,000. C. Assets increase $137,000; owner's equity increases $137,000. D. Assets increase $140,000; owner's equity increases $140,000. E. Assets decrease $85,000; owner's equity decreases $85,000.
112. If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. At the time of the sale, assume that the seller still owed $30,000 to TrustOne Bank on the land that was purchased for $85,000. Immediately after the sale, the seller paid off the loan to TrustOne Bank. What is the effect of the sale and the payoff of the loan on the accounting equation? A. Assets increase $52,000; owner's equity increases $22,000; liabilities decrease $30,000
B. Assets increase $52,000; owner's equity increases $30,000; liabilities decrease $30,000
C. Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000
D. Assets decrease $30,000; owner's equity decreases $30,000; liabilities decrease $30,000
E. Assets decrease $55,000; owner's equity decreases $55,000; liabilities decrease $30,000
113. An example of a financing activity is: A. Buying office supplies. B. Obtaining a long-term loan. C. Buying office equipment. D. Selling inventory. E. Buying land.
114. An example of an operating activity is: A. Paying wages.
B. Purchasing office equipment. C. Borrowing money from a bank. D. Selling stock. E. Paying off a loan.
115. Operating activities:
A. Are the means organizations use to pay for resources like land, buildings and equipment.
B. Involve using resources to research, develop, purchase, produce, distribute and market products and services.
C. Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
D. Are also called asset management. E. Are also called strategic management. 116. An example of an investing activity is: A. Paying wages of employees. B. Withdrawals by the owner. C. Purchase of land. D. Selling inventory.
E. Contribution from owner. 117. Net Income: A. Decreases equity.
B. Represents the amount of assets owners put into a business. C. Equals assets minus liabilities.
D. Is the excess of revenues over expenses. E. Represents owners' claims against assets.
118. If equity is $300,000 and liabilities are $192,000, then assets equal: A. $108,000. B. $192,000. C. $300,000. D. $492,000. E. $792,000.
119. Resources that are expected to yield future benefits are: A. Assets. B. Revenues. C. Liabilities.
D. Owner's Equity. E. Expenses.
120. Increases in equity from a company's earnings activities are: A. Assets. B. Revenues. C. Liabilities.
D. Owner's Equity. E. Expenses.
121. The difference between a company's assets and its liabilities, or net assets is: A. Net income. B. Expense. C. Equity. D. Revenue. E. Net loss.
122. Creditors' claims on the assets of a company are called: A. Net losses. B. Expenses. C. Revenues. D. Equity. E. Liabilities.
123. Decreases in equity that represent costs of assets or services used to earn revenues are called: A. Liabilities. B. Equity.
C. Withdrawals. D. Expenses.
E. Owner's Investment.
124. The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the: A. Income statement equation. B. Accounting equation. C. Business equation. D. Return on equity ratio. E. Net income. 125. Revenues are:
A. The same as net income.
B. The excess of expenses over assets.
C. Resources owned or controlled by a company
D. The increase in equity from a company’s earning activities. E. The costs of assets or services used.
126. If assets are $99,000 and liabilities are $32,000, then equity equals: A. $32,000. B. $67,000. C. $99,000. D. $131,000. E. $198,000.
127. Another name for equity is: A. Net income. B. Expenses. C. Net assets. D. Revenue. E. Net loss.
128. The excess of expenses over revenues for a period is: A. Net assets. B. Equity. C. Net loss. D. Net income. E. A liability.
129. A payment to an owner is called a(n): A. Liability. B. Withdrawal. C. Expense. D. Contribution. E. Investment.
130. Distributions of assets by a business to its owners are called: A. Withdrawals. B. Expenses. C. Assets.
D. Retained earnings. E. Net Income.
131. The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners? A. $900,000. B. $700,000. C. $500,000. D. $200,000.
E. It is impossible to determine unless the amount of this owners' investment is known.
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