7.1 Transaction Analysis Sheet

Question 1

GAAP-THE OBJECTIVITY PRINCIPLE

Answer 1

The objectivity principle states that accounting will be recorded on the basis of objective evidence.

Question 2

What is Accounting?
1. Accounting is the recording, classifying, summarizing, and analysing of financial information.
2. Accounting is the classifying, recording, summarizing, and analysing of financial information.
3. Accounting is the classifying, recording, analysing, and summarizing of financial information.
4. Accounting is the classifying, summarizing, recording and analysing of financial information.

Answer 2

Accounting is the classifying, recording, analysing, and summarizing of financial information.

Question 3

Purpose of accounting is to provide information for decision making. Questions that could be asked are…

Should a business hire more people?
Should a new machine be purchased?
Should a factory be moved?
A and B only
All of the above
None of the above

Answer 3

All of the above

Question 4

What does GAPP stand for?

Generally Accepted Accounting Principles
Generally Accepted Accountant Policies
Generally Accepted Accounting Policies
Generally Accepted Accountant Principles

Answer 4

Generally Accepted Accounting Principles

Question 5

The accounting equation cannot be manipulated.
True
False

Answer 5

False

Question 6

Owner’s Equity and Capital mean the same.

Answer 6

False

Question 7

The items you own, the money you owe and your net worth determine your financial position.

Answer 7

True

Question 8

Net worth is usually referring to a person’s financial economic position.

Answer 8

True

Question 9

Ethical behaviour are situations faced by managers every day; choice between alternatives in a situation that may result in personal/organizational benefit or may minimize losses to “save face”.

Answer 9

True

Question 10

Justin Tyme decided to open up a mechanic shop by himself. This is an example of a…
Business
Partnership & Service Business
Sole Proprietorship & Service Business
Partnership & Merchandising Business

Answer 10

Sole Proprietorship & Merchandising

Question 11

A clothing store is a merchandising AND service business.

Answer 11

False

Question 12

An advantage of Corporation is that they are liable for debts.

Answer 12

False

Question 13

Which of the following is an advantage of sole proprietorship
ease of starting a business
being your own boss
start-up costs can be low
b only
all of the above

Answer 13

all of the above

Question 14

Assets $3000 = Liabilities $1725 + Owner’s Equity (?)
$4725
$1275
$4752
$1257

Answer 14

$1275

Question 15

Assets $57,000 = Liabilities (?) + Owner’s Equity $45,000
$12,000
$21,000
$102,000
120,000

Answer 15

$12,000

Question 16

Assets (?) = Liabilities $372 + Owner’s Equity $721
$1309
$1390
$1093
$1039

Answer 16

$1093

Question 17

Which of the following is considered NOT an asset?
Accounts Receivable
Cash
Building
Accounts Payable

Answer 17

Accounts Payable

Question 18

Which is the fundamental accounting equation?
Assets - Liabilities = Owner’s Equity
Assets = Liabilities + Owner’s Equity
Liabilities = Assets - Owner’s Equity
Assets = Liabilities - Owner’s Equity

Answer 18

Assets = Liabilities + Owner’s Equity

Question 19

Liabilities are the debts of the business such as cash, accounts receivable and office supplies.

Answer 19

False

Question 20

ollection of account receivable will….
increase assets and decrease assets
increase assets and decrease liabilities
increase assets and increase capital
increase assets and increase cash

Answer 20

increase assets and increase cash

Question 21

Payment of expenses will ________ assets

Answer 21

increase
reduce
understate
overstate