1. Accounting is an information system that: A. Identifies business activities. B. Records business activities. C. Communicates business activities. D. Helps people make better decisions. E. All of these. 2. Creditors' claims on the assets of a company are called: A. Net losses. B. Expenses. C. Revenues. D. Equity. E. Liabilities. 3. The excess of expenses over revenues for a period is: A. Net assets. B. Equity. C. Net loss. D. Net income. E. A liability. 4. On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year? A. $8,300 B. $13,050 C. $20,500 D. $31,100 5. Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? A. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase. B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect. C. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect. D. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase. E. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease. 6. The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called: A. A Balance Sheet. B. A Statement of Owner's Equity. C. A Statement of Cash Flows. D. An Income Statement. E. A Statement of Financial Position. 7. A balance sheet lists: A. The types and amounts of the revenues and expenses of a business. B. Only th...
