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Accounting Principles and Practices

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1. A profit-making business that is a separate legal entity and in which ownership is divided into shares of stock is known as a:
A. sole proprietorship
B. single proprietorship
C. partnership
D. corporation

2. The properties owned by a business enterprise are called:
A. assets
B. liabilities
C. the accounting equation
D. owner's equity

3. A list of assets, liabilities, and owner's equity of a business entity as of a specific date is:
A. a balance sheet
B. an income statement
C. a statement of owner's equity
D. a statement of cash flows

4. If total assets increased $20,000 during a period of time and total liabilities increased $12,000 during the same period, the amount and direction (increase or decrease) of the period's change in owner's equity is:
A. $32,000 increase
B. $32,000 decrease
C. $8,000 increase
D. $8,000 decrease

5. If revenue was $45,000, expenses were $37,500, and the owner's withdrawals were $10,000, the amount of net income or net loss would be:
A. $45,000 net income
B. $7,500 net income
C. $37,500 net loss
D. $2,500 net loss

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Solution Summary

This solution looks at accounting principles and practices: proprietorship, properties, and financial statements.

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1. D
A corporation, organized in accordance with state or federal statutes, is a separate legal entity in which ownership is divided into shared of stock. A sole proprietorship, sometimes called a single proprietorship, is an unincorporated business enterprise owned by one individual. A partnership is an unincorporated business enterprise owned by two or more individuals.

2. A
The properties owned by a business enterprise ...

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