Question : 41.The owner of Westhampton Fish Eatery purchased a new car : 1259628

 

 

41.The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant’s balance sheet. The reporting of this item in this manner violated the:   

A. Cost principle.

 

B. Business entity concept.

 

C. Objectivity principle.

 

D. Going-concern assumption.

 

 

 

 

42.Eton Corporation purchased land in 1998 for $190,000. In 2014, it purchased a nearly identical parcel of land for $430,000. In its 2014 balance sheet, Eton valued these two parcels of land at a combined value of $860,000. Reporting the land in this manner violated the:   

A. Cost principle.

 

B. Principle of the business entity.

 

C. Objectivity principle.

 

D. Going-concern assumption.

 

 

 

 

43.Bob Bertolucci, owner of Bob’s Bazaar, also owns a personal residence that costs $575,000. The market value of his residence is $725,000. During preparation of the financial statements for Bob’s Bazaar, the accounting principle most relevant to the presentation of Bob’s home is:   

A. The concept of the business entity.

 

B. The cost principle.

 

C. The going-concern assumption.

 

D. The objectivity principle.

 

 

 

 

44.Which of the following will not cause a change in the owners’ equity of a business?   

A. Purchase of land with cash.

 

B. Withdrawal of cash by the owner.

 

C. Sale of land at a profit.

 

D. Losses from unprofitable operations.

 

 

 

 

45.Which of the following is correct when a corporation uses cash to pay for an expense?   

A. Total assets will decrease.

 

B. Retained earnings will increase.

 

C. Owners’ equity will increase.

 

D. Liabilities will increase.

 

 

 

 

46.Deerpark Corporation recently borrowed $70,000 cash from its bank. Which of the following was unaffected by this transaction?   

A. Assets.

 

B. Liabilities.

 

C. Owners’ equity.

 

D. Cash.

 

 

 

 

47.Which of the following transactions would cause an increase in both assets and owners’ equity?   

A. Investment of cash in the business by the owner.

 

B. Sale of land for a price less than its cost.

 

C. Borrowing money from a bank.

 

D. Sale of land for cash at a price equal to its cost.

 

 

 

 

48.A transaction caused an increase in both assets and owners’ equity. This transaction could have been resulted from the:   

A. Sale of services to a customer.

 

B. Sale of land for a price less than its cost.

 

C. Borrowing money from a bank.

 

D. Sale of land for cash at a price equal to its cost.

 

 

 

 

49.The amount of owners’ equity in a business is not affected by:   

A. The percentage of total assets held in cash.

 

B. The investments made in the business by the owner.

 

C. The profitability of the business.

 

D. The amount of dividends paid to stockholders.

 

 

 

 

50.Decreases in owners’ equity are caused by:   

A. Purchases of assets and payment of liabilities.

 

B. Purchases of assets and incurrence of liabilities.

 

C. Payment of liabilities and unprofitable operations.

 

D. Distributions of assets to the owners and unprofitable operations.