31 expenses are recorded when a business a sells equipment b consumes resources duri 4352240

31.Expenses are recorded when a business

a.sells equipment

b.consumes resources during the production and sale of goods or services

c.distributes money to owners

d.hires employees

32.Which of these is NOT an expense?

a.cost of goods sold

b.wages paid to employees for services consumed

c.merchandise inventory purchased

d.taxes paid to government

33.Tiger Associates provided business services to another organization. As a result of this transaction, Tiger's assets increased. Which accounting term best describes the concept involved in this situation?

a.liability

b.revenue

c.financing activity

d.investing activity

34.Which type of activity is involved when goods are produced and delivered to customers or when services are provided to customers?

a.financing activities

b.investing activities

c.operating activities

d.accounting activities

35.When starting a new business, in general, which of the following types of activities would have to occur before operating activities could begin?

Investing Activities   Financing Activities

a.Yes                              Yes

b.Yes                              No

c.No                               Yes

d.No                               No

36.Match the event below to the proper category of activity.

Operating Activity                            Financing Activity

a.paying employee salaries                 paying off a bank loan

b.obtaining a loan                               designing a new product

c.buying factory equipment                 refunding a customer's money

d.paying off a bank loan                      buying new tools

37.Which one of the following statements is generally TRUE regarding the relationship between the items mentioned?

a.an increase in assets will always cause an increase in owners' equity

b.a decrease in assets will always cause a decrease in liabilities

c.an increase in revenues increases owners' equity

d.expenses decrease revenues

38.Shari started a computer software firm by investing $20,000 of her own money. She spent 3/4 of it on office furniture, fixtures for the business. After borrowing $8,000 from First National Bank, she spent 1/2 of these funds on computer hardware. At this point, what balances should be recorded in her accounting system for total assets and total expenses?

Total Assets     Total Expenses

a.$28,000                $16,000

b.$12,000                $16,000

c.$16,000                $0

d.$28,000                $0

39.Cohen Enterprises sold inventory for which it had paid $20,000. When this event is recorded in the company's accounting system, it will affect which of the following categories?

a.assets only

b.liabilities and owners' equity

c.assets, revenues, and expenses

d.owners' equity only

40.Revenues and expenses have what effect on the basic accounting equation of

Assets = Liabilities + Owners' Equity?

a.revenues and expenses are not related to the equation

b.the difference between revenues and expenses increases liabilities

c.revenues increase equity while expenses decrease it

d.revenues increase equity while expenses increase liabilities

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