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Exam 1: Introduction to Accounting and Business

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Question 81

True/False

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An example of an external user of accounting information is the federal government.

A) True
B) False

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Question 82

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Which of the following is not an asset?

A) investment
B) cash
C) inventory
D) stockholder's equity

E) A) and B)
F) C) and D)

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Question 83

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Equipment with an estimated market value of $30,000 is offered for sale at $45,000. The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is

For each of the following, determine the amount of net income or net loss for the year.

If total liabilities decreased by $46,000 during a period of time and stockholders' equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

Shiny Kar Company had the following transactions. For each transaction, show the effect on the accounting equation by putting the amount and direction (plus, minus, or NC for no change) in each box of the table below.

What are the three sections of the statement of cash flows?

Given below are the accounts and amounts for Bright Futures Company as of August 31, 2011. All of the revenue and expense amounts are for the month of August. $\begin{array}{ll}\text { Telephone Expense } & \$ 1,150 \\\text { Cash } & 3,000 \\\text { AccountsPayable } & 1,540 \\\text { Dividends } & 800 \\\text { FeesEarned } & 15,700 \\\text { Rent Expense } & 1,400 \\\text { Supplies } & 140 \\\text { Accounts Receivable } & 1,500 \\\text { Computer Equipment } & 20,000 \\\text { Capital Stock } & 10,000 \\\text { WagesExpense } & 4,800 \\\text { Utilities Expense } & 750 \\\text { Notes Payable } & 2,400 \\\text { Retained Earnings } & 4,320 \\\text { Office Expense } & 420\end{array}$ Based on the data provided for Bright Futures Company, prepare in good format a retained earnings statement for the month ended August 31, 2011.

What information does the income statement give to business users?

On July 1 of the current year, the assets and liabilities of Wong Company are as follows: Cash, $27,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of stockholders' equity as of July 1 of the current year?

The balance sheet represents the accounting equation.

Discuss the characteristics of a LLC (Limited liability company).

Denzel Jones is the major stockholder of Crystal Cleaning Company. Recently, Denzel received $10,000 of dividends from Crystal Cleaning. After receiving the dividends, he contributed $6,000, in his name, to Habitat for Humanity. The contribution of $6,000 should be recorded on the accounting records of which of the following entities?

The assets and liabilities of S&P Day Spa at December 31, 2014 and expenses for the year are listed below. The retained earnings balance was $68,000 at January 1, 2014. Net income for 2014 is $45,625. Prepare an income statement for the current year ended December 31, 2014.

Explain the meaning of: (a) the objectivity concept (b) the unit of measure concept

How does paying a liability in cash affect the accounting equation?

The monetary value charged to customers for the performance of services or sales is called a(n)

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

The assets section of the balance sheet normally presents assets in