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Exam 1: Introduction to Accounting and Business

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Question 101

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Bob Johnson is the sole stockholder of Johnson's Carpet Cleaning Service. Bob purchased a personal automobile for $10,000 cash plus he took out a loan for $20,000 in his name. Describe how this transaction is related to the business entity concept.

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Under the business entity concept, econo...

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Question 102

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Managerial accounting information is used by external and internal users equally.

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B) False

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Question 103

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The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles.

At December 31, 2011, Martin Consultants has assets of $430,000 and liabilities of $205,000. Using the accounting equation and considering each case independently, determine the following: a. Total Stockholders' Equity as of December 31, 2011. b. Total Stockholders' Equity as of December 31, 2012, assuming that assets increased by $12,000 and liabilities increased by $15,000 in 2012. c. Total Stockholders' Equity as of December 31, 2012, assuming that assets decreased by $8,000 and liabilities increased by $14,000 during 2012.

Profit is the difference between

Which of the following is not an asset?

If stockholders wanted to know how money flowed into and out of the company, what financial statement would they use?

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

The year-end balance of the retained earnings account appears in

Amos Moving Services' account balances at March 31, 2011, the end of the current year, are listed below. The Retained Earnings balance was $180,000 at April 1, 2010, the beginning of the current year. Based on the data provided for Amos Moving Services, prepare a retained earnings statement for the year ended March 31, 2011.

What information does the income statement give to business users?

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

Paying an account payable increases liabilities and decreases assets.

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.