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Exam 1: Introduction to Accounting and Business

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Question 81

Multiple Choice

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The year-end balance of the owner's capital account appears in

A) both the statement of owner's equity and the income statement
B) only the statement of owner's equity
C) both the statement of owner's equity and the balance sheet
D) both the statement of owner's equity and the statement of cash flows

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

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Question 82

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Most businesses in the United States are

A) proprietorships
B) partnerships
C) corporations
D) co-operatives

E) A) and D)
F) All of the above

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Question 83

Multiple Choice

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

Purchasing supplies on account increases liabilities and decreases equity.

What information does the Income Statement give to business users?

The balance sheet represents the accounting equation.

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

Which of the following group of companies are all examples of a merchandising business?

Revenue is earned only when money is received.

Determine the missing amount for each of the following:

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

The cost concept is the basis for entering the exchange price into the accounting records.

Which of the following isnot a characteristic of a corporation?

Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.

Using the following accounts and their amounts, prepare in good format a Balance Sheet for Bright Futures Company, month ended August 31, 2011:

Accounting information users need reports about the economic activities and condition of businesses.

Two common areas of accounting that respectively provide information to internal and external users are:

Receiving payments on an account receivable increases both equity and assets.

Donner Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?

Using the following accounts and their amounts, prepare in good format a Statement of Owner's Equity for Bright Futures Company, month ended August 31, 2011: