Exam 1: Accounting in Business

Reese's Company reported equity of $22,000 on its December 31, 2019 balance sheet. The following information is available for the year ended December 31, 2020 What are the total assets of Reese's Company on December 31, 2020?

If the liabilities of a business increased $60,000 during a period of time and equity in the business decreased $18,000 during the same period, would the assets of the business have increased or decreased? By what amount?

Business transactions are exchanges of economic consideration between two parties.

Internal auditors perform the audit at the request of the board of directors to protect investor interests.

How does the going concern principle affect reporting asset values of a business?

Dallas Parsons, CPA, began an accounting practice and completed these transactions during September 2015: Show the effects of the above transactions on the balance sheet items of Dallas Parsons, CA. Use the following format for your answers. Increase = I Decrease = D No effect = N

The Historical cost principle states that if no cash is involved in a transaction the cash-equivalent value must be used.

Payments of cash by a corporation to its shareholders are called

Identify the three forms of business organizations.

Accounting is an information and measurement system that

Explain the accounting equation, also called the balance sheet equation.

Businesses can take the following form(s)

Assets created by selling products or services on credit are

Although a proprietorship is not a separate legal entity, a partnership is.

Generally accepted accounting principles are

An exchange of economic consideration between two parties that causes a change in assets, liabilities or equity is called

The assumption that a business will continue to operate until it can sell its assets to pay its creditors underlies the going concern principle.

Exchanges between the entity and some other person or organization are

The income statement is a financial statement that shows revenues earned and expenses incurred by a business over a specified period of time.

The business entity principle requires that an owner keep accounting records separate from personal records or records of any other businesses owned.