Exam 1: Introduction to Accounting and Business

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

On May 20, White Repair Service extended an offer of $108,000 for land that had been priced for sale at $140,000. On May 30, White Repair Service accepted the seller's counteroffer of $115,000. On June 20, the land was assessed at a value of $95,000 for property tax purposes. On July 4, White Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in White Repair Service's records?

Revenues are reported when

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

If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $71,000 during the same period, then the amount and direction increase or decrease) of the period's change in total liabilities is

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

The assets section of the balance sheet normally presents assets in

The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below. The common stock was $120,000 and the retained earnings were $60,000 at April 1, the beginning of the current year. During the year, shareholders purchased an additional $25,000 in stock. -Prepare a statement of retained earnings for the current year ended March 31.

Which of the following asset accounts is increased when a receivable is collected?

The excess of revenue over the expenses incurred in earning the revenue is called capital.

All of the following statements regarding the ratio of liabilities to stockholders' equity are true except

The financial statements of a proprietorship should include the owner's personal assets and liabilities.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Purchased supplies on credit

Net income and net profit do not mean the same thing.

Selected transaction data of a business for September are summarized below. Determine the following amounts for September: a) total revenue, b) total expenses, c) net income.

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: Fees earned \ 165,000 Cash Accounts receivable 14,000 Selling expenses Equipment 64,000 Common stock Accounts payable 12,000 Interest income Salaries \& wages expense 40,000 Frepaid rent Income taxes payable 5,000 Income taxes expense Notes payable 20,000 Rent expense -Based on this information, is Scott Industries profitable? Explain your answer.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid part of an amount owed to a creditor

Company G has a ratio of liabilities to stockholders' equity of 0.12 and 0.28 for Year 1 and Year 2, respectively. In contrast, Company M has a ratio of liabilities to stockholders' equity of 1.13 and 1.29 for the same period. REQUIRED: Based on this information, which company's creditors are more at risk and why? Should the creditors of either company fear the risk of nonpayment?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid cash for the purchase of a one-year insurance policy

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called an)