Exam 1: Introduction to Accounting and Business

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 $48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. Accounts payable \ 4,375 Spa operating expense \ 23,760 Accounts receivable 8,490 Office expense 2,470 Cash 13,980 Spa supplies 9,230 Fees earned 98,435 Wages expense 26,580 Spa furniture \& equipment 56,000 Dividends 38,170 Computers 2,130 Prepare a statement of retained earnings for Rocky's Day Spa for the current year ended December 31.

Computer Corporation is starting its computer programming business and has sold stock of $15,000. Identify how the accounting equation will be affected.

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

Explain the interrelationship between the balance sheet and the statement of cash flows.

The unit of measurement concept requires that economic data be recorded in dollars.

Proprietorships are owned by one owner and provide only services to their customers.

A summary of cash flows for Evelyn's Event Planning for the year ended December 31 is shown below.

If a shareholder wanted to know how money flowed into and out of the company, which financial statement would the shareholder use?

Use the accounting equation to answer each of the independent questions below. a) At the beginning of the year, Norton Company's assets were $75,000 and its stockholders' equity was $38,000. During the year, assets increased by $18,000 and liabilities increased by $4,000. What was the stockholders' equity at the end of the year? b) At the beginning of the year, Turpin Industries had liabilities of $44,000 and stockholders' equity of $66,000. If assets increased by $10,000 and liabilities decreased by $5,000, what was the stockholders' equity at the end of the year?

On March 1, the amount of retained earnings in Richard's Catering Company was $150,000. During March, stockholders were paid $31,000 in dividends from the business. The amounts of the various assets, liabilities, revenues, and expenses are as follows: Accounts payable \ 10,250 Accounts receivable 45,950 Cash 23,840 Fees earned 64,950 Insurance expense 1,275 Land 85,400 Miscellaneous expense 1,210 Prepaid insurance 3,000 Rent expense 9,000 Salary expense 20,300 Supplies 900 Supplies expense 525 Utilities expense 2,800 Present, in good form, a) an income statement for March, b) a statement of retained earnings for March, and c) a balance sheet as of March 31.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Payment of dividends

On July 1 of the current year, the assets and liabilities of John Wong, DVM, 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?

Match the following business types with each business listed below. Each may be used more than once. -A health club and spa

Using the following accounts and their amounts, prepare in good format a balance sheet for Bright Futures Company for the month ended August 31. Telephone expense \ 1,150 Cash 3,000 Accounts payable 1,540 Dividends 800 Fees eamed 15,700 Rent expense 1,400 Supplies 140 Accounts receivable 1,500 Computer equipment 20,000 Stockholders' equity August 1) 14,320 Wages expense 4,800 Utilities expense 750 Notes payable 2,400 Office expense 420

Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity, an investing activity, a financing activity, or does not appear on the cash flow statement. a) Cash paid for building b) Cash paid to suppliers c) Cash paid for dividends d) Cash received from customers e) Cash received from the sale of common stock f) Cash received from the sale of a building g) Borrowed cash from a bank

Paying an account payable increases liabilities and decreases assets.

How does receiving a bill to be paid next month for services received affect the accounting equation?

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

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for services provided

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 $48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. Accounts payable \ 4,375 Spa operating expense \ 23,760 Accounts receivable 8,490 Office expense 2,470 Cash ??? Spa supplies 9,230 Fees earned 98,435 Wages expense 26,580 Spa furniture \& equipment 56,000 Dividends 38,170 Computers 2,130 Prepare a balance sheet for Rocky's Day Spa for the year ended December 31.