Exam 1: Introduction to Accounting and Business

The account balances of Awesome Travel Services at December 31 are listed below. There were no additional investments or withdrawals by J. Trendsetter during the year. Accounts payable \ 12,000 Retained earnings Jan. 1) \ 10,000 Accounts receivable 14,000 Supplies 1,000 Cash 18,000 Income taxes expense 1,300 Computer equipment 21,000 Utilities expense 8,000 Fees earned 78,000 Wages expense 25,000 Rent expense 10,000 Supplies expense 1,700 Prepare an income statement, retained earnings statement, and a balance sheet as of December 31.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Owned by two or more individuals

Which of the following is not a characteristic of a corporation?

At the end of its accounting period, December 31, of Year 1, Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts. a) Hsu's liabilities as of December 31, of Year 1. b) Hsu's liabilities as of December 31, of Year 2, assuming that assets increased by $56,000 and shareholders' equity decreased by $32,000. c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000, liabilities were $450,000, and there were no additional investments or dividends.

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

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

What information does the income statement give to business users?

The main objective for all business is to maximize unrealized profits.

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

Given the following data: Compute the ratio of liabilities to stockholders' equity for each year. Round to two decimal places.

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

The following data were taken from Miller Company's balance sheet: a) Compute the ratio of liabilities to stockholders' equity. Round your answer to one decimal place. b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -The second statement prepared

Given the following data: Dec. 31 , Year 2 Dec. 31 , Year 1 Total liabilities \ 128,250 \ 120,000 Total stockholders' equity 95,000 80,000 a) Compute the ratio of liabilities to stockholders' equity for each year. b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

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

The accounting equation can be expressed as Assets - Liabilities = Shareholder's Equity.

Which of the following is the best description of accounting's role in business?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Payment for common stock by stockholder

From the following list of items taken from Lamar's accounting records, identify those that would appear on the income statement. a) Rent expense b) Land c) Common stock d) Fees earned e) Dividends f) Wages expense g) Investment

Match the following business types with each business listed below. Each may be used more than once. -An automobile dealer