Exam 1: Introduction to Accounting and Business

Cash investments made by the owner in the business are reported on the statement of cash flows in the

Purchasing supplies on account increases liabilities and decreases equity.

Identify each of the following as an 1) increase to stockholders' equity, or a 2) decrease to stockholders' equity. a) Fees earned b) Wages expense c) Dividends d) Lawn care revenue e) Investment f) Supplies expense

Discuss the characteristics of a limited liability company LLC).

The accounting equation may be expressed as

How does paying a liability in cash affect the accounting equation?

For accounting purposes, the business entity should be considered separate from its owners if the entity is

Financial reports are used by

The role of accounting is to provide many different users with financial information to make economic decisions.

Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,000. The Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?

Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using cash that had been obtained from the initial investment by Donnie Darnell. Which entity or entities Darnell Company, Joseph Company, and Donnie Darnell) should record the transaction involving the computer equipment on their accounting records?

If the liabilities owed by a business total $300,000 and stockholders' equity is equal to $300,000, then the assets also total $300,000.

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

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

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -Reports only revenues and expenses

Which of the following is true in regards to a limited liability company?

Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.

Managerial accountants would be responsible for providing information regarding

An account receivable is a claim against a customer resulting from a sale on account.