Exam 1: Introduction to Accounting and Business

Transactions affecting stockholders' equity include

Name and describe the four primary financial statements for a corporation.

Statement of cash flows: A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.

Most businesses in the United States are

If net income for a company was $50,000, $20,000 in cash dividends were paid and the shareholders invested $10,000 in cash, the stockholders' equity increased by $40,000.

Indicate how the following transactions affect the accounting equation. a) The purchase of supplies on account b) The purchase of supplies for cash c) Payment of cash dividends to stockholders d) Revenues received in cash e) Sale made on account

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

Match the following business types with each business listed below. Each may be used more than once. -A tax preparation firm

How does the purchase of equipment by signing a note affect the accounting equation?

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Comprises 70% of business entities in the United States

Using the following accounts and their amounts, prepare in good format an income statement for Heavenly Futures Company for the month ended August 31. Telephone expense \ 1,150 Cash 3,000 Accounts payable 1,540 Dividends 800 Fees earned 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

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

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

Determine the missing amount for each of the following: Assets Liabilities Stockholders' Equity a) \ 38,000 \ 45,000 \ 30,000 b) \ 22,000 \ 53,000 \ 32,000 c)

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received payment from a customer on account

Karen Meyer owns and operates Crystal Cleaning Company. Recently, Meyer withdrew $10,000 from Crystal Cleaning, and she contributed $6,000, in her name, to the American Red Cross. The contribution of the $6,000 should be recorded on the accounting records of which of the following entities?

Receiving payments on an account receivable increases both equity and assets.

The business entity concept means that