Exam 1: Introduction to Accounting and Business

Identify which of the following items would appear on a balance sheet. (a)Cash (b)Fees earned (c)Joe Brown, capital (d)Wages payable (e)Rent expense (f)Prepaid advertising (g)Land

A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

Which of the following is not true of accounting principles?

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

Bob Johnson is the sole owner of Johnson's Carpet Cleaning Service. Bob purchased a personal automobile for $10,000 cash plus he took out a loan for $20,000 in his name. Describe how this transaction is related to the business entity concept.

If total assets decreased by $30,000 during a specific period and owner's equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.

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?

The following data were taken from Miller Company's balance sheet:​​ Dec. 31, Year 2 Dec. 31, Year 1 Total liabilities \ 150,000 \ 105,000 Total owner's equity 75,000 60,000 (a) Compute the ratio of liabilities to owner's 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?

The assets section of the balance sheet normally presents assets in

Revenue is earned only when money is received.

Dave Ryan is the owner and operator of Ryan's Arcade. At the end of its accounting period, December 31, Ryan's Arcade has assets of $450,000 and liabilities of $125,000. Using the accounting equation, determine the following amounts: (a)owner's equity as of December 31 of the current year (b)owner's equity as of December 31 at the end of the next year, assuming that assets increased by $65,000 and liabilities increased by $35,000 during the year

Daniels Company is owned and operated by Thomas Daniels. The following selected transactions were completed by Daniels Company during May: 1.Received cash from owner as additional investment, $55,000. 2.Paid creditors on account, $7,000. 3.Billed customers for services on account, $2,565. 4.Received cash from customers on account, $8,450. 5.Paid cash to owner for personal use, $2,500. 6.Received the utility bill, $160, to be paid next month. ?Indicate the effect of each transaction on the accounting equation by: (a)Accounting equation element type: (A) assets, (L) liabilities, (OE) owner's equity, (R) revenue, and (E) expense b)Name of accounting equation element c)The amount of the transaction d)The direction of change (increase or decrease) in the account affected Note: Each transaction has two entries.?

The monetary value charged to customers for the performance of services sold is called a (n)

Purchasing supplies on account increases liabilities and decreases equity.

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

The accounting equation elements and their 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 J. Trendsetter, capital (January 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, statement of owner's equity, and a balance sheet as of December 31.?

Paying an account payable increases liabilities and decreases assets.

The unit of measure concept

Eric Wood, CPA, was organized on January 1 as a proprietorship. List the errors that you find in the following financial statements and prepare the corrected statements for the three months ended March 31.+ ?

Financial accounting reports are relevant only to users within the business.