Exam 1: Introduction to Accounting and Business

Explain the meaning of the business entity concept.

The accountant for Scott Industries prepared the following list of accounting equation element balances from the company's records for the year ended December 31: ​ Fees earned \ 165,000 Cash \ 30,000 Accounts receivable 14,000 Selling expenses 44,000 Equipment 64,000 Scott, capital 27,000 Accounts payable 12,000 Interest income 3,000 Salaries and wages expense 40,000 Prepaid rent 2,000 Income taxes payable 5,000 Income taxes expense 18,000 Notes payable 20,000 Rent expense 20,000 -Determine the total assets at the end of the current year for Scott Industries.

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

No significant differences exist between the accounting standards issued by the FASB and the IASB.

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

Profit is the difference between

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

Financial reports are used by

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

The balance sheet represents the accounting equation.

Which of the following is a service business?

The accountant for Scott Industries prepared the following list of accounting equation element balances from the company's records for the year ended December 31: ​ Fees earned \ 165,000 Cash \ 30,000 Accounts receivable 14,000 Selling expenses 44,000 Equipment 64,000 Scott, capital 27,000 Accounts payable 12,000 Interest income 3,000 Salaries and wages expense 40,000 Prepaid rent 2,000 Income taxes payable 5,000 Income taxes expense 18,000 Notes payable 20,000 Rent expense 20,000 -Determine the total liabilities at the end of the current year for Scott Industries.

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

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

Company G has a ratio of liabilities to stockholders' equity of 0.12 and 0.28 for Year 1 and Year 2, respectively. In contrast, Company M has a ratio of liabilities to stockholders' equity of 1.13 and 1.29 for the same period.​REQUIRED:Based on this information, which company's creditors are more at risk and why? Should the creditors of either company fear the risk of nonpayment?

Donner Company is selling a piece of land adjacent to its business. An appraisal reported the market value of the land to be $120,000. Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what amount will be used to record this transaction in the accounting records?

Revenues are reported when

Match the following business types with each business listed below. Each may be used more than once. -A men's clothing store

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

Selected transaction data of a business for September are summarized below. Determine the following amounts for September: (a) total revenue, (b) total expenses, (c) net income. Service sales charged to customers on account during September$33,000 Cash received from cash customers for services performed in September28,000 Cash received from customers on account during September:Services performed and charged to customers prior to September13,000 Services performed and charged to customers during September18,000 Expenses incurred prior to September and paid during September 6,500Expenses incurred and paid in September36,250 Expenses incurred in September but not paid in September5,000 Expenses for supplies used and insurance (not included above)applicable to September2,000