Exam 1: Accounting and the Business Environment

The relevant measure of value of the assets of a company that is going out of business is:

An owner investment would increase the assets and decrease the liabilities of the firm.

An income statement is dated for a period of time such as "For the Year Ended December 31, 2019."

Table 1-2 Following is a list showing the account balances of various assets, liabilities, revenues, and expenses for Tim's Landscaping at December 31, 2019, the end of its first year of operations. Accounts receivable \ 30,000 Accounts payable 7,000 Salary expense 9,000 Repairs expense 1,600 Truck 17,000 Equipment 12,600 Notes payable 16,400 Cash 13,600 Supplies expense 3,200 Service revenue 25,600 Gasoline expense 1,600 Salary payable 4,400 The owner, Tim Brown, invested $45,200 during the year and withdrew $10,000 during the year for personal use. -Refer to Table 1-2. Not including the investment, the net change in owner's equity for the year ended December 31, 2019, was:

Purchasing a parcel of land for $100,000 by paying $10,000 in cash and signing a promissory note for the remainder would:

Table 1-1 Following is a random list showing the account balances of various assets, liabilities, revenues, and expenses for Spiffy's Garage at December 31, 2019, the end of its first year of operations. Accounts receivable \ 15,000 Accounts payable 3,500 Salary expense 4,500 Repairs expense 800 Truck 8,500 Equipment 6,300 Notes payable 8,200 Cash 6,800 Supplies expense 1,600 Service revenue 12,800 Gasoline expense 800 Salary payable 2,200 The owner, Spiffy Sloan, invested $22,600 at the beginning of the year and withdrew $5,000 during the year for personal use. -Refer to Table 1-1. Total assets at December 31, 2019, were:

What is the qualitative characteristic that states that accounting records and statements are based on the most accurate and useful data available?

Provide the accounting equation.

The primary objective of financial reporting is to provide information:

Financial statements provide information about business activities to decision makers.

Which of the following transactions would have no effect on total assets, total liabilities, or owner's equity?

The income statement presents a summary of an entity's revenues and liabilities over a period of time.

Performing a service on account would:

Increases in owner's equity result from revenues and owner investments while decreases result from expenses and owner withdrawals.

Table 1-2 Following is a list showing the account balances of various assets, liabilities, revenues, and expenses for Tim's Landscaping at December 31, 2019, the end of its first year of operations. Accounts receivable \ 30,000 Accounts payable 7,000 Salary expense 9,000 Repairs expense 1,600 Truck 17,000 Equipment 12,600 Notes payable 16,400 Cash 13,600 Supplies expense 3,200 Service revenue 25,600 Gasoline expense 1,600 Salary payable 4,400 The owner, Tim Brown, invested $45,200 during the year and withdrew $10,000 during the year for personal use. -Refer to Table 1-2. Owner's equity at December 31, 2019, was:

Rules of professional conduct for accountants apply to accountants working in public practice but not for accountants employed by companies.

Borrowing money and signing a note payable would:

The purchase of supplies on account would have an effect on the owner's equity of the firm.

The principle that states that assets acquired by the business should be recorded at their exchange price is the:

On December 31, the assets of a business are: Cash, $3,500, Accounts Receivable, $14,000, and Supplies, $1,050. The liabilities on December 31 total $7,600. The owner's equity on December 31 is: