Exam 1: Introduction to Financial Statements

Ashley's Accessory Shop started the year with total assets of $140,000 and total liabilities of $80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and dividends of $40,000. Stockholders' equity at the end of the year was

If total liabilities decreased by $75,000 and stockholders' equity decreased by $25,000 during a period of time, then total assets must change by what amount and direction during that same period?

The summaries of data from the balance sheet, income statement, and retained earnings statement for two corporations, Bates Corporation and Wilson Enterprises, are presented below for 2014. Instructions Determine the missing amounts. Assume all changes in stockholders' equity are due to changes in retained earnings.

The company's policy toward dividends and growth could best be determined by examining the

Your friend, James, made this comment: "My major is biology and I plan to research for cures for major illnesses. Therefore, I have no need to study accounting." What is your response to James?

At the beginning of the year, Gant Company had total assets of $660,000 and total liabilities of $300,000. Answer the following questions viewing each situation as being independent of the others. (1) If total assets increased $225,000 during the year, and total liabilities decreased $100,000, what is the amount of stockholders' equity at the end of the year? (2) During the year, total liabilities increased $215,000 and stockholders' equity decreased $130,000. What is the amount of total assets at the end of the year? (3) If total assets decreased $60,000 and stockholders' equity increased $150,000 during the year, what is the amount of total liabilities at the end of the year?

Benedict Company compiled the following financial information as of December 31, 2014: Benedict's assets on December 31, 2014 are

Marvin Services Corporation had the following accounts and balances: If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000, what would be the total of stockholders' equity?

Liabilities of a company are owed to

Buying assets needed to operate a business is an example of a(n)

All publicly traded U.S. companies must provide their stockholders with an annual report each year.

Corporate stockholders generally pay higher taxes but have no personal liability.

The concern about international companies adopting SOX-type standards centers on

Finney Company began the year by issuing $40,000 of common stock for cash. The company recorded revenues of $370,000, expenses of $320,000, and paid dividends of $20,000. What was Finney's net income for the year?

Sleep Cheap is a private camping ground near the Boulder Peak Recreation Area. It has compiled the following financial information as of December 31, 2014. Instructions (a) Determine net income from Sleep Cheap for 2014. (b) Prepare a retained earnings statement and a balance sheet for Sleep Cheap as of December 31, 2014.

Which of the following is a primary user of accounting information with a direct financial interest in the business?

The purchase of equipment is an example of a financing activity.

The framework used to record and summarize the economic activities of a business enterprise is referred to as the accounting equation. State the basic accounting equation and define its major components. How are financial statements related to the accounting equation?

On June 1, 2014, Shaw Company prepared a balance sheet that shows the following: Shortly thereafter, all of the assets were sold for cash. How would the balance sheet appear immediately after the sale of the assets for cash for each of the following cases?

Reinhardt's Carpet Cleaning has the following balance sheet items: