Exam 1: Introduction to Accounting and Business

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 assumption.

Which of the following asset accounts is increased when a receivable is collected?

The following data were taken from Miller Company's balance sheet: (a) Compute the ratio of liabilities to stockholders' 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 measurement principle requires that

The account balances of Awesome Travel Services at December 31 are listed below. There were no additional investments or dividends by Awesome Travel Services during the year. Prepare an income statement, a statement of stockholders' equity, and a balance sheet as of December 31.

At the end of its accounting period, December 31, of Year 1, Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts.​ (a) Hsu's liabilities as of December 31, of Year 1.(b) Hsu's liabilities as of December 31, of Year 2, assuming that assets increased by $56,000 and shareholders' equity decreased by $32,000.(c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000, liabilities were $450,000, and there were no additional investments or dividends.

Cash investments made by the owner in the business are reported on the statement of cash flows in the

Using the following accounts and their amounts, prepare in good format an income statement for Bright Futures Company for the month ended August 31.​

Goods purchased on account for future use in the business, such as supplies, are called

Match the following business types with each business listed below. Each may be used more than once. -A health club and spa A)Service business B)Manufacturing business C)Retail business

Paying an account payable increases liabilities and decreases assets.

How does paying a liability in cash affect the accounting equation?

Which of the following is a service business?

For accounting purposes, the business entity should be considered separate from its owners if the entity is

An income statement is a summary of the revenues and expenses of a business as of a specific date.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid wages A)Increase assets, increase liabilities B)Increase liabilities, decrease stockholders' equity C)Increase assets, increase stockholders' equity D)No effect E)Decrease assets, decrease liabilities F)Decrease assets, decrease stockholders' equity

If a shareholder wanted to know how money flowed into and out of the company, which financial statement would the shareholder use?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for providing services to customers A)Increase assets, increase liabilities B)Increase liabilities, decrease stockholders' equity C)Increase assets, increase stockholders' equity D)No effect E)Decrease assets, decrease liabilities F)Decrease assets, decrease stockholders' equity

At December 31 of the current year, Martin Consultants has assets of $430,000 and liabilities of $205,000. Using the accounting equation and considering each case independently, determine the following: (a) stockholders' equity, as of December 31.(b) stockholders' equity, as of December 31 of the next year, assuming that assets increased by $12,000 and liabilities increased by $15,000.(c) stockholders' equity, as of December 31 of the next year, assuming that assets decreased by $8,000 and liabilities increased by $14,000.

How does receiving a bill to be paid next month for services received affect the accounting equation?