Exam 1: Introduction to Accounting and Business

The total assets and total liabilities of Paul's Pools and Palaces at the beginning and at the end of the current fiscal year are as follows: (a)Determine the amount of net income earned during the year. No additional common stock was issued and no dividends were paid.(b)Determine the amount of net income during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders were paid $53,000 in cash dividends during the year (no additional purchase of common stock).(c)Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders paid for $35,000 of common stock in June of the current fiscal year (no dividends).(d)Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders paid for $12,000 of common stock in August of the current fiscal year and were paid twelve monthly cash dividends of $1,500 each during the year.​

If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total stockholders' equity was a $200,000 increase.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Easy and cheap to organize A)Proprietorship B)Partnership C)Corporation D)Limited liability company (LLC)

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for services provided 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

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 A)Proprietorship B)Partnership C)Corporation D)Limited liability company (LLC)

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

The natural business year is a

What are the three sections of the statement of cash flows?

Financial reports that are available for user's to use in decision making show

Which of the following would not normally operate as a service business?

The assets and liabilities of a company are $128,000 and $84,000, respectively. Stockholders' equity should equal

Proprietorships are owned by one owner and provide only services to their customers.

Assets that are used up during the process of earning revenue are called expenses.

Which of the following is the best description of accounting's role in business?

Earning revenue

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Has the ability to obtain large amounts of resources A)Proprietorship B)Partnership C)Corporation D)Limited liability company (LLC)

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

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of stockholders' equity (SSE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

The accounting equation can be expressed as Assets - Liabilities = Stockholder's Equity.

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -The second statement prepared A)Income statement B)Balance sheet C)Statement of stockholder's equity D)Statement of cash flows