Exam 1: Introduction to Accounting and Business

Identify each of the following as either internal or external users of accounting information.

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -Has three sections: operating, investing and financing A)Income statement B)Balance sheet C)Statement of stockholder's equity D)Statement of cash flows

Determine the missing amount for each of the following:

A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

Discuss the characteristics of a limited liability company (LLC).

Krammer Company has liabilities equal to one fourth of the total assets. Krammer's stockholders' equity is $45,000. Using the accounting equation, what is the amount of liabilities for Krammer?

Given the following data: Compute the ratio of liabilities to stockholders' equity for each year. Round to two decimal places.

Most businesses in the United States are

The liabilities and stockholder's equity of a company are $132,000 and $244,000, respectively. Assets should equal

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. Prepare an income statement for Rocky's Day Spa for the current year ended December 31.

Which of the following groups of companies are all examples of a retail business?

What information does the income statement give to business users?

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. The 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 principle, what is the amount that will be used to record this transaction in the accounting records?

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

Given the following: Beginning stockholders' equity $58,000 Ending stockholders' equity $30,000 Stockholder dividends $25,000 Calculate net income or net loss.

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. Prepare a statement of stockholder's equity for Rocky's Day Spa for the current year ended December 31.

The following are examples of external users of accounting information except

Dividends paid to stockholders decrease assets and increase equity.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Often used as an alternative to a partnership A)Proprietorship B)Partnership C)Corporation D)Limited liability company (LLC)