Exam 1: An Introduction to Accounting

The following is a partial set of financial statements prepared for the company's first year of operations. All transactions were for cash. Required:Fill in the blanks indicated by the alphabetic letters in the following financial statements.

The Financial Accounting Standards Board is a privately funded organization with authority for establishing accounting standards for businesses in the US.

Which of the following is a source of assets?

As of December 31, Year 1, Mason Company had $500 cash. During Year 2, Mason earned $1,200 of cash revenue and paid $800 of cash expenses. What is the amount of cash that will be reported on the balance sheet at the end of Year 2?

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.)1)Acquired $950 cash from the issue of common stock.2)Borrowed $420 from a bank.3)Earned $650 of revenues.4)Paid expenses of $250.5)Paid a $50 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.)1)Issued an additional $325 of common stock.2)Repaid $220 of its debt to the bank.3)Earned revenues of $750.4)Incurred expenses of $360.5)Paid dividends of $100. What is Packard Company's net cash flow from financing activities for Year 2?

Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden Wheels. Jack transferred $650,000 of the cash he borrowed to the store on the first day of the year. How many reporting entities exist in this scenario?

Which of the following statements is false regarding managerial accounting information?

The dividends a business pays to its owners appear on the income statement.

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.)Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800. Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.)Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280. What was the amount of retained earnings that will be reported on Lexington's balance sheet at the end of Year 1?

The value created by a business is created by its assets.

Mayberry Company paid $30,000 cash to purchase land. What happened as a result of this business event?

The financial statements of Calloway Company prepared at the end of the current year contained the following elements and corresponding amounts: Assets = $36,000; Liabilities = ?; Common Stock = $6,600; Revenue = $14,200; Dividends = $1,550; Beginning Retained Earnings = $4,550; Ending Retained Earnings = $8,600. Based on this information, what was the amount of expenses reported on Calloway's income statement for the current year?

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) Acquired $5,000 cash from issuing common stock.Borrowed $3,200 from a bank.Earned $4,100 of revenues.Incurred $2,600 in expenses.Paid dividends of $600. Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.) Acquired an additional $1,500 cash from the issue of common stock.Repaid $2,000 of its debt to the bank.Earned revenues, $5,500.Incurred expenses of $3,150.Paid dividends of $1,840. What was the net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?

Which of the following is the most accurate depiction of the accounting equation?

Name and briefly describe each of the four financial statements.

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1)Acquired $1,150 cash from the issue of common stock.2)Borrowed $620 from a bank.3)Earned $850 of revenues.4)Paid expenses of $290.5)Paid a $90 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1)Issued an additional $525 of common stock.2)Repaid $360 of its debt to the bank.3)Earned revenues of $950.4)Incurred expenses of $440.5)Paid dividends of $140. What is Packard Company's net cash flow from financing activities for Year 2?

At the beginning of Year 2, the accounting records of Grace Company included the accounts and balances shown on the first row of the table below. During Year 2, the following transactions occurred:Received $95,000 cash for providing services to customersPaid salaries expense, $50,000Purchased land for $12,000 cashPaid $4,000 on note payablePaid operating expenses, $22,000Paid cash dividend, $2,500Required:a)Record the transactions in the appropriate accounts. Record the amounts of revenue, expense, and dividends in the retained earnings column. Enter 0 for items not affected. Provide appropriate titles for these accounts in the last column of the table. (The effects of the first event are shown below.) b)What is the amount of total assets as of December 31, Year 2?c)What is the amount of total stockholders' equity as of December 31, Year 2?

Give three examples of asset use transactions.

Jackson Company paid $500 cash for salary expenses. Which of the following accurately reflects how this event affects the company's accounting equation?

Montgomery Company experienced the following events during Year 1 (all were cash events): Issued a notePaid operating expensesIssued common stockProvided services to customersRepaid part of the note in event 1Paid dividends to stockholders Required:Indicate how each of these events affects the accounting equation by writing the letter "I" for increase, the letter "D" for decrease, and "NA" for no effect under each of the elements of the accounting equation. Use only one item of entry in each column. (The effects of the first event are shown below.)