Exam 1: An Introduction to Accounting

Define the term "accounting period." How does this term relate to the "matching concept" as it pertains to the income statement?. a)Financial resources can be provided to a business by consumers.b)Resource owners are the businesses that transform resources into products that satisfy consumer desires.c)Labor resources include both the physical and intellectual labor of a business's employees.d)Businesses purchase their resources from resource owners.e)Consumers are the main providers of resources in any market.

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1)issued stock for $40,0002)borrowed $25,000 from its bank3)provided consulting services for $39,0004)paid back $15,000 of the bank loan5)paid rent expense for $9,0006)purchased equipment costing $12,0007)paid $3,000 dividends to stockholders8)paid employees' salaries for work completed during the year, $21,000 What is Yowell's net income?

Which of the following transactions would be reported on the statement of changes in stockholders' equity?

Which financial statement reports revenue and expenses?

Classify each of the following events as an asset source (designate as "AS"), asset use (designate as "AU"), asset exchange (designate as "AX"), or not an asset source (designate as "NA"). ________ 1)Borrowed cash from the bank________ 2)Issued stock for cash________ 3)Purchased land for cash________ 4)Performed services and collected cash________ 5)Paid cash for operating expense________ 6)Purchased equipment for cash________ 7)Paid dividends to stockholders________ 8)Repaid the bank loan with cash

The following transactions apply to the Garber Corporation for Year 1, its first year in business. 1)Issued stock to investors, $48,000. 2)The company borrowed $42,000 cash from the bank. 3)Services were provided to customers and $50,000 cash was received. 4)The company acquired land for $44,000. 5)The company paid $34,000 rent for the building where it does its business. 6)The company paid $3,200 for supplies that were used during the period. 7)The company sold the land acquired in item 5 for $44,000. 8)A dividend of $1,000 was paid to the owners. 9)Repaid $20,000 of the loan described in item 2. Required: a)Prepare an income statement, statement of changes in equity, and balance sheet for Year 1. b)Prepare a statement of cash flows for Year 1.

Santa Fe Company was started on January 1, Year 1, when it acquired $9,000 cash by issuing common stock. During Year 1, the company earned cash revenues of $4,500, paid cash expenses of $3,750, and paid a cash dividend of $250. Which of the following is true based on this information?

Grimes Corporation reports the following cash transactions for the year ending December 31, Year 1, its first year of operation:1)Issued common stock for $35,0002)Borrowed $25,000 from a local bank3)Purchased land for $40,0004)Provided services to clients for $38,0005)Paid operating expenses of $30,5006)Paid $2,000 cash dividends to stockholders Required:a)What are the total assets for Grimes Corporation at December 31, Year 1?b)Prepare an income statement for Year 1.

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1)issued stock for $80,0002)borrowed $65,000 from its bank3)provided consulting services for $78,0004)paid back $35,000 of the bank loan5)paid rent expense for $19,0006)purchased equipment costing $32,0007)paid $5,000 dividends to stockholders8)paid employees' salaries for work completed during the year, $41,000What is Yowell's net income?

Hazeltine Company issued common stock for $200,000 cash. What happened as a result of this event?

Which of the following could represent the effects of an asset source transaction on the accounting equation?

Ellen Gatsby and her siblings, Ben and Sarah, started Gatsby Company when they each invested $100,000 in the company. After the investments there will be

Which of the following describes the effects of an asset use transaction on the accounting equation?

Frank Company earned $15,000 of cash revenue. Which of the following accurately reflects how this event affects the company's accounting equation?

Retained earnings at the beginning and ending of the accounting period were $1,000 and $2,100, respectively. Revenues of $3,900 and dividends paid to stockholders of $900 were reported during the period. What was the amount of expenses reported for the period?

Land is an element of the financial statements.

Which of the following appears in the investing activities section of the statement of cash flows?

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 the amount of total stockholders' equity that will be reported on Packard's balance sheet at the end of Year 1?

Indicate whether each of the following statements about the types of transactions is true or false.a)An asset source transaction increases total assets and increases claims to assets.b)The issuance of stock to owners for cash would be an example of an asset exchange transaction.c)Purchasing equipment for cash is an example of an asset use transaction.d)Paying a dividend to stockholders is an example of an asset use transaction.e)Making a payment on a bank loan is an example of an asset exchange transaction.

Reynolds Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Reynolds' accounting equation?