Exam 1: An Introduction to Accounting

Indicate whether each of the following statements about liabilities is true or false.a)Liabilities are reported on the balance sheet.b)The acquisition of a bank loan increases both assets and liabilities.c)The accounting equation requires that liabilities be equal to stockholders' equity.d)The amount of a company's liabilities is equal to the difference between its assets and its stockholders'equity.e)Liabilities are reported on the statement of cash flows of a business.

Retained earnings at the beginning and ending of the accounting period were $300 and $800, respectively. Revenues of $1,100 and dividends paid to stockholders of $200 were reported during the period. What was the amount of expenses reported for the period?

Turner Company reported assets of $20,000 (including cash of $9,000), liabilities of $8,000, common stock of $7,000, and retained earnings of $5,000. Based on this information, what can be concluded?

Use the following information to prepare an income statement for Penelope Company for the period ending December 31, Year 1. All transactions were for cash.A)Received revenue from services provided to customers, $30,500.B)Paid $19,000 cash for land.C)Issued $16,000 of common stock.D)Paid dividends to stockholders, $3,000.E)Paid operating expenses, $25,400.

Expenses are reported on which of the following financial statement(s)?

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1)issued stock for $74,0002)borrowed $59,000 from its bank3)provided consulting services for $72,0004)paid back $32,000 of the bank loan5)paid rent expense for $17,5006)purchased equipment costing $29,0007)paid $4,700 dividends to stockholders8)paid employees' salaries for work completed during the year, $38,000What is Yowell's ending notes payable balance?

A business and the person who owns the business are separate reporting entities.

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter dollar amounts. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. Increase = IDecrease = DNot Affected = NA Pierce Company paid $40,000 cash to purchase land.

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter dollar amounts. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. Increase = IDecrease = DNot Affected = NA North Company issued a note to purchase a building.

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1)Acquired $1,750 cash from the issue of common stock.2)Borrowed $1,220 from a bank.3)Earned $1,450 of revenues.4)Paid expenses of $410.5)Paid a $210 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1)Issued an additional $1,125 of common stock.2)Repaid $780 of its debt to the bank.3)Earned revenues of $1,550.4)Incurred expenses of $680.5)Paid dividends of $260. What is the amount of total stockholders' equity that will be reported on Packard's balance sheet at the end of Year 1?

The Heritage Company is a manufacturer of office furniture. Which term best describes Heritage's role in society?

Who are the three distinct types of participants in the market for business resources? Briefly describe the role of each group of participants.

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 net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?