Exam 2: The Accounting Equation and Transaction Analysis

Use the accounting equation to answer the following questions. 1. Penny Sales Co. has total assets of $140,000 and total liabilities of $54,000. What is owner's equity? 2. The Virtual Sun Center has total assets of $252,000 and owner's equity of $100,000. What are total liabilities? 3. Columbia River Restaurant has total liabilities of $50,000 and owner's equity of $80,000. What are total assets?

Selected transactions for Mountain Goats Tree Service are listed below. 1. Invested cash to start business. 2. Paid for monthly advertising. 3. Purchased supplies on account. 4. Billed customers for services performed. 5. Withdrew cash for owner's personal use. 6. Received cash from customers billed in (4). 7. Incurred utilities expense on account. 8. Purchased additional supplies for cash. 9. Received cash from customers when service was performed. Instructions List the numbers of the above transactions and descriliabilities, and owner's equity. For example, the first answer is: (1) Increase in assets and increase in owner's equity.

If a utility bill is received for electricity used during the month, then

Bethel Company reported the following financial information as of December 31, 2020: Revenues \ 320,000 Owner's Capital (1/1/20) 130,000 Equipment 180,000 Expenses 220,000 Cash 90,000 Owner's Drawings 10,000 Supplies 20,000 Accounts payable 60,000 Notes Payable 100,000 Accounts receivable 90,000 Bethel's assets on December 31, 2020 are

Foxes Service Shop started the year with total assets of $320,000 and total liabilities of $240,000. During the year, the business recorded $630,000 in revenues, $450,000 in expenses, and owner drawings of $60,000. Owner's equity at the end of the year was

Owner's equity is decreased by all of the following except

Boone Drug Store collected cash on account from customers. The collection of the accounts

Which of the following statements is not true?

Tess's Nail Bar had the following transactions during the month of May. Indicate the effect of each transaction upon the total assets of the business by one of the following phrases: increased total assets, decreased total assets, or no change in total assets. (a) Purchased additional equipment on account. (b) Purchased supplies for cash. (c) Borrowed money from the bank. (d) Paid the monthly utility bill. (e) Collected an accounts receivable. (f) Tess, the owner, withdrew cash from the business for personal use.

External transactions involve economic events between the company and some other enterprise or party.

Luis Consulting started the year with total assets of $60,000 and total liabilities of $17,000. During the year, the business recorded $48,000 in consulting revenues and $36,000 in expenses. Luis made an additional investment of $8,000 and withdrew cash of $9,000 during the year. Owner's equity changed by what amount from the beginning of the year to the end of the year?

The basic accounting equation is assets = ______________ + owner's equity.

Owner's equity is increased by

If total liabilities decreased by $40,000 and owner's equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?

Presented below are items for Blue Lagoon Company at December 31, 2020. Accounts payable \ 37,000 Accounts receivable 39,000 Cash 17,000 Equipment 78,000 Owner's capital 47,000 Notes payable 50,000 Compute each of the following: 1. Total assets. 2. Total liabilities.

All of the following accounts are liabilities except

Which of the following events is not a business transaction?

Sorrento Ski Company received a utility bill in December and recorded a liability at that time. When the bill is paid in January, the payment

Revenues are

If rent is paid for the month, then