Exam 1: An Introduction to Accounting

The transactions listed below apply to Bates Company for its first year in business.Assume that all transactions involve the receipt or payment of cash. Transactions for the year 2015: 1)Issued common stock to investors for $25,000 cash. 2)Borrowed $18,000 from the local bank. 3)Provided services to customers for $28,000. 4)Paid expenses amounting to $21,400. 5)Purchased a plot of land costing $22,000. 6)Paid a dividend of $15,000 to its stockholders. 7)Repaid $12,000 of the loan listed in item 2. Required: (a)Fill in the headings to the accounting equation shown below. (b)Show the effects of the above transactions on the accounting equation.Precede the amount with a minus sign if the transaction reduces that section of the equation.

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 amounts. -Nguyen Co.borrowed $50,000 cash from Metropolitan Bank.

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?

If a corporation issues common stock for $50,000 cash,in which section of the statement of cash flows will this transaction be reported?

What is meant by the term double-entry bookkeeping?

Which of the following items would appear in the cash flow from financing activities section of a statement of cash flows?

Fill in the missing information by determining the amounts represented by letters a - d.

At the beginning of 2016,Grace Company's accounting records had the general ledger accounts and balances shown in the table below.During 2016,the following transactions occurred: 1.Received $95,000 cash for providing services to customers 2.Paid salaries expense,$50,000 3.Purchased land for $12,000 cash 4.Paid $4,000 on note payable 5.Paid operating expenses,$22,000 6.Paid cash dividend,$2,500 Required: a)Record the transactions in the appropriate general ledger accounts.Record the amounts of revenue,expense,and dividends in the retained earnings column.Precede the amount with a minus sign if the transaction reduces that section of the equation.Enter 0 for items not affected. Provide appropriate titles for these accounts in the last column of the table. b)What is the amount of total assets as of December 31,2016? c)What is the amount of total stockholders' equity as of December 31,2016?

Give three examples of asset use transactions.

Hazeltine Company issued common stock for $200,000 cash.As a result of this event,

Which of the following accounts are permanent?

Expenses are shown on the

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 amounts. -Pierce Co.paid $40,000 cash to purchase land.

Montgomery Company experienced the following events during 2015 (all were cash events): 1.Issued a note 2.Paid operating expenses 3.Issued common stock 4.Provided services to customers 5.Repaid part of the note in event 1 6.Paid 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 components of the accounting equation.Use only one item of entry in each column.The first event is done for you as an example.

Indicate whether each of the following statements about retained earnings is true or false. _______ a)A dividend paid to stockholders decreases retained earnings. _______ b)Issuing common stock for cash increases retained earnings. _______ c)The amount of net income for a period must equal retained earnings. _______ d)The purchase of a truck decreases retained earnings. _______ e)The amount of net income for a period increases retained earnings.

Use the following information to answer questions Packard Company engaged in the following transactions during 2015,its first year in 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 2016,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. -The net cash inflow from operating activities on Packard's 2015 statement of cash flows is

Chico 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 Chico's statements?

The following transactions apply to Wilson Fitness Center for 2016. 1)Started the business by issuing $48,000 of common stock for cash. 2)Provided services to clients and received $65,500 cash. 3)Borrowed $10,500 from the bank. 4)Paid $8,500 for rent of equipment. 5)Purchased land for $15,000. 5)Paid $46,600 of salary expense. 6)Cash dividends of $4,000 were paid to the stockholders. Required: a)What are the total assets of the business at the end of 2016? b)Prepare a Statement of Cash Flows for 2016.Precede the amount with a minus sign if the transaction reduces that section of the statement.

Name the group that has the primary authority for establishing U.S.GAAP.

The balance sheet of the Algonquin Company reported assets of $50,000,liabilities of $22,000 and common stock of $15,000.Based on this information only,the amount or balance for retained earnings must be