Exam 1: An Introduction to Accounting

Which types of accounts are closed out to retained earnings at the end of an accounting period?

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

Rosemont Company began operations on January 1,2015,and on that date issued stock for $60,000 cash.In addition,Rosemont borrowed $50,000 cash from the local bank.The company provided services to its customers during 2013 and received $35,000.It purchased land for $70,000.During the year,it paid $10,000 cash for salaries and $9,000 cash for supplies that were used up in its operations.Stockholders were paid cash dividends of $8,000 during the year. Required: a)List the transactions from the information above (for example,issued common stock for $60,000)and indicate in which section of the statement of cash flows each transaction would be reported. b)What would the amount be for net cash flows from operating activities? c)What would be the end-of-year balance for the cash account? d)What would be the amount of the total assets for the Rosemont Company at the end of 2015? e)What would be the end-of-year balance for the retained earnings account?

Indicate whether each of the following statements about financial statements is true or false. _______ a)A cash dividend paid to stockholders is shown in the investing activities section of the statement of cash flows. _______ b)A cash dividend paid to stockholders is shown on the statement of changes in stockholders' equity. _______ c)A cash dividend paid to stockholders is shown on the income statement. _______ d)The balance sheet shows ending balances of permanent accounts as of the last day of the accounting period. _______ e)Changes in retained earnings for the accounting period are shown on the income statement.

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

Tandem Company borrowed $32,000 of cash from a local bank.Which of the following choices accurately reflects how this event affects the company's financial statements?

Elements are subclassifications of the various accounts of the financial statements.

Li Company paid cash to purchase land.As a result of this accounting event

Delta 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 Delta's statements?

How does providing services for cash affect the accounting equation? Is it considered an asset source,asset use,or asset exchange transaction?

Perez Company paid a $300 cash dividend.Which of the following choices accurately reflects how this event affects the company's financial statements?

At the end of 2016,retained earnings for the Baker Company was $3,500.Revenue earned by the company in 2016 was $1,500,expenses paid during the period were $800,and dividends paid during the period were $500.Based on this information alone,retained earnings at the beginning of 2016 was

The historical cost concept requires that most assets be recorded at the amount paid for them,regardless of increases in market value.

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

The following events occurred for Ringgold Company during 2015,its first year in operation: 1.Issued stock to investors for $45,000 cash 2.Borrowed $25,000 cash from the local bank 3.Provided services to its customers and received $32,000 cash 4.Paid expenses of $28,000 5.Paid $22,000 cash for land 6.Paid dividend of $12,000 to stockholders 7.Repaid $10,000 of the loan listed in item 2 Required: Show the effects of the above transactions on the accounting equation,below.Include dollar amounts of increases and decreases.Precede the amount with a minus sign if the event reduces that section of the equation.Enter NA for items not affected.If one section is affected by an increase and also a decrease,enter each part on a separate line. The first event is done for you.After entering all the events,calculate the total amounts of assets,liabilities,and equity at the end of the year.

Use the following information to answer questions Yowell Company began operations on January 1,2016.During 2016,the company engaged in the following cash transactions: 1)issued stock for $40,000 2)borrowed $25,000 from its bank 3)provided consulting services for $39,000 4)paid back $15,000 of the bank loan 5)paid rent expense for $9,000 6)purchased equipment costing $12,000 7)paid $3,000 dividends to stockholders 8)paid employees' salaries,$21,000 -What is Yowell's net income?

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. -Perez Co.paid $220,000 cash in salaries to its employees.

In a market,a company that manufactures cars would be referred to as a conversion agent.

Pinehurst Company was formed in 2015 and experienced the following accounting events during the year: 1.Issued common stock for $15,000 cash 2.Earned cash revenue of $28,000 3.Paid cash expenses of $20,500. These were the only events that affected the company during the year. Required: a)Write the accounting equation and record the effects of each accounting event under the appropriate general ledger account heading.Precede the amount with a minus sign if the transaction reduces that section of the equation. Enter 0 for items not affected. b)Prepare an income statement for 2015 and a balance sheet as of December 31,2015.Precede the amount with a minus sign if the transaction reduces that section of the income statement.

During 2016,Millstone Company earned $6,500 of cash revenue,paid cash dividends of $1,000 to owners and paid $4,000 for cash expenses.Liabilities were unchanged.Which of the following accurately describes the effect of these events on the elements of the company's financial statements?