Exam 1: An Introduction to Accounting

During the year, 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?

Chow Company earned $1,500 of cash revenue, paid $1,200 for cash expenses, and paid a $200 cash dividend to its owners. Which of the following statements is true?

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

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?

Dividends paid by a company are shown on the:

Which of the following does not describe the effects of an asset use transaction on a company's financial statements?

Yi Company provided services to a customer for $5,500 cash. As a result of this event:

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 cash. 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 cash. 4) Incurred expenses of $360. "5) Paid dividends of $100. The amount of total equity on Packard's balance sheet at the end of Year 1 is:"

International accounting standards are formulated by the IASB. What does that acronym stand for?

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

The value created by a business may be called assets.

Borrowing cash from the bank is an example of which type of transaction?

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?

Mayberry Company paid $30,000 cash to purchase land. As a result of this business event:

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.

The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?; Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500. The amount of liabilities reported on the end-of-period balance sheet was:

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

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1. Acquired $6,000 cash from issuing common stock. 2) Borrowed $4,400 from a bank. 3) Earned $6,200 of revenues. 4) Incurred $4,800 in expenses. 5) Paid dividends of $800. Lexington Company engaged in the following transactions during Year 2: 1) Acquired an additional $1,000 cash from the issue of common stock. 2) Repaid $2,600 of its debt to the bank. 3) Earned revenues, $9,000. 4) Incurred expenses of $5,500. 5) Paid dividends of $1,280. Total liabilities on Lexington's balance sheet at the end of Year 1 equal:

The Financial Accounting Standards Board is a privately funded organization with authority for establishing accounting standards for businesses in the US.

Which of the following could represent the effects of an asset exchange transaction on a company's financial statements?