Exam 1: An Introduction to Accounting

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. What is Packard's retained earnings account balance at the end of Year 1 before the process of closing the accounts has been undertaken?"

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.

Yowell Company began operations on January 1, Year 1. During Year 1, 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 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders "8) paid employees' salaries of $21,000 What is Yowell's net cash flow from operating activities?"

Garrison Company acquired $23,000 by issuing common stock. Which of the following choices accurately reflects how this event affects the company's financial statements?

Retained earnings reduces a company's commitment to use its assets for the benefit of its stockholders.

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

If a company's total assets increased while liabilities and common stock were unchanged, then:

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.

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 retained earnings on Packard's Year 2 balance sheet is:"

Which of the following is false regarding managerial accounting information?

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

Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

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

Liabilities represent the future obligations of a business entity.

Which of the following is not an element of the financial statements?

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

Which of the following items is an example of revenue?

In a market, creditors are resource providers.

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. The amount of total assets on Lexington's balance sheet at the end of Year 1 was:

At the time of liquidation, Fairchild Company reported assets of $200,000, liabilities of $120,000, common stock of $90,000 and retained earnings of ($10,000). What amount of Fairchild's assets are the shareholders entitled to receive?