Exam 1: Introduction to Accounting and Business

Equipment with an estimated market value of $30,000 is offered for sale at $45,000.The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days.The amount used in the buyer's accounting records to record this acquisition is

Which of the following is the best description of accounting's role in business?

All of the following are general-purpose financial statements except

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of stockholders.

Cash dividends

The debt created by a business when it makes a purchase on account is referred to as an

Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity,an investing activity,a financing activity,or does not appear on the cash flow statement. a. Cash paid for building b. Cash paid to suppliers c. Cash paid for dividends d. Cash received from customers e. Cash received from the sale of common stock f. Cash received from the sale of a building g. Borrowed cash from a bank

Daniels Company made the following selected transactions during May: 1. Received cash from sale of stock, $55,000 2. Paid creditors on account, $7,000 3. Billed customers for services on account, $2,565 4. Received cash from customers on account, $8,450 5. Paid dividends to stockholders, $2,500 6. Received the utility bill, $160, to be paid next month Indicate the effect of each transaction on the accounting equation by: a Account type - Aassets, Lliabilities, SEstockholders' equity, Rrevenue, and Eexpense b Name of account c The amount by of the transaction d The direction of change increase or decrease in the account affected Note: Each transaction has two entries.

Which of the following groups are considered to be internal users of accounting information?

If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $71,000 during the same period,then the amount and direction increase or decrease of the period's change in total liabilities is

The statement of cash flows consists of three sections: cash flows from operating activities,cash flows from income activities,and cash flows from equity activities.

Net income and net profit do not mean the same thing.

Assets that are used up during the process of earning revenue are called expenses.

The main objective for all business is to maximize unrealized profits.

The balance sheet represents the accounting equation.

At the end of its accounting period,December 31,of Year 1,Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000.Using the accounting equation and considering each case independently,determine the following amounts. a Hsu's liabilities as of December 31,of Year 1. b Hsu's liabilities as of December 31,of Year 2,assuming that assets increased by $56,000 and shareholders' equity decreased by $32,000. c Net income or net loss during Year 2,assuming that as of December 31,Year 2,assets were $592,000,liabilities were $450,000,and there were no additional investments or dividends.

Use the accounting equation to answer each of the independent questions below. a. At the beginning of the year,Norton Company's assets were $75,000 and its stockholders' equity was $38,000.During the year,assets increased by $18,000 and liabilities increased by $4,000.What was the stockholders' equity at the end of the year? b. At the beginning of the year,Turpin Industries had liabilities of $44,000 and stockholders' equity of $66,000.If assets increased by $10,000 and liabilities decreased by $5,000,what was the stockholders' equity at the end of the year?

The accountant for Flagger Company prepared the following list of account balances from the company's records for the year ended December 31: Fees earned \ 165,000 Cash \ 30,000 Accounts receivable 14,000 Selling expenses 44,000 Equipment 42,000 Common stock 36,000 Accounts payable 12,000 Interest income 3,000 Salaries \& wages expense 40,000 Rent expense 51,000 Income taxes payable 5,000 Prepaid rent 2,000 Notes payable 20,000 Income taxes expense 18,000 Prepare an income statement for Flagger Company in good form.

There are four transactions that affect stockholders' equity. a What are the two types of transactions that increase stockholders' equity? b What are the two types of transactions that decrease stockholders' equity?

A business paid $7,000 to a creditor in payment of an amount owed.The effect of the transaction on the accounting equation was to