Exam 2: Analyzing Transactions: the Accounting Equation

Show the effects of each transaction on the accounting equation by indicating under the proper heading the dollar amount of increase or decrease for each transaction listed below.Compute the resulting accounting equation. ​ a. Owner deposited $\$ 20,000$ in his new business checking account. b. Supplies were purchased for $\$ 300$ on account. c. Paid a $\$ 1,200$ premium for six months of liability insurance. d. Purchased supplies for $\$ 200$ cash. e. Purchased equipment for $\$ 4,000$ by paying $\$ 1,000$ ; the rest to be paid in six months. f. Paid the $\$ 300$ bill outstanding (from transaction $b$ ). g. Owner withdrew $\$ 700$ from the business for personal use.

____________________ represent probable future benefits.

Tyler paid $3,700 on account to the company from which equipment was purchased on credit.This transaction would

The financial statement that should be completed first is the

Match the terms with the definitions. -A formal written promise to pay a supplier or lender a specified sum of money at a definite future time.

Any item a business owns that will provide future benefits is called owner's equity.

Since supplies last for several months,they are recorded as assets.

Financial statements commonly prepared by businesses include an income statement,a statement of owner's equity,and a balance sheet.

Falana received $7,000 in cash from a client for professional services rendered.This transaction would

From the following list of accounts,prepare an income statement,statement of owner's equity,and balance sheet for the year ended or at December 31,20--,for J.Carr's Delivery Service. Cash \ 11,450 Accounts Payable 4,450 Fees Earned 41,500 J. Carr, Capital January 1, 20-- 14,500 J. Carr, Drawing 7,000 Office Supplies 250 Rent Expense 10,000 Accounts Receivable 7,000 Equipment 6,000 Wages Expense 14,000 Repairs Expense 250 Furniture 4,500

The relationship between the three basic accounting elements: ____________________,____________________,and ____________________,can be expressed in the form of a simple equation known as the accounting equation.

Show the effect of each transaction on the three basic accounting elements by indicating the dollar amount of the increase or decrease under the proper element heading.Compute the resulting accounting equation. ​ a. Owner invested $\$ 16,500$ cash in the business. b. Paid premium for two-year insur ance policy, $\$ 1,500$ . c. Purchased a van valued at $\$ 35,000$ with $\$ 5,000$ down payment; the bal ance to be paid over three years. d. Paid the rent for the month, $\$ 900$ . e. Purchased $\$ 470$ of supplies for cash. f. Cash sales for the month, $\$ 8,750$ . g. Billed credit customers $\$ 14,200$ for monthly services. h. Paid monthly utility bill, $\$ 210$ . Owner withdrew $\$ 2,200$ for personal use. Received payments of $\$ 3,300$ from credit customers. ​ ​

Match the terms with the definitions. -Items a business owns that will provide future benefits.

Amounts owed to the business by its customers are called ____________________.

Dr.Etana Jenson is a podiatrist.As of December 31,Jenson owned the following assets related to the professional practice: As of that date,Jenson owed business suppliers as follows: Cash \ 6,600 X-ray Equipment \ 9,000 Office Equipment 3,500 Laboratory Equipment 3,000 Required: Top Flight Office Equipment Co. \ 3,000 Dunhill Medical Supplies Company 1,000 Island Gas Company 2,200

A business entity is an individual,association,or organization with control over economic resources and which engages in economic activities.

____________________ is a measure of the ease with which an asset will be converted to cash.

Match the terms with the definitions. -The decrease in assets (or increase in liabilities)as a result of efforts to produce revenues.

The income statement provides information about events over a period of a month,year,or other period of time.

The balance sheet reports assets,liabilities,and owner's equity on a specific date.