Exam 1: Accounting and the Business Environment

Precision Camera Services started the year with total assets of $90,000 and total liabilities of $65,000. The revenues and the expenses for the year amounted to $100,000 and $70,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $40,000. What is the amount of stockholders' equity at the end of the year?

Indicate the effects on the accounting equation of the following business transactions of Pilgrim Service Corporation for b) to d) below. Use proper account titles. Transaction a) is answered as a guide. a) Received cash from Maxwell Jones; issued common stock to him. b) Received cash from a customer on accounts receivable. c) Paid cash dividends to the stockholder. d) Paid cash on accounts payable.

Common stock represents the basic ownership of every corporation.

As long as an increase and decrease of the same amount is recorded on one side of the accounting equation, the accounting equation remains in balance.

Financial analysts perform reviews of companies to ensure compliance to rules and regulations.

The Public Company Accounting Oversight Board (PCAOB) was created ________.

A law firm provides legal services for clients who do not pay immediately. As a result of this transaction, assets and revenues increase.

Which of the following is true of assets?

Members of a limited-liability company (LLC) are not personally liable for the debts of the business.

The net income of Hollywood Talent Services is $26,000. The beginning and ending stockholders' equity balances were $35,000 and $56,000, respectively. The company issued no common stock. Calculate the amount of dividends.

Regarding the separation of corporate ownership and management, which of the following is a true statement?

Merian Company has just completed operations for the year ended December 31, 2018. This is the second year of operations for the company. The following data have been assembled for the business at December 31, 2018. Accounts Payable \ 12,200 Office Expense \ 6,500 Accounts Receivable 14,500 Rent Expense 9,600 Cash 8,200 Retained Earnings, Jan. 1, 2018 8,300 Common Stock 9,000 Salaries Expense 36,000 Dividends 13,500 Service Revenue 84,000 Equipment 15,000 Utilities Expense 6,200 Insurance Expense 4,000 Prepare the statement of retained earnings for the year. Use a proper heading.

Which of the following actions determines when a corporation comes into existence?

Financial accounting focuses on information for decision makers outside of the business, such as creditors and taxing authorities.

A creditor is a person who owes money to the business.

List the four financial statements and briefly explain how each is prepared. Financial statement How it is prepared 1. 2. 4.

Which of the following financial statements shows the dividends distributed to stockholders?

What is the calculation for return on assets (ROA)? What does ROA measure?

Which of the following appears on both the statement of retained earnings and the balance sheet?

The economic resources of a business such as furniture, building, and land are its ________.