Exam 1: Accounting and the Business Environment

Lawton Company records business transactions in dollars and disregards changes in the value of a dollar over time.Which of the following accounting assumptions does this represent?

Match the accounting position to the job description. -Certified Management Accountant

The Financial Accounting Standards Board (FASB)works with the following groups.Which of these groups was congressionally created?

The statement of owner's equity informs users about changes in the owner's capital account over a period of time.

The left side of the accounting equation measures the total amount of assets of a business.

Which of the following financial statements is used to report cash receipts for services provided?

Regarding liabilities,which of the following statements is incorrect?

Wylie Company has just completed operations for the year ended December 31,2018.This is the second year of operations for the company.The company is a sole proprietorship.The following data have been assembled for the business.There were no new capital contributions during the year. Accounts Payable \ 12,200 Office Expense \ 6,500 Accounts Receivable 14,500 Rent Expense 9,600 Cash 8,200 Wylie, Capital, Jan. 1,2018 17,300 Wylie, Withdrawals 13,500 Salaries Expense 36,000 Equipment 15,000 Service Revenue 84,000 Insurance Expense 4,000 Utilities Expense 6,200 Prepare the balance sheet at December 31,2018.Use a proper heading.

Ten years ago,a company purchased a building for $190,000.At that time,the company felt that the building was worth $215,000.The current market value of the building is $450,000.The building has been assessed at $425,000 for property tax purposes.At which amount should the company record the building in its accounting records?

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

Managerial accounting focuses on information needed by lenders,customers,and the federal government.

Critical thinking and judgment skills are not necessary for accountants because technology has made the activities routine.

A creditor is any person who has an ownership interest in a business.

In a sole proprietorship,the owner is personally liable for the debts of the business.

For the accounting equation to balance,a transaction must affect both sides of the equation.

Equity decreases with expenses and revenues.

Diamond Company had the following transactions during June: Performed services for $3,000 on account; received cash on account,$8,000; paid $900 for repair expense; paid $1,600 to a supplier that it owed from the previous month.What is the combined effect on Cash of these June transactions?

An accounting firm collected cash on account.As a result of this transaction,total assets,liabilities,and equity are all unchanged.

Investors primarily use managerial accounting information for decision-making purposes.

Adams Service Company had a net income of $14,500 for the year ending December 31,2018.The total assets on January 1,2018 were $28,000.The total assets on December 31,2018 were $16,000. Calculate Adam's return on assets (ROA).Show your computations and label your work.Round your answer to two decimal places.