Exam 2: Basic Accounting Concepts

The first month of operation showed the net cash from operating activities to be $3,760,the net cash from investing activities to be ($5,415),and the ending cash balance to be $3,425.The net cash from financing activities must be

Expenses can be defined as

Fees earned and received in cash will increase operating activity cash flows as well as retained earnings.

DAF Company paid a utility bill of $300 and paid rent of $700 in December.By how much would these events reduce stockholders' equity?

The payment of utilities expense in cash would affect the operating activities in the statement of cash flows and the income statement but NOT the balance sheet.

Johnson,Inc.paid rent expense of $3,500 for the month of October.How are the accounts affected due to this transaction?

By keeping a running total of the effects of transactions,the accounting equation provides a framework for summarizing the effects of a series of transactions.

Dividends are an example of an expense.

Which of the following group of accounts are all assets?

On May 1,the cash account balance was $72,600.During May,cash receipts totaled $345,600 and the May 31 balance was $95,230.Determine the cash payments made during May.

Letty's Laundry and Dry Cleaning incorporated and started business on January 1,2011. Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1)through (10)in a vertical column,and inserting at the right of each number the appropriate letter from the following list: a.Increase in an asset,decrease in another asset. b.Increase in an asset,increase in a liability. c.Increase in an asset,increase in stockholders' equity. d.Decrease in an asset,decrease in a liability. e.Decrease in an asset,decrease in stockholders' equity

-Refer to Coke's balance sheet and answer the following questions:

The statement of cash flows is integrated with the balance sheet because

Retained earnings will be increased by the amount in the dividend account.

The gross increases in stockholders' equity attributable to business activities are called

Exhibit 2-1 -Refer to Exhibit 2-1.What is net income,assuming $50,000 of stock was issued and $25,000 of dividends were paid?

Stockholders' Equity will be reduced by all of the following accounts EXCEPT:

Explain how the four financial statements are linked.

For EFG Co. ,the transaction "Cash sales to customers" would

A to Z Corporation engaged in the following transaction "Issued a $30,000 note payable to borrow cash from the bank." On the Statement of Cash Flows,the transaction would be classified as