Exam 1: Introduction to Accounting and Business

Simpson Auto Body Repair purchased $20,000 of machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly installments. (a) How will the purchase affect the accounting equation? (b) How will the payment of the first monthly installment affect the accounting equation?

Given the following data: Dec. 31,2014 Dec. 31,2013 Total liabilities \ 128,250 \ 120,000 Total stockholders' equity 95,000 80,000 a. Compute the ratio of liabilities to stockholders' equity for each year. b. Has the creditors' risk increased or decreased from December 31, 2013, to December 31, 2014?

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

Given below are the accounts and amounts for Bright Futures Company as of August 31, 2011. All of the revenue and expense amounts are for the month of August. Telephone Expense \ 1,150 Cash 3,000 AccountsPayable 1,540 Dividends 800 FeesEarned 15,700 Rent Expense 1,400 Supplies 140 Accounts Receivable 1,500 Computer Equipment 20,000 Capital Stock 10,000 WagesExpense 4,800 Utilities Expense 750 Notes Payable 2,400 Retained Earnings 4,320 Office Expense 420 Based on the data provided for Bright Futures Company, prepare in good format an income statement for the month ended August 31, 2011.

Clifford Moore purchased $15,000 of Star Tech stock for cash. Star Tech would

Which of the following is not a certification for accountants?

Donner Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $220,000. The Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?

The asset created by a business when it makes a sale on account is termed

Which of the following is not a business transaction?

Which of the following concepts relate to separating the reporting of business and personal economic transactions?

Which of the following is not a role of accounting in business?

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

The accountant for Franklin Company prepared the following list of account balances from the company's records for the year ended December 31, 2011: Based on this information, is Franklin Company profitable? Explain your answer by including net income or loss.

Which of the following is not a business transaction?

Revenues are reported when

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

The Austin Land Company sold land for $85,000 in cash. The land was originally purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank. After the sale, The Austin Land Company paid off the loan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

Managerial accountants would be responsible for providing which of the following?

Amos Moving Services' account balances at March 31, 2014, the end of the current year, are listed below. The Retained Earnings balance was $180,000 at April 1, 2013, the beginning of the current year.

Krammer Company has liabilities equal to one fourth of the total assets. Krammer's stockholders' equity is $45,000. Using the accounting equation, what is the amount of liabilities for Krammer?