Exam 1: Introduction to Accounting and Business

A business is an organization in where basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

Indicate how the following transactions affect the accounting equation: (a) The purchase of supplies on account. (b) The purchase of supplies for cash. (c) A withdraw by the owner to pay personal expenses. (d) Revenues received in cash. (e) Revenues received on account.

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

Explain the interrelationship between the Balance Sheet and the Statement of Cash Flows.

Which of the following is not true of accounting principles?

Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using cash that had been obtained from the initial investment by Donnie Darnell. Which entity or entities (Darnell Company, Joseph Company, Donnie Darnell) should record the transaction involving the computer equipment on their accounting records?

List the five steps in the process by which accounting provides information to users.

Donner Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?

The assets and liabilities of Amos Moving Services at March 31, 2014, the end of the current year, and its revenue and expenses for the year are listed below. The capital of the owner was $180,000 at April 1, 2013, the beginning of the current year. Mr. Amos invested an additional $25,000 in the business during the year. Prepare a balance sheet for the current year ended March 31, 2014.

The balance sheet represents the accounting equation.

What information does the Income Statement give to business users?

Gomez Service Company paid their first installment on their Notes Payable in the amount of $2,000. How will this transaction affect the accounting equation?

Which of the following is not a business transaction?

Given the following data: Dec.\nobreakspace31,2014 Dec.\nobreakspace31,2013 Total liabilities \ 128,250 \ 120,000 Total owner's equity 95,000 80,000 Compute the ratio of liabilities to owner's equity for each year. Round to two decimal places.

The following data were taken from Harrison Company's balance sheet: a. Compute the ratio of liabilities to owner's equity. b. Has the creditors' risk increased or decreased from December 31, 2011, to December 31, 2012?

All of the following are general-purpose financial statements except:

Selected transaction data of a business for September are summarized below. Determine the following amounts for September: (a) total revenue, (b) total expenses, (c) net income.

Denzel Jones owns and operates Crystal Cleaning Company. Recently, Denzel withdrew $10,000 from Crystal Cleaning, and he contributed $6,000, in his name, to Habitat for Humanity. The contribution of the $6,000 should be recorded on the accounting records of which of the following entities?

Simpson Designers began operations on April 1, 2011. The financial statements for Simpson Designers are shown below for the month ended April 30, 2011 (the first month of operations). Determine the missing amounts for letters (a) through (o). Place your answers in the space provided below. Hint: Use the interrelationships among the financial statements to solve this problem.