Exam 1: Introduction to Accounting and Business

A summary of cash flows for Alex Design Services for the year ended December 31, 2012, is shown below. Cash receipts Cash received from customers \ 83,990 Cash received from additional investment by owner 25,000 Prepare a statement of cash flows for Alex Design Services for the year ended December 31, 2012.

Explain the meaning of the business entity concept.

On March 1, 2014, the amount of Norton Cook's capital in Cook's Catering Company was $150,000. During March, he withdrew $31,000 from the business. The amounts of the various assets, liabilities, revenues, and expenses are as follows: Accounts payable \ 10,250 Accounts receivable 45,950 Cash 23,840 Fees earned 64,950 Insurance expense 1,275 Land 85,400 Miscellaneous expense 1,210 Prepaid insurance 3,000 Rent expense 9,000 Salary expense 20,300 Supplies 900 Supplies expense 525 Utilities expense 2,800 Present, in good form, (a) an income statement for March, (b) a statement of owner's equity for March, and (c) a balance sheet as of March 31.

An example of an external user of accounting information is the federal government.

A statement of owner's equity reports the changes in the owner's equity for a period of time.

Two common areas of accounting that respectively provide information to internal and external users are:

The business entity concept means that

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. Accounts Payable \ 2,000 Miscellaneous Expense \ 1,030 Accounts Receivable \ 10,340 Office Expense \1 ,240 Cash \ 21,420 Supplies \1 ,670 Fees Earned \ 73,450 Wages Expense \2 3,550 Land \ 47,000 Drawing \1 6,570 Building \ 157,630 Prepare a statement of owner's equity for the current year ended March 31, 2014.

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

The unit of measurement concept requires that economic data be recorded in a common unit of measurement.