Exam 1: Introduction to Accounting and Business

The owner's rights to the assets rank ahead of the creditors' rights to the assets.

Which of the following is true in regards to a Limited Liability Company?

Cash investments made by the owner to the business are reported on the statement of cash flows in the

The monetary value charged to customers for the performance of services sold is called a(n)

The assets and liabilities of the company are $128,000 and $84,000, respectively. Owner's equity should equal

How does paying a liability in cash affect the accounting equation?

On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller's counteroffer of $125,000. On June 20, the land was assessed at a value of $95,000 for property tax purposes. On August 4, Gregg Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repair Service's records?

The following are examples of external users of accounting information except:

Companies like Enron, WorldCom, and Tyco International, Ltd. have been caught in the midst of ethical lapses that led to fines, firings, and criminal and/or civil prosecution. List and briefly describe three factors that are responsible for what went wrong in these companies.

The role of accounting is to provide many different users with financial information to make economic decisions.

Using the following accounts and their amounts, prepare in good format a Balance Sheet for Bright Futures Company, month ended August 31, 2011: Telephone Expense \ 1,150 Cash \ 3,000 Accounts Payable \ 1,540 Jason Bright, Drawing \ 800 Fees Earned \ 15,700 Rent Expense \ 1,400 Suppliess \ 140 Accounts Receivable \ 1,500 Computer Equipment \ 20,000 Jason Bright, Capital \ 14,320 Wages Expense \ 4,800 Utilities Expense \ 750 Notes Payable \ 2,400 Office Expense \ 420

Determine the missing amount "X" for each of the following: Assets Liabilities Owner'sEquity a. \ 78,500 \ 37,600 X b. X \ 53,280 \1 45,000 c. \4 9,500 X \3 4,000

Receiving payments on an account receivable increases both equity and assets.

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Which of the following groups are considered to be internal users of accounting information?

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.

The unit of measure concept:

Daniels Company is owned and operated by Thomas Daniels. The following selected transactions were completed by Daniels Company during May: 1. Received cash from owner as additional investment $\$ 55,000$ 2. Paid creditors on ac count $\$ 7,000$ . 3. Billed customers for services on account $\$ 2,565$ . 4. Received cash from customers on accounts $\$ 8,450$ . 5. Paid cash to owner for personal use, $\$ 2,500$ . 6. Received the utility bill $\$ 160$ , to be paid next month. Indicate the effect of each transaction on the accounting equation: 1) By Account type - (A) assets, (L)liabilities, (O)owner's (E) equity, (R)revenue, and (E) expense 2) Name of Account for the entry 3) The amount by of the transaction 4) Indicate the direction of change in the account that is affected. Note: Each transaction has two entries.

Eric Wood, CPA, was organized on January 1, 2011, as a proprietorship. List the errors that you find in the following financial statements and prepare the corrected statements for the three months ended March 31, 2011.