Exam 1: Introduction to Accounting and Business

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. Based on the data provided for Bright Futures Company,prepare in good format a balance sheet as of August 31,2011.

The Financial Accounting Standards Board (FASB)is the authoritative body that has primary responsibility for developing accounting principles.

Profit is the difference between

Given the following data: 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?

Only large companies such as Wal-Mart,JCP,General Motors,and the Bank of America can be organized as corporations.

The business entity concept means that

Which of the items below is not a business entity?

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

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. Based on the data provided for Bright Futures Company,prepare in good format an income statement for the month ended August 31,2011.

Use the accounting equation to answer each of the independent questions below. a. At the beginning of the year,Norton Company assets were $75,000 and its stockholders' equity was $38,000.During the year,assets increased by $18,000 and liabilities increased by $4,000.What was the stockholders' equity at the end of the year? b. At the beginning of the year,Turpin Industries had liabilities of $44,000 and stockholders' equity of $66,000.If assets increased by $10,000 and liabilities decreased by $5,000,what was the stockholders' equity at the end of the year?

Paying an account payable increases liabilities and decreases assets.

a. A vacant lot acquired for $83,000 cash is sold for $127,000 in cash.What is the effect of the sale on the total amount of the seller's (1)assets, (2)liabilities,and (3)stockholders' equity? b.Assume that the seller owes $52,000 on a loan for the land.After receiving the $127,000 cash in (a),the seller pays the $52,000 owed.What is the effect of the payment on the total amount of the seller's (1)assets, (2)liabilities,and (3)stockholders' equity?

Given the following: Beginning retained earnings $ 58,000 Ending retained earnings $ 30,000 Dividends declared and paid $ 25,000 Calculate net income or net loss.

Indicate how the following transactions affect the accounting equation: (a)The purchase of supplies on account. (b)The purchase of supplies for cash. (c)Cash dividends paid to stockholders. (d)Revenues received in cash. (e)Revenues received on account.

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

Which type of accountant typically practices as an individual or as a member of a public accounting firm?

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.

The cost concept is the basis for entering the exchange price into the accounting records.

Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions.

Which of the following is not a business transaction?