Exam 1: Introduction to Accounting and Business

The accountant for Franklin Company prepared the following list of account balances from the company's records for the year ended December 31,2011: FeesEarned \ 165,000 Cash \ 30,000 Accounts Receivable 14,000 Selling Expenses 44,000 Equipment 64,000 Capital Stock 7,000 Accounts Payable 22,000 Retained Earnings 23,000 Salaries \& Wages Expense 40,000 Prepaid Rent 2,000 Dividends 5,000 Income Taxes Expense 13,000 Salaries \& Wages Payable 15,000 Rent Expense 20,000 Based on this information,is Franklin Company profitable? Explain your answer by including net income or loss.

Explain the meaning of the business entity concept.

No significant differences exist between the accounting standards issued by the FASB and the IASB.

Who among the following uses financial reports?

Receiving a bill or otherwise being notified that an amount is owed is recorded until the amount is paid.

Explain the meaning of: (a)the objectivity concept (b)the unit of measure concept

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.

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

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.

Which of the following is not true of accounting principles?

If a corporation had net income of $60,000 and $20,000 in cash dividends were declared and paid then the retained earnings account would increase by $40,000.

Identify each of the following as an (1)increase in stockholders' equity,or a (2)decrease in stockholders' equity.

If the liabilities owed by a business total $300,000 and stockholder's equity is equal to $300,000,then the assets also total $300,000.

A business paid $7,000 to a creditor in payment of an amount owed.The effect of the transaction on the accounting equation was to

Managerial accounting information is used by external and internal users equally.

Within the United States,the dominant body in the primary development of accounting principles is the

Cash dividends paid to stockholders decrease assets and increase equity.

Given the following data: Dec. 31,2014 Dec. 31,2013 Total liabilities \ 128,250 \ 120,000 Total stockholders' equity 95,000 80,000 Compute the ratio of liabilities to stockholders' equity for each year.Round to two decimal places.

Ramierez Company received its first electric bill in the amount of $60 which will be paid next month.How will this transaction affect the accounting equation?

For each of the following,determine the amount of net income or net loss for the year.