Exam 1: Introduction to Accounting and Business

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

On May 7, Carpet Barn Company offered to pay $95,000 for land that had a selling price of $110,000. On May 15, Carpet Barn accepted a counteroffer of $103,000. On June 5, the land was assessed at a value of $120,000 for property tax purposes. On December 10, Carpet Barn Company was offered $145,000 for the land by another company. At what value should the land be recorded in Carpet Barn Company's records?

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?

Explain the interrelationship between the balance sheet and the statement of cash flows.

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

Equipment with an estimated market value of $55,000 is offered for sale at $75,000. The equipment is acquired for $20,000 in cash and a note payable of $40,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is

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?

A retained earnings statement reports all changes in cash for a period of time.

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

Which of the following financial statements reports information as of a specific date?

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?

Net income and net profit do mean the same thing.

Ramos Repair Company paid $750 in dividends to its stockholders. How does this transaction affect Ramos Repair Company's accounting equation?

Revenue is earned only when money is received.

The debt created by a business when it makes a purchase on account is referred to as an

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).

A corporation is a business that is legally separate and distinct from its owners.

Collins Landscape Company purchased various landscaping supplies on account to be used for landscape designs for its customers. How will this business transaction affect the accounting equation?

How does the purchase of equipment by signing a note affect the accounting equation?

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