Exam 1: Introduction to Accounting and Business

Which of the following are guidelines for behaving ethically?

On July 1 of the current year, the assets and liabilities of John Wong, DVM, Inc., are as follows: Cash, $15,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $8,700. What is the amount of stockholders' equity as of July 1 of the current year?

The asset created by a business when it makes a sale on account is termed

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The retained earnings statement (RE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

The following data were taken from Harrison Company's balance sheet: Dec. 31, 2012 Dec. 31, 2011 Total liabilities $150,000 $105,000 Total stockholders' equity 75,000 60,000 a. Compute the ratio of liabilities to stockholders' equity. b. Has the creditors' risk increased or decreased from December 31, 2011, to December 31, 2012?

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

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

Liabilities are reported on the

The principal financial statements for a corporation are the income statement, the retained earnings statement, the balance sheet, and the budget.

Cash investments made by stockholders in exchange for capital stock in a business are reported on the statement of cash flows in the

Allen Marks is the sole stockholder of Great Marks Company. As of the end of its accounting period, December 31, 2011, Great Marks Company has assets of $940,000 and liabilities of $300,000. During 2012, Allen Marks purchased an additional $65,000 of capital stock and received $45,000 in cash dividends from the business. What is the amount of net income during 2012, assuming that as of December 31, 2012, assets were $995,000, and liabilities were $270,000?

Which of the following would not normally operate as a service business?

Expenses are assets that are used up during the process of earning revenue.

Given the following data: Dec. 31, 2012 Dec. 31, 2011 Total liabilities $118,750 $104,000 Total stockholders' equity 95,000 80,000 a. Compute the ratio of liabilities to stockholders' equity for each year. b. Has the creditors' risk increased or decreased from December 31, 2011, to December 31, 2012?

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total owner's equity was a $200,000 increase.

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

If total liabilities decreased by $55,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is

Krammer Company has liabilities equal to one-fourth of the total assets. Krammer's owner's equity is $30,000. Using the accounting equation, what is the amount of liabilities for Krammer?

Simpson Auto Body Repair purchased $20,000 of machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly installments. (a) How will the purchase affect the accounting equation? (b) How will the payment of the first monthly installment affect the accounting equation?