Exam 1: Introduction to Accounting and Business

The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the owner had withdrawn $55,000 for personal use and had made an additional investment of $33,000 in the business. Calculate the net income for the year.

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

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

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

The main objective for all business is to maximize unrealized profits.

Company G has a ratio of liabilities to stockholders' equity of 0.12 and 0.28 for 2010 and 2011, respectively. In contrast, Company M has a ratio of liabilities to stockholders' equity of 1.13 and 1.29 for the same period. REQUIRED: Based on this information, which company's creditors are more at risk and why? Should the creditors of either company fear the risk of nonpayment?

The accounting equation can be expressed as Assets - Liabilities = Owner's Equity.

Discuss the characteristics of a LLC (Limited liability company).

Given the following: Beginning capital $ 58,000 Ending capital $ 30,000 Owner's withdrawals $ 25,000 Calculate net income or net loss.

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.

Which of the following is the best description of accounting's role in business?

Net income and net profit do mean the same thing.

Due to various fraudulent business practices and accounting coverups in the early 2000's, Congress enacted the Sarbanes-Oxley Act of 2002. The Act was responsible for establishing a new oversight board for public accountants called the

For each of the following companies, identify whether they are a service, merchandising, or manufacturing 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: Determine the total liabilities at the end of 2011 for Franklin Company.

Which of the following concepts relates to separating the reporting of business and personal economic transactions?

The asset section of the Balance Sheet normally presents assets in

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

Ramon Ramos has withdrawn $750 from Ramos Repair Company's cash account to deposit in his personal account. How does this transaction affect Ramos Repair Company's accounting equation?

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.