Exam 1: Introduction to Accounting and Business

Which of the following group of companies are all examples of a merchandising business?

Purchasing supplies on account increases liabilities and decreases equity.

Two common areas of accounting that respectively provide information to internal and external users are:

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

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

Most businesses in the United States are

The balance sheet represents the accounting equation.

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?

Using the following accounts and their amounts, prepare in good format a Balance Sheet for Bright Futures Company, month ended August 31, 2011:

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

Accounting information users need reports about the economic activities and condition of businesses.

The year-end balance of the owner's capital account appears in

Revenue is earned only when money is received.

Which of the following isnot a characteristic of a corporation?

Determine the missing amount for each of the following:

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

If the owner wanted to know how money flowed into and out of the company, what financial statement would she use?

What information does the Income Statement give to business users?

Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.

Using the following accounts and their amounts, prepare in good format a Statement of Owner's Equity for Bright Futures Company, month ended August 31, 2011: