Exam 1: An Introduction to Accounting

The following events occurred for Jarvis Company during 2012, its first year in operation: 1. issued stock to investors for $35,000 cash 2. borrowed $15,000 cash from the local bank 3. provided services to its customers and received $22,000 cash 4. paid expenses of $18,000 5. paid $12,000 cash for land 6. paid dividend of $2,000 to stockholders 7. repaid $2,000 of the loan listed in item 2 Required: Show the effects of the above transactions on the accounting equation, below. Include dollar amounts of increases and decreases. The first is done for you. After entering all the events, calculate the total amounts of assets, liabilities, and equity at the end of the year.

The Financial Accounting Standards Board is an agency of the US government with authority for establishing accounting standards for businesses in the US.

Yang Company reported the following balance sheet for the end of 2012: During 2013, Yang reported the following transactions: • Repaid $8,000 to a local bank on a note payable • Provided services to clients for $26,400 cash • Paid operating expenses of $19,200 • Paid $3,500 cash dividends to stockholders Required: Prepare Yang Company's balance sheet as of December 31, 2013.

Define the term "accounting period." How does this term relate to the "matching concept" as it pertains to the income statement?

Vantage Corporation invested $800 cash in Tandem Company stock. As a result of this transaction,

Each of the following requirements is independent of the others. a) Viking Corporation has liabilities of $85,000 and equity of $115,000. What is the amount of Viking's assets? _________________________________________________ b) Garibaldi Company has assets of $310,000 and liabilities of $95,000. What is the amount of Garibaldi's equity? ______________________________________________________ c) King Company has assets of $70,000 and liabilities of $25,000. What is the amount of King's claims? _____________________________________________________________

An asset exchange transaction does not affect the total amount of claims to a company's assets.

Fill in the blanks indicated by the alphabetic letters in the following financial statements. These financial statements were prepared for the company's first year in operation, and all transactions were for cash. $\text { Income Statement }$ Revenue \ 22,000 Expense \_\_\_\_\_ Net income \ \_\_\_\_\_

Petras Company engaged in the following transactions during 2012, its first year in operations: (Assume all transactions are cash transactions) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $600 of revenues. 4) Paid expenses of $250. 5) Paid a $50 dividend. During 2013, Petras engaged in the following transactions: (Assume all transactions are cash transactions) 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. The total in Petras' retained earnings account BEFORE closing in 2012 is

Jarvis Company experienced the following events during 2012 (all were cash events): 1. issued a note 2. purchased land 3. provided services to customers 4. repaid part of the note in event 1 5. paid operating expenses 6. paid a dividend to stockholders 7. issued common stock Required: Indicate how each of these events affects the accounting equation by writing the letter I for increase, the letter D for decrease, and NA for no effect under each of the components of the accounting equation. The first is done for you as an example.

Financial accounting information is usually more detailed than managerial accounting information.

Indicate whether each of the following statements about retained earnings is true or false. _______ a) A dividend paid to stockholders decreases retained earnings. _______ b) Issuing common stock for cash increases retained earnings. _______ c) The amount of net income for a period must equal retained earnings. _______ d) The purchase of a truck decreases retained earnings. _______ e) The amount of net income for a period increases retained earnings.

The balance sheet of the Chesapeake Company contained the following accounts and balances: Cash \ 600 Notes Payable \ 300 Equily \ 450 Land ? Based on the above information only, the amount or balance for Land must be

Indicate whether each of the following statements about the types of transactions is true or false. _______ a) An asset source transaction increases total assets and decreases claims to assets. _______ b) The issuance of stock to owners for cash would be an example of an asset exchange transaction. _______ c) Purchasing equipment for cash is an example of an asset exchange transaction. _______ d) Paying a dividend to stockholders is an example of an asset use transaction. _______ e) Making a payment on a bank loan is an example of an asset exchange transaction.

Fill in the missing information by determining the amounts represented by letters a - d.

Young Company provided services to a customer for $6,500 cash. As a result of this event,

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. $\text { Increase }=\mathrm{I} \quad \text { Decrease }=\mathrm{D} \quad \text { No Effect }=\mathrm{N}$ Vegas Co. issued a note to purchase a building. Assets Liabilities Equity Revenues Expenses Net Income Cash

Fill in the blanks indicated by the alphabetic letters in the following financial statements. These financial statements were prepared for the company's first year in operation, and all transactions were for cash. $\text { Income Statement }$ Revenue \ 22,000 Expense \_\_\_\_\_ Net income \ \_\_\_\_\_

Yi Company began operations on January 1, 2013. During 2013, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $38,000 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment costing $12,000 7) paid $3,000 dividends to stockholders 8) paid employees' salaries, $21,000 What is Yi's net cash flow from operating activities?

As of December 31, 2013, Bloch Company had $3,800 of assets, $1,600 of liabilities and $700 of retained earnings. The balance in the common stock account on the December 31, 2013 balance sheet was