Exam 1: Introducing Financial Accounting

Data for Kennedy Realty are as follows: The owner, Finn Kennedy, received a dividend of $30,000 during the year. Using the above data, prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

In the partnership form of business, the owners are called stockholders.

The stockholders' claim on assets, also known as net assets, is called __________________.

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

An exchange of value between two entities that yields a change in the accounting equation is called:

Dividends are expenses.

Determine the net income of a company for which the following information is available for the month of September.

Return on assets is also known as return on investment.

Revenues are increases in equity from a company's sales of products and services to customers.

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

The independent group that issues standards that identify preferred accounting practices and is attempting to harmonize the accounting practices globally is the:

General accounting principles arise from long-used accounting practices.

Match each of the following business activities 1 through 8 to the appropriate category a, b, or c. a. Operating b. Investing c. Financing ____ 1. Paid utilities expenses. ____ 2. Withdrawal of funds by stockholders. ____ 3. Purchase of land. ____ 4. Sale of used equipment. ____ 5. Borrowed money from a bank on a long-term note. ____ 6. Paid employee wages. ____ 7. Received investment from owner. ____ 8. Paid an amount due on a long-term bank loan.

The International Accounting Standards Board (IASB) is the government group that establishes reporting requirements for companies that issue stock to the public.

Bookkeeping is the recording of transactions and events and is only one part of accounting.

_________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

Verity Siding Company, Inc., owned by S. Verity, began operations in May and completed the following transactions during that first month of operations. Show the effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns in the table below. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance.

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

Chou Co. has a net income of $43,000, assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000. Compute its return on assets.

A company's operating and financing totals are always equal.