Exam 1: An Introduction to Accounting

Peru Corporation paid $40,000 cash to purchase land.

Dividends that a company pays to its stockholders are treated as an expense of the business.

During the year,MNO Company issued common stock to stockholders for $5,000; purchased land for $1,000 cash; provided services to customers for $4,000; paid cash operating expenses of $3,100; and paid cash dividends of $500 to the company's owners.Enter each of these events into the horizontal financial statements model,below.Indicate dollar amounts of increases and decreases.For cash flows,show whether they are operating activities (OA),investing activities (IA),or financing activities (FA).

What was the cash flow from investing activities?

The four financial statements prepared by a business are not interrelated.

Gomez Corporation paid rent for the month in the amount of $1,400.

The balance sheet reports a business's assets and the claims to those assets.

Which of the following groups has primary responsibility for establishing generally accepted accounting principles for businesses in the United States?

Ohio Company provided services to a customer for $1,700 cash.As a result of this event,

Net income is an increase in assets as a result of operating a business.

The amount of land owned by a business appears on which financial statement?

Which of the following transactions is an asset source transaction?

The historical cost concept requires that most assets be reported at the amount paid for them.

Generally accepted accounting principles (GAAP)are measurement rules for

Warren Corporation acquired cash by issuing common stock to investors.

Which of the following items would appear in the financing activities section of a statement of cash flows?

STU Company borrowed $32,000 of cash from a local bank.Which of the following choices accurately reflects how this event would affect the company's financial statements?

In 1998,Parker Corporation purchased land for $130,000.In 2010,Parker Company had the land appraised,and its value was estimated to be $190,000.Also during 2010,another company offered Parker $145,000 for the parcel of land.When the balance sheet is prepared at the end of 2010,at what dollar amount should the land be reported?

Rowena Company spent cash to purchase equipment.As a result of this event,

Farmington Corporation acquired cash by issuing common stock to investors.