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Exam 1: Introduction to Accounting and Business

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Question 91

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Ramierez Company received its first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

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Increase liabilities...

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Question 92

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Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Organized as a separate legal taxable entity

A) Proprietorship
B) Partnership
C) Corporation
D) Limited liability company (LLC)

E) B) and D)
F) None of the above

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Question 93

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List the five steps in the process by which accounting provides information to users.

Karen Meyer owns and operates Crystal Cleaning Company. Recently, Meyer withdrew $10,000 from Crystal Cleaning, and she contributed $6,000, in her name, to the American Red Cross. The contribution of the $6,000 should be recorded on the accounting records of which of the following entities?

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Generates 90% of business revenues

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Investment of land by owner

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

On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of owner's equity (John Wong's capital) as of July 1 of the current year?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received payment from a customer on account

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions.

Match the following business types with each business listed below. Each may be used more than once. -A book publisher

Determine the missing amount for each of the following:

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for services provided

The assets and liabilities of Rocky's Day Spa on December 31 and its revenue and expenses for the year are listed below. The capital of the owner is $68,000 on January 1. The owner invested an additional $10,000 during the year.? $\begin{array} { | l | r | l | r | } \hline \text { Accounts payable } & \$ 4,375 & \text { Spa operating expense } & \$ 23,760 \\\hline \text { Accounts receivable } & 8,490 & \text { Office expense } & 2,470 \\\hline \text { Cash } & 13,980 & \text { Spa supplies } & 9,230 \\\hline \text { Fees earned } & 98,435 & \text { Wages expense } & 26,580 \\\hline \text { Spa furniture and equipment } & 56,000 & \text { Drawing } & 38,170 \\\hline \text { Computers } & 2,130 & & \\\hline\end{array}$ Prepare a statement of owner's equity for the current year ended December 31.

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

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.

If total assets decreased by $88,000 during a period of time and owner's equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities would be a (n)

The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below. The capital of the owner was $180,000 at April 1, the beginning of the current year. Mr. Thompson invested an additional $25,000 in the business during the year. ? $\begin{array} { l r l r } \text { Accounts payable } & \$ 2,000 & \text { Miscellaneous expense } & \$ 1,030 \\\text { Accounts receivable } & 10,340 & \text { Office expense } & 1,240 \\\text { Cash } & 21,420 & \text { Supplies } & 1,670 \\\text { Fees earned } & 73,450 & \text { Wages expense } & 23,550 \\\text { Land } & 47,000 & \text { Drawing } & 16,570 \\\text { Building } & 157,630 & &\end{array}$ -Prepare an income statement for the current year ended March 31.

The primary financial statements of a proprietorship are the income statement, statement of owner's equity, and balance sheet.