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Exam 1: Introduction to Accounting and Business

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Question 81

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Name and describe the four primary financial statements for a corporation.

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1. Income statement: A summary of the re...

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Question 82

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

A) Increase assets, increase liabilities
B) Increase liabilities, decrease stockholders' equity
C) Increase assets, increase stockholders' equity
D) No effect
E) Decrease assets, decrease liabilities
F) Decrease assets, decrease stockholders' equity

G) C) and E)
H) All of the above

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Question 83

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Statement of cash flows: A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

The business entity concept means that

Indicate how the following transactions affect the accounting equation. a) The purchase of supplies on account b) The purchase of supplies for cash c) Payment of cash dividends to stockholders d) Revenues received in cash e) Sale made on account

Transactions affecting stockholders' equity include

If net income for a company was $50,000, $20,000 in cash dividends were paid and the shareholders invested $10,000 in cash, the stockholders' equity increased by $40,000.

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

Using the following accounts and their amounts, prepare in good format a statement of retained earnings for Bright Futures Company for the month ended August 31. $\begin{array}{lc}\text { Telephone expense } & \$ 1,150 \\\text { Cash } & 3,000 \\\text { Accounts payable } & 1,540 \\\text { Dividends } & 800\\\text { Fees earned } & 15,700 \\\text { Rent expense } & 1,400 \\\text { Supplies } & 140 \\\text { Accounts receivable } & 1,500 \\\text { Computer equipment } & 20,000 \\\text { Retained earnings August 1) } & 14,320 \\\text { Wages expense } & 4,800 \\\text { Utilities expense } & 750 \\\text { Notes payable } & 2,400 \\\text { Office expense } & 420\end{array}$

Most businesses in the United States are

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

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

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 business types with each business listed below. Each may be used more than once. -A tax preparation firm

How does the purchase of equipment by signing a note affect the accounting equation?

Determine the missing amount for each of the following: $\begin{array} { c c c } \text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \\\text { a) } & \$ 38,000 & \$ 45,000 \\\$ 30,000 & \text { b) } & \$ 22,000 \\\$ 53,000 & \$ 32,000 & \text { c) }\end{array}$

Using the following accounts and their amounts, prepare in good format an income statement for Heavenly Futures Company for the month ended August 31. $\begin{array} { l c } \text { Telephone expense } & \$ 1,150 \\\text { Cash } & 3,000 \\\text { Accounts payable } & 1,540 \\\text { Dividends } & 800 \\\text { Fees earned } & 15,700 \\\text { Rent expense } & 1,400 \\\text { Supplies } & 140 \\\text { Accounts receivable } & 1,500 \\\text { Computer equipment } & 20,000 \\\text { Stockholders' equity August } 1 ) & 14,320 \\\text { Wages expense } & 4,800 \\\text { Utilities expense } & 750 \\\text { Notes payable } & 2,400 \\\text { Office expense } & 420\end{array}$

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Comprises 70% of business entities in the United States