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Exam 1: Accounting and Business

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Question 31

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Daniels Company made the following selected transactions during May: 1. Received cash from sale of stock, $\$ 55,000$ 2. Paid creditors on account, $\$ 7,000$ 3. Billed customers for services on account, $\$ 2,565$ 4. Received cash from customers on account, $\$ 8,450$ 5. Paid dividends to stockholders, $\$ 2,500$ 6. Received the utility bill, $\$ 160$ , to be paid next month ​ Indicate the effect of each transaction on the accounting equation by: (a) Account type - (A)assets, (L)liabilities, (SE)stockholders' equity, (R)revenue, and (E)expense b) Name of account c) The amount by of the transaction d) The direction of change (increase or decrease) in the account affected Note: Each transaction has two entries.

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Question 32

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Which of the following is a business transaction?

A) purchase supplies on account
B) plan advertising for upcoming sale
C) give employees a raise beginning next month
D) submit estimate for construction project

E) All of the above
F) B) and C)

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Question 33

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

Match the following business types with each business listed below. Each may be used more than once. -A men's clothing store

A fiscal year that ends when business activities have reached their lowest point is called the natural business year.

If total assets decreased by $88,000 during a period of time and stockholders' 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 is

Discuss the characteristics of a limited liability company (LLC).

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Often used as an alternative to a partnership

Which of the following is not a characteristic of a corporation?

Financial reports that allow users to identify the similarities and differences among reported items are said to demonstrate

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

Schultz Tax Services, a tax preparation business, had the following transactions during the month of June: ​ 1. Received cash for providing accounting services, $3,000 2. Billed customers on account for providing services, $7,000 3. Paid advertising expense, $800 4. Received cash from customers on account, $3,800 5. Paid shareholder dividends, $1,500 6. Received telephone bill, $220 7. Paid telephone bill, $220 ​ ​ Based on the information given above, calculate the balance of cash at June 30. Use the following format. ​ Cash, June 1 $25,000 ​ Plus cash receipts for June ____________ ​ Minus cash payments for June ____________ ​ Cash, June 30 ____________

A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below. $\begin{array}{l}\text { Cash receipts: }\\\begin{array}{lr}\text { Cash received from customers } & \$ 83,990 \\\text { Cash received from sale of stock } & 25,000\end{array}\end{array}$ ? $\begin{array}{lr}\text { Cash payments: }\\\text { Cash paid for expenses } & \$ 27,000 \\\text { Cash paid for land } & 47,000 \\\text { Cash paid for supplies } & 410 \\\text { Dividends } & 5,000\\\\\text { The cash balance as of January 1}&\$ 40,600\end{array}$ ? Prepare a statement of cash flows for Linda's Design Services for the year ended December 31.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Offers tax and legal liability advantages for owners

Has three sections: operating, investing and financing

A statement of stockholders' equity reports the changes in stockholder's equity for a period of time.

Profit is the difference between

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?

Relevant and faithful representation of accounting data is enhanced when financial reports are clear and concise. Such reports demonstrate

Accounting information users need reports about the economic activities and condition of businesses.