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Exam 1: Introduction to Accounting and Business

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Question 21

True/False

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A retained earnings statement reports all changes in cash for a period of time.

A) True
B) False

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Question 22

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An account receivable is typically classified as a revenue.

A) True
B) False

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Question 23

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The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit of the client?

The objectivity concept requires that

Identify which of the following accounts appear on a balance sheet.

Proprietorships are owned by two or more individuals and provide only services to their customers.

Determine the missing amount for each of the following:

Two common areas of accounting that respectively provide information to internal and external users are

The role of accounting is to provide many different users with financial information to make economic decisions.

Allen Marks is the sole stockholder of Great Marks Company. As at December 31, 2013, Great Marks Company has assets of $940,000 and liabilities of $300,000. During 2014, Allen Marks purchased an additional $73,000 of capital stock and received $33,000 in cash dividends from the business. What is the amount of net income of Great Marks Company during 2014, assuming that as of December 31, 2014, assets were $995,000, and liabilities were $270,000?

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 cash 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. (Hint: Use the following reconciliation.) $\begin{array}{lr}\text { Cash, June } 1 & \$ 25,000 \\\text { Plus: cash receipts for June } & \_\_\_ \\\text { Minus: cash payments for June } & \_\_\_\\\text { Cash, June } 30&\_\_\_\end{array}$

Within the United States, the dominant body in the primary development of accounting principles is the

The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

Land, originally purchased for $30,000, is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?

Selected transactions completed by a corporation are described below. Indicate the effects of each transaction on assets, liabilities, and stockholders' equity by inserting "+" for increase and "-" for decrease in the appropriate columns at the right. If appropriate, you may insert more than one symbol in a column.

The unit of measure concept

a. A vacant lot acquired for $83,000 cash is sold for $127,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) stockholders' equity? b. Assume that the seller owes $52,000 on a loan for the land. After receiving the $127,000 cash in (a), the seller pays the $52,000 owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) stockholders' equity?

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?

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

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.