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Exam 1: Introduction to Accounting and Business

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Question 41

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Krammer Company has liabilities equal to one fourth of the total assets. Krammer's stockholders' equity is $45,000. Using the accounting equation, what is the amount of liabilities for Krammer?

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Assets = Liabilities + Stockho...

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Question 42

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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. -Has the ability to obtain large amounts of resources

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

E) B) and C)
F) A) and D)

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Question 43

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The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $\begin{array} { l r l } \text { Fees earned } & \$ 165,000 & \text { Cash } \\\text { Accounts receivable } & 14,000 & \text { Selling expenses } \\\text { Equipment } & 64,000 & \text { Common stock } \\\text { Accounts payable } & 12,000 & \text { Interest income } \\\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \\\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \\\text { Notes payable } & 20,000 & \text { Rent expense }\end{array}$ -Collins Landscape Company purchased various landscaping supplies on account to be used for landscape designs for its customers. How will this business transaction affect the accounting equation?

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

An account receivable is typically classified as a revenue.

Which of the following concepts relates to separating the reporting of business and personal economic transactions?

A corporation is a business that is legally separate and distinct from its owners.

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

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -A formal presentation of the accounting equation

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Used up supplies that were already on hand

Goods purchased on account for future use in the business, such as supplies, are called

If total liabilities decreased by $46,000 during a period of time and stockholder's equity increased by $60,000 during the same period, the amount and direction increase or decrease) of the period's change in total assets is

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

The total assets and total liabilities of Paul's Pools and Palaces at the beginning and at the end of the current fiscal year are as follows: $\begin{array}{llr}&\text { Jan. } 1&\text { Dec. } 31\\\text { Total assets } & \$ 280,000 & \$ 475,000 \\\text { Total liabilities } & 205,000 & 130,000\end{array}$ a)Determine the amount of net income earned during the year. The owner did not invest any additional assets in the business during the year and made no withdrawals. b)Determine the amount of net income during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders were paid $53,000 in cash dividends during the year no additional purchase of common stock). c)Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders paid for $35,000 of common stock in June of the current fiscal year no dividends). d)Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders paid for $12,000 of common stock in August of the current fiscal year and were paid twelve monthly cash dividends of $1,500 each during the year.

For each of the following, determine the amount of net income or net loss for the year. a) Revenues for the year totaled $71,300 and expenses totaled $35,500. The shareholders purchased $15,000 of common stock during the year. b) Revenues for the year totaled $220,500 and expenses totaled $175,000. The shareholders were paid $40,000 dividends during the year. c) Revenues for the year totaled $149,000 and expenses totaled $172,000. The shareholders purchased $12,000 of common stock and were paid $16,000 in dividends during the year. d) Revenues for the year totaled $198,150 and expenses totaled $174,200. The shareholders were paid $35,000 dividends during the year.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

The monetary value charged to customers for the performance of services sold is called an)

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 common stock was $120,000 and the retained earnings were $60,000 at April 1, the beginning of the current year. During the year, shareholders purchased an additional $25,000 in stock. -Prepare an income statement for the current year ended March 31.

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

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