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Exam 1: Introduction to Accounting and Business

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Question 111

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Proper ethical conduct implies that you only consider what's in your best interest.

A) True
B) False

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Question 112

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

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Assets = Liabilities...

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Question 113

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

Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity, an investing activity, or a financing activity, or if it does not appear on the cash flow statement. (a) Cash paid for building (b) Cash paid to suppliers (c) Cash paid for owner's withdrawal (d) Cash received from customers (e) Cash received from the owner's investment (f) Cash received from the sale of a building (g) Borrowed cash from a bank

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

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. Owner made a withdrawal, $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 reconciliation.​

The objectivity concept requires that

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

Which of the following financial statements reports information as of a specific date?

Using the following accounting equation elements and their balances, prepare, in good form, a statement of owner's equity for Bright Futures Company for the month ended August 31. $\begin{array} { l r } \text { Telephone expense } & \$ 1,150 \\\text { Cash } & 3,000 \\\text { Accounts payable } & 1,540 \\\text { Jason Bright, drawing } & 800 \\\text { Fees earned } & 15,700 \\\text { Rent expense } & 1,400 \\\text { Supplies } & 140 \\\text { Accounts receivable } & 1,500 \\\text { Computer equipment } & 20,000 \\\text { Jason Bright, capital (August 1) } & 14,320 \\\text { Wages expense } & 4,800 \\\text { Utilities expense } & 750 \\\text { Notes payable } & 2,400 \\\text { Office expense } & 420\end{array}$

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 a statement of owner's equity for Thompson Computer Services for the current year ended March 31.

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

Indicate how the following transactions affect the accounting equation.​ (a) The purchase of supplies on account (b) The purchase of supplies for cash (c) A withdrawal by the owner to pay personal expenses (d) Revenues received in cash (e) Sale made on account

Which of the following groups is considered to be internal users of accounting information?

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

About 90% of the businesses in the United States are organized as corporations.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Easy and cheap to organize

An example of an external user of accounting information is the federal government.

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Expenses are recorded when