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Exam 1: Introduction to Accounting and Business

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Question 71

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Austin Land Company sold land for $85,000 in cash. The land was originally purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank. After the sale, Austin Land Company paid off the loan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

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Total assets decrease $20,000 (Cash inc...

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Question 72

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

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B) False

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Question 73

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Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received utility bill to be paid next month

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

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

Use the accounting equation to answer each of the independent questions below.? (a) At the beginning of the year, Norton Company's assets were $75,000 and its owner's equity was $38,000. Duringthe year, assets increased by $18,000 and liabilities increased by $4,000. What was the owner's equity at theend of the year?? (b) At the beginning of the year, Turpin Industries had liabilities of $44,000 and owner's equity of $66,000. If assetsincreased by $10,000 and liabilities decreased by $5,000, what was the owner's equity at the end of the year?

Explain the meaning of: (a) the objectivity concept (b) the unit of measure concept

Which of the following would not normally operate as a service business?

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

The assets and liabilities of Rocky's Day Spa on December 31 and its revenue and expenses for the year are listed below. The capital of the owner was $68,000 on January 1. The owner invested an additional $10,000 during the year.? $\begin{array} { | l | r | l | r | } \hline \text { Accounts payable } & \$ 4,375 & \text { Spa operating expense } & \$ 23,760 \\\hline \text { Accounts receivable } & 8,490 & \text { Office expense } & 2,470 \\\hline \text { Cash } & ? ? ? & \text { Spa supplies } & 9,230 \\\hline \text { Fees earned } & 98,435 & \text { Wages expense } & 26,580 \\\hline \text { Spa furniture and equipment } & 56,000 & \text { Drawing } & 38,170 \\\hline \text { Computers } & 2,130 & & \\\hline\end{array}$ Prepare a balance sheet for the year ended December 31.?

Which of the following is most likely to obtain large amounts of resources by issuing stock?

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

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Borrowed money from a bank

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

The debt created by a business when it makes a purchase on account is referred to as an

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a (n)

The assets and liabilities of a company are $128,000 and $84,000, respectively. Owner's equity should equal

Which of the following is the best description of accounting's role in business?

Assets that are used up during the process of earning revenue are called expenses.

Which of the following is a guideline for behaving ethically?I.Identify the consequences of a decision and its effect on others.II.Consider your obligations and responsibilities to those affected by the decision.III.Identify your decision based on personal standards of honesty and fairness.