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Exam 1: Accounting and Business

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Question 101

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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: $\begin{array}{lrr}& \underline{\text {Jan. 1}} &\underline{\text {Dec. 31}}\\\text { Total assets } & \$ 280,000 & \$ 475,000 \\\text { Total liabilities } & 205,000 & 130,000\end{array}$ (a) Determine the amount of net income earned during the year. No additional common stock was issued and no dividends were paid. (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 sharehol ders 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 sharehol ders 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 sharehol ders paid for $\$ 12,000$ of common stock in August of the current fiscal year and were paid twel ve monthly cash dividends of $\$ 1,500$ each during the year.

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Question 102

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At the beginning of the year, Winton Company's assets were $180,000 and its stockholders' equity was $82,000. During the year, assets increased by $25,000 and liabilities increased by $9,000. What was the stockholders' equity at the end of the year?

A) $107,000
B) $98,000
C) $114,000
D) $116,000

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

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Question 103

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The assets and stockholder's equity of a company are $159,000 and $95,000, respectively. Liabilities should equal

How does paying a liability in cash affect the accounting equation?

Selected transaction data of a business for September are summarized below. Determine the following amounts for September: (a) total revenue, (b) total expenses, (c) net income. $\begin{array}{lr}\text { Service sales charged to customers on account during September}& \$ 33,000 \\ \text { Cash received from cash customers for services performed in September}& 28,000\\ \text { Cash received from customers on account during September:}\\\text { Services performed and charged to customers prior to September } & 13,000 \\\text { Services performed and charged to customers during September } & 18,000 \\\text { Expenses incurred prior to September and paid during September } & 6,500 \\\text { Expenses incurred and paid in September } & 36,250\\\text { Expenses incurred in September but not paid in September}&5,000\\\text { Expenses for supplies used and insurance (not included above)}\\\text { applicable to September}&2,000\end{array}$

Most businesses in the United States are

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

What are the three sections of the statement of cash flows?

The accounting equation can be expressed as Assets - Liabilities = Stockholder's Equity.

Given the following: ​ Beginning stockholders' equity $58,000 Ending stockholders' equity $30,000 Stockholder dividends $25,000 ​ Calculate net income or net loss.

Proprietorships are owned by one owner and provide only services to their customers.

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

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

Which of the following is not true of accounting principles?

Identify each of the following as an (1) increase to stockholders' equity, or a (2) decrease to stockholders' equity. (a) Fees earned (b) Wages expense (c) Dividends (d) Lawn care revenue (e) Investment (f) Supplies expense

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

The accounting equation may be expressed as

Match the following items to the financial statement where they can be found. (Hint: Some of the items can be found on more than one financial statement.) A. Balance sheet B. Income statement C. Statement of cash flows D. Statement of stockholder's equity $\begin{array} { | l | l | } \hline \# & \text { Item } \\\hline 1 . & \text { Dividends } \\\hline 2 . & \text { Revenues } \\\hline 3 . & \text { Supplies } \\\hline 4 . & \text { Land } \\\hline 5 . & \text { Accounts payable } \\\hline 6 . & \text { Accounts receivable } \\\hline 7 . & \text { Operating activities } \\\hline 8 . & \text { Wages expense } \\\hline 9 . & \text { Net income } \\\hline 10 . & \text { Cash } \\\hline\end{array}$

The excess of revenue over the expenses incurred in earning the revenue is called capital.

Match the following business types with each business listed below. Each may be used more than once. -An automobile dealer