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Exam 1: Introduction to Accounting and Business

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Question 1

Multiple Choice

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Liabilities are reported on the

A) income statement
B) statement of owner's equity
C) statement of cash flows
D) balance sheet

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

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Question 2

Multiple Choice

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Revenues are reported when

A) a contract is signed
B) cash is received from the customer
C) work is begun on the job
D) work is completed on the job

E) None of the above
F) C) and D)

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Question 3

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On May 20,White Repair Service extended an offer of $108,000 for land that had been priced for sale at $140,000.On May 30,White Repair Service accepted the seller's counteroffer of $115,000.On June 20,the land was assessed at a value of $95,000 for property tax purposes.On July 4,White Repair Service was offered $150,000 for the land by a national retail chain.At what value should the land be recorded in White Repair Service's records?

Harris Designers began operations on April 1.The financial statements for Harris Designers are shown below for the month ended April 30, (the first month of operations).Determine the missing amounts for letters (a)through (o).​ ​ ​ ​ Place your answers in the space provided below.Hint: Use the interrelationships among the financial statements to solve this problem.

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

Shiny Kar Company had the following transactions.For each transaction,show the effect on the accounting equation by putting the amount and direction (+,-,or NC for no change)in each box of the table below.​

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?

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

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

The accountant for Scott Industries prepared the following list of accounting equation element balances from the company's records for the year ended December 31: ​ -Daniels Company is owned and operated by Thomas Daniels.The following selected transactions were completed by Daniels Company during May:1.Received cash from owner as additional investment,$55,000.2.Paid creditors on account,$7,000.3.Billed customers for services on account,$2,565.4.Received cash from customers on account,$8,450.5.Paid cash to owner for personal use,$2,500.6.Received the utility bill,$160,to be paid next month.​Note: Each transaction has two entries. ​

Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -Has three sections: operating,investing and financing

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

Explain the interrelationship between the balance sheet and the statement of cash flows.

An account receivable is a claim against a customer resulting from a sale on account.

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. ​ -Prepare an income statement for the current year ended March 31.

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

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.

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

Which of the following is a business transaction?

A business is an organization in which basic resources or inputs,such as materials and labor,are assembled and processed to provide outputs in the form of goods or services to customers.