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Exam 1: Introduction to Accounting and Business

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Question 41

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Due to various fraudulent business practices and accounting coverups in the early 2000's, Congress enacted the Sarbanes-Oxley Act of 2002. The Act was responsible for establishing a new oversight board for public accountants called the

A) Generally Accepted Accounting Practices for Public Accountants Board.
B) Public Company Accounting Oversight Board.
C) Congressional Accounting Oversight Board.
D) None are correct.

E) None of the above
F) A) and B)

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Question 42

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Which of the following are guidelines for behaving ethically? I. Identify the consequences of a decisuon 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

A) I and II.
B) II and III.
C) I and III.
D) I, II, and III.

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

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Question 43

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Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

Equipment with an estimated market value of $30,000 is offered for sale at $45,000. The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is

Determine the missing amount for each of the following: $\begin{array}{cll}\text { Asssets }&\text { Liabilities }&\text { Owner's Equity }\\\hline(\mathrm{a}) & \$ 38,000 & \$ 45,000 \\\$ 30,000 & \text { (b) } & \$ 22,000 \\\$ 53,000 & \$ 32,000 & \text { (c) }\end{array}$

The asset created by a business when it makes a sale on account is termed

The initials GAAP stand for

Using the following accounts and their amounts, prepare in good format a Statement of Owner's Equity for Bright Futures Company, month ended August 31, 2011: $\begin{array}{ll}\text { Telephone Expense } & \$ 1,150 \\\text { Cash } & \$ 3,000 \\\text { Accounts Payable } & \$ 1,540 \\\text { Jason Bright, Drawing } & \$ 800 \\\text { Fees Earned } & \$ 15,700 \\\text { Rent Expense } & \$ 1,400 \\\text { Suppliess } & \$ 140 \\\text { Accounts Receivable } & \$ 1,500 \\\text { Computer Equipment } & \$ 20,000 \\\text { Jason Bright, Capital } & \$ 14,320 \\\text { Wages Expense } & \$ 4,800 \\\text { Utilities Expense } & \$ 750 \\\text { Notes Payable } & \$ 2,400 \\\text { Office Expense } & \$ 420\end{array}$

a. A vacant lot acquired for $83,000 cash is sold for $127,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity? b. Assume that the seller owes $52,000 on a loan for the land. After receiving the $127,000 cash in (a), the seller pays the $52,000 owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity?

Revenues are reported when

Debts owed by a business are referred to as

If total assets decreased by $88,000 during a period of time and owner's equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

The assets and liabilities of S&P Day Spa at December 31, 2014 and its revenue and expenses for the year are listed below. The capital of the owner is $68,000 at December 31, 2014. The owner invested an additional $10,000 during the year. $\begin{array}{|l|l|l|l|}\hline \text { Accounts Payable } & \$ 4,375 & \text { Spa Operating Expense } & \$ 23,760 \\\hline \text { Accounts Receivable } & \$ 8,490 & \text { Office Expense } & \$ 2,470 \\\hline \text { Cash } & \$ 13,980 & \text { Spa Supplies } & \$ 9,230 \\\hline \text { Fees Earned } & \$98,435 & \text { Wages Expense } & \$ 26,580 \\\hline \text { Spa Furniture \& Equipment } & \$ 56,000 & \text { Drawing } & \$ 38,170 \\\hline \text { Computers } & \$ 2,130 & & \\\hline & & & \\\hline\end{array}$ Determine the capital of the owner at January 1, 2014 (Hint: Calculate the increase/decrease in owner's equity first.). Prepare a statement of owner's equity for the current year ended December 31, 2014.

Shiny Kar Company had the following transactions. For each transaction, show the effect on the accounting equation by putting the amount and direction (plus, minus, or NC for no change) in each box of the table below. $\begin{array}{|l|l|l|l|}\hline &Assets&Liabilities&Owner's~ Equity\\\hline \text{a. Shiny Kar withckew \$ 500 cash for food.}\\\hline \text{b. Shiny Kar Company sold 2 cars for a total of \$ 55,000 on account.}\\\hline \text{c. The cost of the cars sold in (b) above was \$ 40,000 .}\\\hline \text{d. Shiny Kar received \$ 35,000 payment for a car previously sald on account.}\\\hline \text{e. Shiny Kar paid \$ 450 for advertising,}\\\hline \text{f. Shiny Kar purchased \$ 150 of cleaning supplies on account.}\\\hline \end{array}$

Ramierez Company received their first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

Which of the following best describes accounting?

Which of the following group of companies are all examples of a merchandising business?

What are the three sections of the Statement of Cash Flows?

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