Exam 1: Accounting in Action

Analyze the transactions of a business organized as a corporation described below and indicate their effect on the basic accounting equation. Use a plus sign (+) to indicate an increase and a minus sign (-) to indicate a decrease.

The first step in solving an ethical dilemma is to

Ethics are the standards of conduct by which one's actions are judged as

The following transactions represent part of the activities of Bloc Party Company for the first month of its existence. Indicate the effect of each transaction upon the total assets of the business by one of the following phrases: increased total assets, decreased total assets, or no change in total assets. (a) Issued stock in exchange for cash. (b) Purchased a computer for cash. (c) Purchased office equipment with money borrowed from the bank. (d) Paid the first month's utility bill. (e) Collected an accounts receivable. (f) Paid dividends.

Financial statements are the major means of communicating accounting information to interested parties.

If total liabilities increased by $30,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

Neko Case decides to open a cleaning and laundry service near the local college campus that will operate as a corporation. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. It is not necessary to identify the cause of changes in stockholders' equity. Transactions (1) Issued stock in exchange for $20,000 cash on June 1. (2) Purchased equipment for $5,000 paying $3,000 in cash and the remainder due in 30 days. (3) Purchased supplies for $1,200 cash. (4) Received a bill from College News for $300 for advertising in the campus newspaper. (5) Cash receipts from customers for cleaning and laundry amounted to $2,400. (6) Paid salaries of $600 to student workers. (7) Billed the Lion Soccer Team $450 for cleaning and laundry services. (8) Paid $300 to College News for advertising that was previously billed in Transaction 4. (9) Paid dividends of $1,200. (10) Incurred utility expenses for month on account, $500.

The origins of accounting are attributed to Luca Pacioli, a famous mathematician.

This information is for Downing Company for the year ended December 31, 2018. Instructions Prepare the 2018 statement of cash flows for Downing Company.

Mofro's Computer Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000. Stockholders' equity at the end of the year was

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

An income statement

If an individual asset is increased, then

At the time an asset is acquired, cost and fair value should be the same.

Stockholders' equity is increased by

Magnolia Electric Car Cleaning has the following accounts:

The information needs of a specific user of financial accounting information depends upon the kinds of decisions that user makes. Identify the major users of accounting information and discuss what questions financial accounting information answers for each group of users.

Financial accounting ethics violations are

The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.

The first part of the accounting process is