Exam 1: Accounting in Action

Use the accounting equation to answer the following questions. 1. Picaresque Sails Co. has total assets of $140,000 and total liabilities of $45,000. What is stockholders' equity? 2. The Natenal Fun Center has total assets of $225,000 and stockholders' equity of $100,000. What are total liabilities? 3. Okkervil River Restaurant has total liabilities of $50,000 and stockholders' equity of $100,000. What are total assets?

The cost of an asset and its fair value are

A service company shows five transactions summarized below. The effect of each transaction on the accounting equation is shown, and also the new balance of each item in the equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.

The framework used to record and summarize the economic activities of a business enterprise is referred to as the accounting equation. State the basic accounting equation and define its major components. How are business transactions and financial statements related to the accounting equation?

If a corporation distributes cash to its stockholders, then

Misra Company compiled the following financial information as of December 31, 2018: Misra's assets on December 31, 2018 are

At October 1, Arcade Fire Enterprises reported stockholders' equity of $70,000. During October, no stock was issued and the company earned net income of $18,000. If stockholders' equity at October 31 totals $78,000, what amount of dividends were paid during the month?

The body of theory underlying accounting is not based on

A working knowledge of accounting is not relevant to a lawyer or an architect.

If the transaction causes an asset account to decrease, which of the following related effects may occur?

If total assets equal $345,000 and total stockholders' equity equal $140,000, then total liabilities must equal

The partnership form of business organization

If total liabilities increased by $25,000 during a period of time and stockholders' equity decreased by $9,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

Which of the following will not cause a change in the stockholders' equity of a business?

Proprietorships, partnerships, and corporations

The _________________ assumption requires that the activities of an entity be kept separate from the activities of its owner.

At October 1, Arcade Fire Enterprises reported stockholders' equity of $70,000. During October, common stock of $10,000 was issued and the company posted a net loss of $4,000. If stockholders' equity at October 31 totals $70,000, what amount of dividends were paid during the month?