Exam 1: Accounting in Action

An analysis of the transactions made by Cookie Mountain Legal, a law firm, for the month of July is shown below. Each increase and decrease in retained earnings is explained. Instructions Prepare a balance sheet at July 31, 2018.

External transactions involve economic events between the company and some other enterprise or party.

Your friend, Angela, made this comment: My major is biology and I plan to research for cures for major illnesses. Thus, I have no need to study accounting. What is your response to Angela?

The accounting profession provides many career opportunities for individuals. Identify the major fields that exist in accounting and comment on the major functions performed by individuals in each of these areas.

Indicate whether the following items would appear on the balance sheet (BS), income statement (IS), or retained earnings statement (RE). 1. Advertising expense 2. Accounts receivable 3. Dividends 4. Rent revenue 5. Salaries and wages payable 6. Supplies

The following information relates to Bonnie Billy Co. for the year 2018. Instructions After analyzing the data, prepare an income statement and a retained earnings statement for the year ending December 31, 2018

The final step in solving an ethical dilemma is to

Maria Queen was reviewing her business activities at the end of the year (2018) and decided to prepare a Retained Earnings Statement. At the beginning of the year her assets were $700,000 and her liabilities were $210,000. At the end of the year the assets had grown to $930,000 but liabilities had also increased to $340,000. Common Stock was $200,000 in both years. The net income for the year was $220,000. The company paid dividends of $120,000 during the year. Prepare a Retained Earnings statement in good form.

On January 1, 2018, Cat Power Company reported stockholders' equity of $705,000. During the year, the company paid dividends of $30,000. At December 31, 2018, the amount of stockholders' equity was $825,000. What amount of net income or net loss would the company report for 2015?

The internal control standards applicable to Sarbanes-Oxley apply to

Management of a business enterprise is the major external user of information.

Which of the following would not be considered internal users of accounting data for a company?

Accounting information is used only by external users with a financial interest in a business enterprise.

The basic accounting equation cannot be restated as

Presented below are balance sheet items for Black Angel Company at December 31, 2015. Compute each of the following: 1. Total assets. 2. Total liabilities.

The ending retained earnings amount is shown on

The origins of accounting are generally attributed to the work of

For each of the following, indicate whether the transaction increased (+), decreased (-), or had no effect (NE) on assets, liabilities, and stockholders' equity using the following format. Assets = Liabilities + Stockholders' Equity 1. Issued stock in exchange for cash. 2. Billed customers for services performed. 3. Purchased equipment on account. 4. Paid dividends. 5. Paid for equipment purchased in 3. above.

The balance sheet is frequently referred to as

The historical cost principle requires that when assets are acquired, they be recorded at