Exam 1: Introduction to Accounting and Business

Net income and net profit do not mean the same thing.

Ting Hsu is the owner of Hsu's Financial Services. At the end of its accounting period, December 31, of Year 1, Hsu's has assets of $575,000 and owner's equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts:? (a) Hsu's liabilities as of December 31 of Year 1. (b) Hsu's liabilities as of December 31 of Year 2, assuming that assets increased by $56,000 andowner's equity decreased by $32,000. (c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000,liabilities were $450,000, and there were no additional investments or withdrawals.

Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -The second statement prepared

The cost concept is the basis for entering the purchase price into the accounting records.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Provided a service to a customer on account

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid cash for the purchase of a one-year insurance policy

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: ​ Fees earned \ 165,000 Cash \ 30,000 Accounts receivable 14,000 Selling expenses 44,000 Equipment 64,000 Scott, capital 27,000 Accounts payable 12,000 Interest income 3,000 Salaries and wages expense 40,000 Prepaid rent 2,000 Income taxes payable 5,000 Income taxes expense 18,000 Notes payable 20,000 Rent expense 20,000 -Based on the information for Scott Industries, is it profitable? Explain your answer.

Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -The first statement prepared

The accountant for Flagger Company prepared the following list of accounting equation element balances from the company's records for the year ended December 31:? Fees earned \ 165,000 Cash \ 30,000 Accounts receivable 14,000 Selling expenses 44,000 Equipment 42,000 Flagger, capital 36,000 Accounts payable 12,000 Interest income 3,000 Salaries and wages expense 40,000 Rent expense 51,000 Income taxes payable 5,000 Prepaid rent 2,000 Notes payable 20,000 Income taxes expense 18,000 Prepare an income statement for Flagger Company in good form.

The accounting equation may be expressed as

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Used by large business

Which of the following is true regarding a limited liability company?

What are the three sections of the statement of cash flows?

A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below.?

Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000 (a) Compute the ratio of liabilities to owner's equity for each year. (b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

The year-end balance of the owner's capital account appears in

Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -The connecting link between the income statement and balance sheet

Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000Compute the ratio of liabilities to owner's equity for each year. Round to two decimal places.

The financial statements of a proprietorship should include the owner's personal assets and liabilities.

Using the following accounting equation elements and their balances, prepare, in good format a balance sheet in report form for Bright Futures Company for the month ended August 31. Telephone expense \ 1,150 Cash 3,000 Accounts payable 1,540 Jason Bright, drawing 800 Fees earned 15,700 Rent expense 1,400 Supplies 140 Accounts receivable 1,500 Computer equipment 20,000 Jason Bright, capital (August 1) 14,320 Wages expense 4,800 Utilities expense 750 Notes payable 2,400 Office expense 420