Exam 1: Accounting in Action

A net loss will result during a time period when

The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm.

International standards are referred to as

The purchase of office equipment on credit increases total assets and total liabilities.

If supplies that have been purchased are used in the course of business then

Maria Martinez decides to open a cleaning and laundry service near the local college campus that will operate as a sole proprietorship. 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 owner's equity. Transactions (1) Maria Martinez invests $25000 in cash to start a cleaning and laundry business on June 1. (2) Purchased equipment for $5000 paying $3500 in cash and the remainder due in 30 days. (3) Purchased supplies for $1200 cash. (4) Received a bill from College Clarion for $200 for advertising in the campus newspaper. (5) Cash receipts from customers for cleaning and laundry amounted to $2600. (6) Paid salaries of $600 to student workers. (7) Billed the Tiger Tennis Team $480 for cleaning and laundry services. (8) Paid $200 to College Clarion for advertising that was previously billed in Transaction 4. (9) Maria Martinez withdrew $1300 from the business for living expenses. (10) Incurred utility expenses for month on account $500. (9) ______________________________________________ Balance (10) ______________________________________________ Totals _______________________________________________

Which list below best describes the major services performed by public accountants?

Transactions that can be measured in dollars and cents are recorded in the financial information system.

If total liabilities decreased by $40000 and owner's equity decreased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

The hiring of a new company president is an economic event recorded by the financial information system.

If total liabilities increased by $6000 then

Juggernaut Company buys a $29000 van on credit. The transaction will affect the

Accountants do not have to worry about issues of ethics.

Preparing tax returns and engaging in tax planning is performed by

The balance sheet is frequently referred to as

Even though a partnership is not a separate legal entity for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners.

El Centro Company began the year with owner's equity of $30000. During the year El Centro received additional owner investments of $42000 recorded expenses of $120000 and had owner drawings of $12000. If El Centro's ending owner's equity was $112000 what was the company's revenue for the year?

At the beginning of 2016 Stand First Company had total assets of $520000 and total liabilities of $270000. Answer each of the following questions. 1. If total assets increased $60000 and owner's equity decreased $90000 during the year determine the amount of total liabilities at the end of the year. 2. During the year total liabilities decreased $73000 and owner's equity increased $50000. Compute the amount of total assets at the end of the year. 3. If total assets decreased $105000 and total liabilities increased $55000 during the year determine the amount of owner's equity at the end of the year.

An analysis of the transactions made by Dewey Cheatem & Co. a law firm for the month of July is shown below. Each increase and decrease in owner's equity is explained. Instructions Prepare a balance sheet at July 31 2016.

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