Exam 1: Accounting in Action

The monetary unit assumption requires that all dollar amounts be rounded to the nearest dollar.

Use the following information for questions 138-139. Saira's Service Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and owner drawings of $20,000. -The net income reported by Saira's Service Shop for the year was

A business that enjoys limited liability is a

The primary accounting standard-setting body in the United States is the

Analyze the transactions of a business organized as a proprietorship 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 accounting process involves all of the following except

Lawrence Legal Eagles Company entered into the following transactions during March 2010. 1. Purchased office equipment for $21,500 from Business Equipment, Inc. on account. 2. Paid $4,000 cash for March rent on office furniture. 3. Received $15,000 cash from customers for legal work billed in February. 4. Provided legal services to Amy Construction Company for $3,000 cash. 5. Paid Northern States Power Co. $11,000 cash for electric usage in March. 6. Lawrence invested an additional $32,000 in the business. 7. Paid Business Equipment, Inc. for the office equipment purchased in (1) above. 8. Incurred advertising expense for March of $1,200 on account. Instructions Indicate with the appropriate letter whether each of the transactions above results in: (a) an increase in assets and a decrease in assets. (b) an increase in assets and an increase in owner's equity. (c) an increase in assets and an increase in liabilities. (d) a decrease in assets and a decrease in owner's equity. (e) a decrease in assets and a decrease in liabilities. (f) an increase in liabilities and a decrease in owner's equity. (g) an increase in owner's equity and a decrease in liabilities.

Use the following information for questions 140-141. Metzger Company compiled the following financial information as of December 31, 2008: -Metzger's owner's equity on December 31, 2009 is

Use the following information for questions 144-146. Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses. Stahl made an additional investment of $3,000 and withdrew cash of $5,000 during the year. -The owner's equity at the end of the year was

Use the following information to calculate for the year ended December 31, 2009 (a) net income (net loss), (b) ending owner's equity, and (c) total assets.

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

The basic accounting equation states that Assets = Liabilities.

The origins of accounting are generally attributed to the work of

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

The first part of the accounting process is

For each of the following, indicate whether the transaction increased (+), decreased (-), or had no effect (NE) on assets, liabilities, and owner's equity using the following format. Assets = Liabilities + Owner's Equity 1. Made an investment to start the business. 2. Billed customers for services performed. 3. Purchased equipment on account. 4. Withdrew cash for personal use. 5. Paid for equipment purchased in 3. above.

Capital is

As of June 30, 2009, Dallas Company has assets of $100,000 and owner's equity of $5,000. What are the liabilities for Dallas Company as of June 30, 2009?

Which of the following events is not a business transaction?

The use of computers in recording business events