Exam 1: Introduction to Financial Statements

Marvin Services Corporation had the following accounts and balances: Accounts payable \ 18,000 Equipment \ 21,000 Accounts receivable 3,000 Land 21,000 Buildings ? Unearned service revenue 6,000 Cash 9,000 Total stockholders' equity ? If the balance of the Buildings account was $24,000 and $6,000 of Accounts Payable were paid in cash, what would be the total liabilities and stockholders' equity?

An income statement

Mary Baroni is a friend of yours from high school. She decided to become a beautician after leaving high school, rather than to attend college. She recently opened her own shop, and has contracted her services to a local hospital. She is paid a monthly fee for her services, and receives a small gratuity from each of the patients. She has just received her first set of financial statements from her accountant. She is quite upset. The statements show a cash balance of $3,600 at the end of the month, but a net income of only $500. She has written you a letter, asking you whether such a situation is possible, or whether she should find another accountant. Required: Write a short letter to your friend. Use proper form. Answer her question completely, but briefly.

Retained earnings at the end of the period is equal to

Lankston Company began the year by issuing $90,000 of common stock for cash. The company recorded revenues of $825,000, expenses of $720,000, and paid dividends of $45,000. What was Lankston's net income for the year?

Cash is another term for stockholders' equity.

Owners of business firms are the only people who need accounting information.

Which three items affect retained earnings, and how do they affect it?

Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries. Paid $60,000 to purchase office equipment. Paid $15,000 for utilities. Paid $6,000 in dividends. Collected $245,000 from customers. What was Jackson's net cash provided by operating activities?

The primary purpose of a ________________ is to provide financial information about the cash receipts and cash payments of a business.

The liability of corporate stockholders is limited to the amount of their investment.

Gibson Company recorded the following cash transactions for the year: Paid $180,000 for salaries. Paid $80,000 to purchase office equipment. Paid $20,000 for utilities. Paid $8,000 in dividends. Collected $310,000 from customers. What was Gibson's net cash provided by operating activities?

The accounting equation may be expressed as

One way of stating the accounting equation is: Assets + Liabilities = Stockholders' Equity.

Which of the following is an asset?

Kilmer Corporation began the year with retained earnings of $620,000. During the year, the company issued $840,000 of common stock, recorded expenses of $2,400,000, and paid dividends of $160,000. If Kilmer's ending retained earnings was $660,000, what was the company's revenue for the year?

In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results?

If the assets owned by a business total $100,000 and liabilities total $65,000, stockholders' equity totals $25,000.

Issuing shares of stock in exchange for cash is an example of a(n)

Marvin Services Corporation had the following accounts and balances: Accounts payable \ 18,000 Equipment \ 21,000 Accounts receivable 3,000 Land 21,000 Buildings ? Unearned service revenue 6,000 Cash 9,000 Total stockholders' equity ? If the balance of the Buildings account was $51,000, what would be the total of liabilities and stockholders' equity?