Exam 1: Accounting in Action

Ethics are critical in the preparation of accounting information.

A Balance Sheet can also be called a Statement of Financial Position.

In a situation with an ethical consideration, there is only one ethical course of action which can be followed.

Payment of a liability for an expense that has been previously recorded

Revenues, in a proprietorship, are

Listed below are various types of organizations. 1. publicly accountable enterprise 2. bank or credit unions 3. private corporation 4. security broker 5. Canadian partnership Instructions a For each organization, identify the appropriate accounting standards the organization should follow. (ASPE or IFRS). b. If applicable, identify if any organization has the option to follow both standards.

If the owner's equity account increases from the beginning of the year to the end of the year, the best explanation for this change is

If expenses, in a proprietorship, are paid in cash, then

Which of the following is an example of an economic event that should be recorded as an accounting transaction?

Collection of a $600 Accounts Receivable

Selected transactions for Givens Lawn Services are listed below: 1. Purchased a new lawn mower for $2,000, making a 10% down payment in cash, the remainder is on account. 2. Purchased $350 supplies for cash. 3. Billed customers $1,500 for lawn services completed. 4. Purchased used truck for $6,500, fully financed by a bank loan. 5. Collected $800 from customers for services previously billed. 6. Paid balance owing on lawn mower. 7. Incurred telephone expenses of $85 on account. 8. Completed services for customers who pay $440 cash. 9. William Givens, the owner, invests $7,000 of additional funds in the business. 10. Part of the funds invested is used to repay the full balance of the bank loan plus $65 in interest expense. 11. $1,250 in wages is paid to employees. 12. William withdrew $1,000 cash for personal use. Instructions For each transaction, state whether the transaction increases or decreases assets, liabilities and/or owner's equity, and by what amount(s).

An account receivable is recorded in the accounting records as a(n)

If an individual asset, in a proprietorship, is increased, then

Revenues would NOT result from

A basic assumption of accounting assumes that the dollar is

Under the proprietorship form of business organization, no distinction is made between the business as an economic unit and its owner.

Listed below are various types of business organizations. 1. Three individuals created a law practice. 2. Two individuals bought shares of company as an investment. 3. A single mother opens her own hair salon. 4. Husband and wife decide to open a daycare business. The wife will operate and maintain the daycare while the husband works his normal full time job. The daycare income will be reported solely on the wife's personal tax return. 5. A public company with 100 shareholders. 6. Two friends create a chocolate company business. All profits will be on their personal returns. Instructions a. For each of the six situations identify the type of business organization. b. For each of the six situations identify the owner's liability

The going concern assumption is the assumption that a company will continue to operate in the foreseeable future.

The income statement is always prepared first in order to determine