Exam 1: An Introduction to Accounting

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders 8) paid employees' salaries of $21,000 What is Yowell's net income for Year 1?

Wing Company provided services for $30,000 cash. Which of the following shows the impact of this transaction on Wing's accounting equation? Assets = Liabilities + stockholcers equity A. +/- n/a n/a B. + n/a + C. - n/a - D. + + n/a

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)1) Acquired $3,100 cash from issuing common stock.2) Borrowed $2,250 from a bank.3) Earned $3,150 of revenues.4) Incurred $2,410 in expenses.5) Paid dividends of $410.Lexington Company engaged in the following transactions during Year 2:1) Acquired an additional $550 cash from the issue of common stock.2) Repaid $1,335 of its debt to the bank.3) Earned revenues, $4,550.4) Incurred expenses of $2,770.5) Paid dividends of $700. What is the net cash flow from financing activities on Lexington's statement of cash flows for Year 2?

Name and briefly describe each of the four financial statements.

Detailed information about accounts is maintained in the various elements of the financial statements.

The four financial statements prepared by a business bear no relationship to each other.

Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden Wheels. Jack transferred $650,000 of the cash that he borrowed to the store on the first day of the year. How many reporting entities exist in this scenario?

The Financial Accounting Standards Board is a privately funded organization with authority for establishing accounting standards for businesses in the US.

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)1) Acquired $3,900 cash from issuing common stock.2) Borrowed $2,650 from a bank.3) Earned $3,550 of revenues.4) Incurred $2,490 in expenses.5) Paid dividends of $490.Lexington Company engaged in the following transactions during Year 2:1) Acquired an additional $950 cash from the issue of common stock.2) Repaid $1,615 of its debt to the bank.3) Earned revenues, $4,950.4) Incurred expenses of $2,930.5) Paid dividends of $1,180. The amount of retained earnings on Lexington's balance sheet at the end of Year 1 was:

Chow Company earned $1,500 of cash revenue, paid $1,200 for cash expenses, and paid a $200 cash dividend to its stockholders. Which of the following statements is true?

The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?; Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500.Based on this information, the amount of expenses on Calloway's income statement was:

ABC Company earned $2,000 cash for providing services to customers. Indicate whether each of the following statements about the transaction is true or false.Total liabilities would decrease.Total stockholders' equity would increase.The operating activities section of the statement of cash flows would show a cash inflow.This is an asset exchange transaction.

Wing Company borrowed $70,000 cash from Metropolitan Bank. Which of the following shows the impact of this transaction on Wing's accounting equation? Assets = Liabilities + stockholcers equity A. +/- n/a n/a B. + n/a + C. - n/a - D. + + n/a

Indicate whether each of the following statements about liabilities is true or false.A net loss on the income statement decreases liabilities.The acquisition of a bank loan increases both assets and liabilities.The accounting equation requires that liabilities be equal to stockholders' equity.The amount of a company's liabilities is equal to its assets minus its stockholders' equity.Liabilities are reported on the statement of cash flows of a business.

Indicate how each of the following transactions affect assets by entering + for increase, ? for decrease, or NA if total assets are not affected. Enter only one item for each answer._______ 1) Issued stock to investors_______ 2) Borrowed cash from the bank_______ 3) Provided services for cash_______ 4) Paid operating expenses_______ 5) Purchased land for cash_______ 6) Paid cash dividend to the stockholders_______ 7) Repaid the bank loan

The following events are for Holiday Travel Services for Year 1, the first year of operations. Assume that all transactions involve the receipt or payment of cash.The business acquired $50,000 from stock issued to stockholdersCreditors loaned the company $27,500The company provided services to its customers and received $75,400The company paid expenses amounting to $63,250The company purchased land for $25,000The company paid a dividend of $5,500 to its stockholders Required: Show the effects of the above transactions on the accounting equation (use appropriate element and account headings). For those events that affect retained earnings, indicate the appropriate temporary account titles in a separate column. Enter 0 for items not affected.Prepare an income statement and balance sheet for and at the end of Year 1.

Each of the following requirements is independent of the others.Valdez Corporation has liabilities of $95,000 and stockholders' equity of $115,000. What is the amount of Valdez's assets?Global Company has assets of $320,000 and liabilities of $95,000. What is the amount of Global's stockholders' equity?Brown Company has assets of $90,000 and liabilities of $25,000. What is the amount of Brown's claims?

Which of the following is not an element of the financial statements?

The statement of changes in stockholders' equity shows changes in which of the following accounts?

Salaries expense appears in the: