Exam 3: The Accounting Information System

On March 1 2022 Freeze Company hires a new employee who will start to work on March 6.The employee will be paid on the last day of each month.Has an accounting transaction occurred on March 1? Why or why not?

During February 2022 its first month of operations the owner of Schwenn Enterprises invested cash of $100000.Schwenn had cash sales of $20000 and paid expenses of $35000.Assuming no other transactions impacted the cash account what is the balance in Cash on February 28?

The receipt of cash in advance from a customer

The agency of the United States Government that oversees the U.S.financial markets is the

If a company buys a $700 machine on credit this transaction will affect the

When preparing financial statements the accountant assumes that the business will stay in business for the foreseeable future.

On June 1 Barlow Inc.performed services and billed its client Bertram Enterprises $1500.On June 9 Bertram paid the account in full.The combined effect of these two transactions on Bertram's tabular analysis is:

Revenues are a subdivision of stockholders' equity.

Crabtree Company's tabular analysis at the beginning of August included the following balances: Use the tabular analysis to determine the balance in Cash if Crabtree collects its receivables and pays its accounts in full on August 1.

If total assets are increased there must be a corresponding increase in liabilities or a decrease in stockholders' equity.

On July 1 Bentley Books purchased goods with a cost of $500 on account from Aztec Inc.On July 7 Bentley paid the account in full.The combined effect of these two transactions on Bentley's tabular analysis is

It is assumed that the activities of Ford Motor Company can be distinguished from those of General Motors because of the

Crawford Company started the year with $60000 in its Common Stock account and a balance in Retained Earnings of $44000.During the year the company earned net income of $48000 and declared and paid $20000 of dividends.In addition the company sold additional common stock amounting to $28000.As a result the amount of its retained earnings at the end of the year would be

For information to be useful it must be both relevant and faithfully representative.

Relevance and cost are two constraints in accounting.

If total liabilities decreased by $4000 then

The assumption which requires that only those things that can be expressed in money be included in the accounting records is the

The balance sheet lists current assets before property plant and equipment.

Collection of a $600 Accounts Receivable

Full disclosure of all important facts aids in overcoming the limitations of accounting information.