Exam 1: Accounting in Business

An income statement reports on investing and financing activities.

Explain the accounting equation and define its terms.

The conceptual framework that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are attempting to converge and enhance includes the following broad areas to guide standard setting except:

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

Prepare a December 31 balance sheet in proper form for Smokey River Supplies, Inc. from the following list of the accounts: Cash............................... \1 0,000 Accounts receivable......... 8,000 Supplies.......................... 12,000 Equipment...................... 35,000 Land................................ 18,000 Accounts payable............ 13,000 Notes payable................... 41,000 Stockholders' equity......... 29,000

A stockholder's investment in a business normally creates an asset (cash), a liability (note payable), and stockholders' equity (investment.)

Data for Kennedy Realty are as follows: Total assets at January 1.................... \1 00,000 Total liabilities at January 1................ 35,000 Total revenues for the year.................. 79,000 Total expenses for the year................. 47,000 The owner, Finn Kennedy, received a dividend of $30,000 during the year. Using the above data, prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

Define risk and return and discuss the relation between them.

Identify the users and uses of accounting information.

Financial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

External users of accounting information include all of the following except:

Cage Company had income of $350 million and average invested assets of $2,000 million. Its return on assets (ROA) is:

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

A ____________________ is a business that is owned by only one person.

Technology:

There are three major types of business activities. ______________ activities involve using resources to research, develop, purchase, produce, distribute, and market products and services and receiving amounts from selling products and services.

There are at least three types of partnerships that limit the partners' liability. They are 1)_____________________, 2) ___________________, and 3)______________________.

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Distributions of cash or other resources by a business to its stockholders are called:

Soo Lin, the sole stockholder, began an Internet Consulting practice organized as a corporation and completed these transactions during April of the current year: April 1Invested \ 100,000 of her personal savings into a checking account opened in the name of the business. 2Rented office space and paid \ 1,200 cash for the month of September. 3Purchased office equipment for \ 30,000 , paying \ 8,000 cash and agreeing to pay the balance in one year. 4Purchased office supplies for \ 750 cash. 8Completed work for a client and immediately collected \ 2,700 cash for the services. 15Completed \ 3,600 services for a client on credit. 20Received \ 3,600 from a client for the work completed on September 15 . 30Paid the office secretary's monthly salary, \ 3,000 cash. 30The corporation paid a \ 2,000 dividend. Show the effects of the above transactions on the accounting equation of Soo Lin, Consultant. Use the following format for your answers. The first item is shown as an example. Increase = I Decrease = D No effect = N Date Assets Liabilities Equity Example: Apri 1 I N I