Exam 1: Accounting and the Business Environment

Financial statements are prepared after an entity's transactions are analyzed and recorded.Which of the following reports is NOT one of the required financial statements?

Ace Builders had the following transactions in June: Earned $4,000 "on account;" collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 to a supplier that it owed from the previous month; paid out $800 in cash drawings to the owner. -How much was the Net income in June?

A not-for-profit organization has owners just like other forms of business.

Which of the following concepts (or principles)would dictate that a person with three different businesses keep three different checking accounts?

A business receives a bill for services rendered from one of its suppliers.The business will pay the supplier next month.When the business receives the bill from its supplier,how does this affect the accounting equation?

In an LLC,the business,not the owners,is responsible for the corporation's debts.

ABC Delivery Service had the following transactions in June: Earned $4,000 cash for services rendered; collected $2,500 from a customer "on account;" paid out $200 cash for plumbing services; received $3,500 of supplies and promised to pay one month later; paid out $1,000 in cash drawings to the owner. -What is the combined effect on Owner's capital of the June transactions?

Scott's Camera Shop started the year with total assets of $80,000 and total liabilities of $40,000.During the year,the business earned revenues of $120,000 and incurred expenses of $70,000.Scott made no capital contributions during the year,but did make withdrawals of $60,000. -The net change in Scott's owner's equity for the year is a:

Beginning owner's capital was $25,000.Ending owner's capital is $37,000.No contributions were made during the year.Drawings were $23,000.What was net income or loss for the year?

Sharon Samson starts a plumbing service named Reliable Waterworks.Selected transactions are described as follows: A.Sharon deposits $7,000 into a new checking account for the business,recording the capital contribution. B.Reliable pays $4,000 cash for equipment to be used for plumbing repairs. C.Reliable borrows $15,000 from a local bank and deposits the money in the checking account. D.Reliable pays $600 rent for the first month. E.Reliable pays $400 cash for plumbing supplies to be used on various jobs in the future. F.Reliable completes a plumbing repair project for a local lawyer and receives $1,300 cash. G.Sharon takes a cash withdrawal of $2,500. After all of the transactions,what is the amount of total owner's equity?

Hamilton Lawn Service earned $1,000 for services rendered.The customer promised to pay at a later time.Which of the following accounts increased?

Managerial accounting focuses on information for decision makers outside of the business,such as creditors and taxing authorities.

Which of the following concepts (or principles)would require that an item be recorded at the amount actually paid rather than at the estimated market value?

Accountants often refer to GAAP.What do the letters GAAP represent in accounting?

Phillip and Reed have developed a new technology for home computer systems.However,they need to raise a large amount of capital to build the production and support facilities to market their product successfully.Which of the following business types would be best suited to help the company raise the necessary capital to begin production?

Which of the following organizations or groups issue an opinion on whether a company's financial statements are a fair representation of the company's financial situation?

If an analyst wants to know how likely it is that a business would be able to pay off all its debts,which of the following statements would be MOST useful?

Equipment is sold for cash in an amount equal to the cost of the equipment recorded on the books.How does this sale affect the accounting equation?

IFRS (international accounting rules)are much more specific than GAAP and allow for far less professional judgment.

The total assets and the total liabilities of Paragon Services are shown below.During the year,no additional capital contributions were made,and the business earned net income of $50,000. Assets Liabilities Beginning of year \ 395,000 \ 290,000 End of year 455,000 320,000 What was the amount of drawings taken during the year?