Exam 1: Business: Whats It All About

Which of the following increases retained earnings?

The Team Shirts' balance sheet has assets of $6,500 and liabilities of $4,000.Its shareholders' equity is ________.

Disadvantages of the corporate form of business organization include ________.

When a company repays a loan,both the principal and interest paid are financing activities.

Using Lox Stock & Bagel Company's financial statement above,determine the amount that represents the earnings kept in the company.

The two types of merchandising businesses include ________.

Stackables,Inc.paid $8,000 cash for inventory.The effect of this transaction on the accounting equation is:

The Securities and Exchange Commission (SEC)requires all publicly traded companies to file a report called the 10-K after the end of each company's fiscal year.

Target is an example of a ________.

For each of the following transactions,determine whether or not there is an increase,decrease,or no change in total assets. a.The owners each contributed $4,000 to start the business. b.Paid monthly rent of $1,200. c.Received $11,300 in cash from sales. d.Recorded a decrease in inventory of $4,500 for the amounts sold. e.Purchased equipment worth $7,500 with cash. f.Borrowed $9,000 from the bank. g.Paid employees $860. h.Purchased $4,400 worth of inventory for cash.

Net income on the income statement will always be greater than net income on the statement of changes in shareholders' equity.

Team Shirts,Inc.had the following balances on its balance sheet: During 2012,Team Shirts had revenues of $500,000 and expenses of $420,000.No new stock was issued.The amount of dividends for 2012 was ________.

Match each of the following with the appropriate definitions. -A financial statement that presents all the cash collected and all the cash disbursed during an accounting period.

Review the following income statement for Up Against the Wall,a wallpaper store.Then answer the following questions. a.What does gross profit represent? b.Can you tell whether or not the expenses are reasonable compared to the amount of income? c.Ms.Machier,the owner of Up Against the Wall,is looking for a partner.As a potential investor,does this income statement present a favorable or unfavorable impression of the success of the business? d.What other information would you require before you invested in this business?

Doolittle & Daley,attorneys at law,is an example of a ________.

How many of a company's four financial statements report information about the company at a specific point in time?

A sole proprietorship has more than one owner.

Team Instructions: Divide the class into teams of three or four people.Each team member should work the following problem separately outside of class.Then give the students time in class to compare answers with their teammates and put together a final correct copy of the problem.Each team should turn in only one copy of the problem for grading.All team members will receive the same grade. Doug Depp is your manager at Chutes,Inc.which sells parachutes.Management's next year's bonus is based on the current year's net income.In an effort to increase his bonus,Doug decides to buy the pull-cord used in making the company's parachutes from a less reputable supplier.The supplier's prices are lower,but the pull-cords are less reliable in successfully opening the parachute.Discuss with your team members the pros and cons of buying the cheaper pull-cord.As a team,decide what the president of the company could do in the future to avoid having the company face this type of scenario.