Exam 1: Accounting in Business

Identify the risk and the return in each of the following examples. a.Investing $500 in a certificate of deposit at 4.5% interest. b.Placing a $100 bet on an NBA game. c.Investing $10,000 in Microsoft stock. d.Borrowing $20,000 in student loans.

Using the accounting equation,equity is equal to ________.

Accounts payable appear on which of the following statements?

A corporation is:

Investing activities include long-term borrowing and repaying of cash from lenders.

The going-concern assumption presumes that a business will continue operating instead of being closed or sold.

Ending retained earnings reported on the statement of retained earnings is calculated by adding stockholder investments and net income and subtracting net losses and dividends.

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

A limited liability company (LLC):

Grandmark Printing pays the current month's rent of $2,000 to the landlord of the building where its facilities are located.How does this transaction affect the accounting equation for Grandmark?

Identify and describe the four basic financial statements:

An accounting system captures relevant data about transactions and then classifies,records,and reports data.

In the partnership form of business,the owners are called stockholders.

A balance sheet lists:

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange,is the:

The Securities and Exchange Commission (SEC)is a U.S.government agency that oversees proper use of GAAP by companies that sell stock and debt to the public.

Creditors' claims on assets that reflect company obligations to provide assets,products,or services to others are called ________.

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Zapper has beginning equity of $257,000,net income of $51,000,dividends paid of $40,000 and stockholder investments of $6,000.Its ending equity is:

A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.