Exam 1: Accounting and Business

Use the accounting equation to answer each of the independent questions below. (a) At the beginning of the year, Norton Company's assets were $75,000 and its stockholders' equity was $38,000. During the year, assets increased by $18,000 and liabilities increased by $4,000. What was the stockholders' equity at the end of the year? (b) At the beginning of the year, Turpin Industries had liabilities of $44,000 and stockholders' equity of $66,000. If assets increased by $10,000 and liabilities decreased by $5,000, what was the stockholders' equity at the end of the year?

On March 1, the amount of common stock and retained earnings in Richard's Catering Company was $100,000 and $50,000, respectively. During March, stockholders were paid $31,000 in dividends from the business. The amounts of the various assets, liabilities, revenues, and expenses are as follows: Accounts payable \ 10,250 Accounts receivable 45,950 Cash 23,840 Fees earned 64,950 Insurance expense 1,275 Land 88,400 Miscellaneous expense 1,210 Rent expense 9,000 Sal ary expense 20,300 Supplies 900 Supplies expense 525 Utilities expense 2,800 ? Present, in good form, (a) an income statement for March, (b) a statement of stockholder's equity for March, and (c) a balance sheet as of March 31.

Which of the following is the best description of accounting's role in business?

Dividends paid to stockholders decrease assets and increase equity.

If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

Stockholders' equity at the beginning of the year for ATLAS Inc. was $390,000, while its liabilities totaled $230,000. During the year its assets increased by $75,000; its liabilities decreased by $50,000. Which of these is stockholders' equity at the end of the year for ATLAS Inc.?

For each of the following, determine the amount of net income or net loss for the year. (a) Revenues for the year totaled $\$ 71,300$ and expenses totaled $\$ 35,500$ . The shareholders purchased $\$ 15,000$ of common stock during the year. (b) Revenues for the year totaled $\$ 220,500$ and expenses total ed $\$ 175,000$ . The shareholders were paid $\$ 40,000$ dividends during the year. (c) Revenues for the year totaled $\$ 149,000$ and expenses total ed $\$ 172,000$ . The shareholders purchased $\$ 12,000$ of common stock and were paid $\$ 16,000$ in dividends during the year. (d) Revenues for the year totaled $\$ 198,150$ and expenses total ed $\$ 174,200$ . The shareholders were paid $\$ 35,000$ dividends during the year.

Which of the following accounts is a liability?

All of the following statements regarding the ratio of liabilities to stockholders' equity are true except

Transactions affecting stockholders' equity include

Computer Corporation is starting its computer programming business and has sold stock of $15,000. Identify how the accounting equation will be affected.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid cash for the purchase of supplies

Which of the following is true in regards to a limited liability company?

Using the following accounts and their amounts, prepare in good format a statement of stockholder's equity for Bright Futures Company for the month ended August 31. No common stock was issued during the year. Tel ephone expense 1,150 Cash 3,000 Accounts payable 1,540 Dividends 800 Fees earned 15,700 Rent expense 1,400 Supplies 140 Accounts receivable 1,500 Computer equipment 17,600 Common stock 10,000 Retained earnings (August 1 ) 4,320 Wages expense 4,800 Utilities expense 750 Office expense 420 ​ ​

Indicate whether each of the following accounts represents an asset, liability, or stockholders' equity: (a) Accounts Payable (b) Wages Expense (c) Common Stock (d) Accounts Receivable (e) Dividends (f) Land

The account balances of Awesome Travel Services at December 31 are listed below. There were no additional investments or dividends by Awesome Travel Services during the year. Accounts payable \ 12,000 Retained earnings (Jan. 1) \ 6,000 Accounts receivable 14,000 Supplies 1,000 Cash 18,000 Income taxes expense 1,300 Common stock 4,000 Utilities expense 8,000 Computer equipment 21,000 Wages expense 25,000 Fees earned 78,000 Supplies expense 1,700 Rent expense 10,000 ? Prepare an income statement, a statement of stockholders' equity, and a balance sheet as of December 31.

Give the major disadvantage of disregarding the cost principle and constantly revaluing assets based on appraisals and opinions.

Proper ethical conduct implies that you only consider what's in your best interest.

Match the following business types with each business listed below. Each may be used more than once. -A tax preparation firm