Exam 1: Accounting and Business

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Payment for common stock by stockholder

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. Accounts payable \ 4,375 Spa operating expense \ 23,760 Accounts receivable 8,490 Office expense 2,470 Cash 13,980 Spa supplies 9,230 Fees earned ??? Wages expense 26,580 Spa furniture \& equipment 56,000 Dividends 38,170 Computers 2,130 ? Prepare a balance sheet for Rocky's Day Spa for the year ended December 31.

Debts owed by a business are referred to as

At the end of its accounting period, December 31, of Year 1, Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts. (a) Hsu’s liabilities as of December 31, of Year 1. (b) Hsu’s liabilities as of December 31, of Year 2, assuming that assets increased by $56,000 and shareholders' equity decreased by $32,000. (c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000, liabilities were $450,000, and there were no additional investments or dividends.

Revenues for the year totaled $162,000 and expenses totaled $174,000. The stockholders purchased $15,000 of common stock and were paid $6,000 in dividends during the year. What was the net income or net loss for the year?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Received cash for providing services to customers

Which of the following would not normally operate as a service business?

Which of the following is not a business transaction?

The connecting link between the income statement and balance sheet

Which of the following groups of companies are all examples of a retail business?

An income statement is a summary of the revenues and expenses of a business as of a specific date.

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

Paying an account payable increases liabilities and decreases assets.

Cash dividends

Net income and net profit do not mean the same thing.

Ramierez Company received its first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

List the five steps in the process by which accounting provides information to users.