Exam 1: Accounting and Business

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Purchased equipment for cash

The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles.

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 98,435 Wages expense 26,580 Spa furniture \& equipment 56,000 Dividends 38,170 Computers 2,130 ? Prepare a statement of stockholder's equity for Rocky's Day Spa for the current year ended December 31.

Assets that are used up during the process of earning revenue are called expenses.

Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,000. The Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost principle, at what amount should the land be recorded in the accounting records of Focus Company?

Which of the following asset accounts is increased when a receivable is collected?

The first statement prepared

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Comprises 70% of business entities in the United States

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Provided a service to a customer on account

An account receivable is typically classified as a revenue.

The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.

A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

The cost principle is the basis for entering the purchase price into the accounting records.

The monetary unit assumption requires that economic data be recorded in dollars for companies in the United States.

An example of an external user of accounting information is the federal government.

Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

Which of the following best describes accounting?

What information does the income statement give to business users?

The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below. The common stock was $120,000 and the retained earnings was $60,000 at April 1, the beginning of the current year. During the year, shareholders purchased an additional $25,000 in stock. Use this information the answer the questions that follow. Accounts payable \ 2,000 Miscellaneous expense \ 1,030 Accounts receivable 10,340 Office expense 1,240 Cash 21,420 Supplies 1,670 Fees earned 73,450 Wages expense 23,550 Land 47,000 Dividends 16,570 Building 157,630 ​ -Prepare a balance sheet for the current year ended March 31.