Exam 1: Accounting and the Business Environment

Reliable Waterworks provides plumbing services.Transactions of Reliable Waterworks during the first year of operations are given below. A.The owner,Steve Sharon,contributed $11,000 cash to form the business. B.Paid $1,400 for equipment to be used for plumbing repairs. C.Borrowed $15,000 from a local bank and deposited the money in the checking account. D.Paid $100 in rent for the year. E.Paid $400 for plumbing supplies to be used on various jobs next year. F.Completed a plumbing repair for a law firm and received $3,200. Calculate the amount of total assets at the end of the first year.Assume the plumbing supplies of $3,200 are left at the end of the year.

Accounting starts with economic activities that accountants review and evaluate using critical thinking and judgment to create useful information that helps individuals make good decisions.

Define assets.Provide three examples of assets.

Financial accounting focuses on information for decision makers outside of the business,such as creditors and taxing authorities.

Liabilities represent creditors' claims on the business's assets.

Local,state,and federal governments use accounting information to calculate income taxes.

A transaction is any event that affects the financial position of the business and can be easily estimated.

In a statement of owner's equity,decreases in owner's equity result from ________.

Sunlight Company has assets and equity that amount to $220,000 and $60,000,respectively.Liabilities total ________.

Accountants record ________.

John contributed $6,000 to the business by opening a bank account in the name of the business,United Internists.This transaction results in an increase in the assets of the business.

Ten years ago a corporation purchased a building for $100,000.At that time,the corporation felt that the business was worth $125,000.The current market value of the business is $500,000.The building has been assessed at $475,000 for property tax purposes.At which amount should the corporation record the building in its accounting records?

Following is a list of account balances of Suburban Lawn Services as of December 31 of the first year of operation. What is the amount of total liabilities at the end of the year?

Different users of accounting information focus on the information they need to make the best choices.

Prepare an income statement and a statement of owner's equity for the month of June.Also,prepare a balance sheet at June 30.The transactions of Magna Designer Company for the first month of their operations are as follows: • On June 1,2017,the owner Carlos Magna Designer contributed $25,000 cash to establish the business. • The company rendered services to three clients on account with total revenues earned of $9,000. • It then incurred an advertising expense on four different websites and promised to pay a total of $1,200 at a later date. • On June 13,Magna Designer purchased $1,000 worth of office supplies for cash.(The supplies are not used by June 30. ) • On June 22,it received $2,000 on account from a client and deposited it into the business account. • On June 23,it incurred $1,300 for a legal expense and paid cash. • On June 30,Magna Designers made a payment of $500 to one of the websites that it owed for advertising provided earlier in the month. • No owner withdrawals were paid during the month.

Which of the following financial statements would be most useful if an analyst wants to know the likelihood of repayment of business debts?

International Financial Reporting Standards ________ U.S.Generally Accepted Accounting Principles.