Exam 1: Accounting in Business

Data for Madison Realty are as follows: The owner, Mary Madison, withdrew a total of $30,000 for personal use during the year. Using the above data, prepare Madison Realty's Statement of changes in equity for the year ended December 31.

Regulators often have legal authority over certain activities of organizations.

Unlimited liability is an advantage of a sole proprietorship.

The statement of cash flows identifies cash flows separated into operating, investing, and financing activities over a period of time.

For each of the following transactions, identify the effects as reflected in the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively. Part A has been completed as an example.

Flash reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets:

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

The owner's claim on assets is called _________________.

Understanding generally accepted accounting principles is not necessary to use and interpret financial statements.

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Discuss the relation between risk and return.

The assumption that requires that a business be accounted for separately from its owners is the __________________ assumption.

FastLane has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):

The accounts of Garfield Company with the increases or decreases that occurred during the past year are as follows: Except for net income, an investment of $3,000 by the owner, and a withdrawal of $11,000 by the owner, no other items affected the owner's capital account. Using the balance sheet equation, compute net income for the past year.

The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners?

How does the objectivity principle support ethical behavior?

______________ users of accounting information are not directly involved in running the organization.