Exam 2: Basic Financial Statements

The accounting principle that assumes that a company will operate in the foreseeable future is:

Decreases in owners' equity are caused by:

Forms of Business Organization State and describe the three most common forms of business organizations in the United States.

Preparation of balance sheet after a series of transactions The balance sheet was as follows for Custom Ceramics on February 1,2018: During the first week of February,the following transactions occurred: (1)The business used cash to pay off $5,000 of its accounts payable.(No payment was made on the notes payable. ) (2)Additional capital stock was issued to Joan Custom for $15,000 cash. (3)Equipment was purchased on credit for $1,800 (4)The business collected $4,000 cash from accounts receivable. Complete the balance sheet for Custom Ceramics as of February 8,2018.

The balance sheet shows assets,liabilities,and equity,as an extension of the accounting equation.

Eton Corporation purchased land in 1998 for $190,000.In 2018,it purchased a nearly identical parcel of land for $430,000.In its 2018 balance sheet,Eton valued these two parcels of land at a combined value of $860,000.Reporting the land in this manner violated the:

The concept of adequate disclosure means that:

The purchase of an asset,such as office equipment,for cash will cause owners' equity to decrease.

Which of the following will not cause a change in the owners' equity of a business?

When a business borrows money from a bank,the immediate effect is an increase in total assets and a decrease in liabilities or owners' equity.

The way in which financial statements relate is known as:

Retained earnings appears on:

The valuation of assets in the balance sheet is based primarily upon:

During the current year,the assets of Wheatley's increased by $362,000,and the liabilities increased by $260,000.The owners' equity in the business must have:

The payment of a liability causes an increase in owners' equity.

Assume that the Equipment shown above was acquired by the business five years ago and has a book value of $156,000,but has a current appraised value of $200,000.Hercules Manufacturing's Retained Earnings at December 31,2018,amounts to:

The principle of adequate disclosure means that a company should disclose:

Computation of assets,liabilities,and owners' equity after a series of transactions On April 30,2018,the balance sheet of China Collectibles showed total assets of $700,000,total liabilities of $400,000,and owners' equity of $300,000.The following transactions occurred in May of 2018: (1)Capital stock was issued in exchange for $165,000 cash. (2)The business purchased equipment for $360,000,paying $160,000 cash and issuing a note payable for $200,000. (3)The business paid $70,000 of its accounts payable. (4)The business collected $54,000 of its accounts receivable. Compute the following as of May 31,2018: (A. )Total assets (B. )Total liabilities (C. )Owners' equity

Which one of the following is not considered as one of the three primary financial statements?

An inexperienced accounting intern at Tasso Company prepared the following income statement for the month of July 2018: Instructions: Prepare a revised income statement in accordance with generally accepted accounting principles.