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Exam 1: Introduction to Accounting and Business

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Question 51

True/False

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A retained earnings statement reports the changes in the retained earnings for a period of time.

A) True
B) False

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Question 52

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The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of stockholders.

A) True
B) False

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Question 53

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The following are examples of external users of accounting information except

Explain the meaning of: a) the objectivity concept b) the unit of measure concept

The primary financial statements of a corporation are the income statement, retained earnings statement, and the balance sheet.

Accounting information users need reports about the economic activities and condition of businesses.

Determine the missing amount "X" for each of the following: $\begin{array}{|lc|l|l|}\hline & \text { Assets } & \text { Liabilities } &{\text { Stockholders' Equity }} \\\hline \text { a) } & \$ 78,500 & \$ 37,600 & X \\\hline \text { b) } & \mathrm{X} & \$ 53,280 & \$ 145,000 \\\hline \text { c) } & \$ 49,500 & \mathrm{X} & \$ 34,000\\\hline\end{array}$

Which of the following is not a business transaction?

Which type of accountant typically practices as an individual or as a member of a public accounting firm?

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

Many countries outside the United States use financial accounting standards issued by the

Ramos Repair Company is paying a cash dividend. How does this transaction affect Ramos Repair Company's accounting equation?

The initials GAAP stand for

Bob Johnson is the sole owner of Johnson's Carpet Cleaning Service. Bob purchased a personal automobile for $10,000 cash plus he took out a loan for $20,000 in his name. Describe how this transaction is related to the business entity concept.

A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -Reports as of a specific date

Identify which of the following accounts would appear on a balance sheet. a) Cash b) Fees earned c) Common stock d) Wages payable e) Rent expense f) Prepaid advertising g) Land

Match the following business types with each business listed below. Each may be used more than once. -A hospital

At December 31 of the current year, Martin Consultants has assets of $430,000 and liabilities of $205,000. Using the accounting equation and considering each case independently, determine the following: a) Stockholders' equity, as of December 31. b) Stockholders' equity, as of December 31 of the next year, assuming that assets increased by $12,000 and liabilities increased by $15,000. c) Stockholders' equity, as of December 31 of the next year, assuming that assets decreased by $8,000 and liabilities increased by $14,000.

Which of the following groups are considered to be internal users of accounting information?