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Exam 1: Introduction to Accounting and Business

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Question 51

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Explain the meaning of the business entity concept.

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The business entity concept limits the e...

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Question 52

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How does the purchase of equipment by signing a note affect the accounting equation?

A) assets increase; assets decrease
B) assets increase; liabilities decrease
C) assets increase; liabilities increase
D) assets increase; stockholders' equity increases

E) A) and C)
F) B) and C)

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Question 53

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Which of the following is a manufacturing business?

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

The cost concept is the basis for entering the exchange price into the accounting records.

Given the following: Beginning retained earnings $ 58,000 Ending retained earnings $ 30,000 Dividends declared and paid $ 25,000 Calculate net income or net loss.

Simpson Designers began operations on April 1, 2011. The financial statements for Simpson Designers are shown below for the month ended April 30, 2011 (the first month of operations). Determine the missing amounts for letters (a) through (o).

Countries outside the United States use financial accounting standards issued by the

The business entity concept means that

If total assets decreased by $30,000 during a specific period and stockholder's equity decreased by $35,000 during the same period, the period's change in total liabilities was an $65,000 increase.

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

There are four transactions that affect stockholders' equity. (a) What are the two types of transactions that increase stockholders' equity? (b) What are the two types of transactions that decrease stockholders' equity?

Declaring and paying cash dividends

On March 1, 2014, Cook's Catering Company Capital Stock balance was $30,000 and the balance of Retained Earnings was $120,000. During March, dividends of $31,000 were declared and paid by the business. Assets, liabilities, revenues, and expenses at March 31, 2014, were as follows: Present, in good form, (a) an income statement for March, (b) a retained earnings statement for March, and (c) a balance sheet as of March 31.

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

If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is

At the end of its accounting period, December 31, 2010, Miller's Arcade has assets of $450,000 and liabilities of $125,000. Using the accounting equation, determine the following amounts:

Given the following data: $\begin{array}{lrc}&\text { Dec. } 31,2014& \text { Dec. 31,2013 } \\\text { Total liabilities } & \$ 128,250 & \$ 120,000 \\\text { Total stockholders' equity } & 95,000 & 80,000\end{array}$ Compute the ratio of liabilities to stockholders' equity for each year. Round to two decimal places.

On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller's counteroffer of $125,000. On June 20, the land was assessed at a value of $95,000 for property tax purposes. On August 4, Gregg Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repair Service's records?

Liabilities are reported on the