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Exam 1: Introduction to Accounting and Business

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Question 91

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If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash and the owner invested $10,000 in cash, the capital of the owner increased by $40,000.

A) True
B) False

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Question 92

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Doug Miller is the owner and operator of Miller's Arcade. 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: a. Owner's Equity as of December $31,2010$ . b. Owner's Equity as of December 31, 2011, assuming that assets increased by $\$ 65,000$ and liabilities increased by $\$ 35,000$ during 2011

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Question 93

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Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

If the liabilities owed by a business total $300,000 and owners equity is equal to $300,000, then the assets also total $300,000.

Ramon Ramos has withdrawn $750 from Ramos Repair Company's cash account to deposit in his personal account. How does this transaction affect Ramos Repair Company's accounting equation?

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

Earning revenue

Goods purchased on account for future use in the business, such as supplies, are called

Which of the following would not normally operate as a service business?

An account receivable is typically classified as a revenue.

Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.

Jonathan Martin is the owner and operator of Martin Consultants. At December 31, 2011, 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. Jonathan Martin, capital, as of December 31, 2011. b. Jonathan Martin, capital, as of December 31, 2012, assuming that assets increased by $12,000 and liabilities increased by $15,000 in 2012. c. Jonathan Martin, capital, as of December 31, 2012, assuming that assets decreased by $8,000 and liabilities increased by $14,000 during 2012.

The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the owner had withdrawn $55,000 for personal use and had made an additional investment of $33,000 in the business. Calculate the net income for the year.

If the owner wanted to know how money flowed into and out of the company, what financial statement would she use?

On May 7, Carpet Barn Company offered to pay $83,000 for land that had a selling price of $105,000. On May 15, Carpet Barn accepted a counteroffer of $95,000. On June 5, the land was assessed at a value of $115,000 for property tax purposes. On December 10, Carpet Barn Company was offered $135,000 for the land by another company. At what value should the land be recorded in Carpet Barn Company's records?

Which of the following is not an asset?

Identify which of the following accounts appear on a balance sheet. $\begin{array}{ll}\text { (a) } & \text { Cash } \\\text { (b) } & \text { Fees Earned } \\\text { (c) } & \text { Joe Brown, Capital } \\\text { (d) } & \text { Wages Payable } \\\text { (e) } & \text { Rent Expense } \\\text { (f) } & \text { Prepaid Advertising } \\\text { (g) } & \text { Land }\end{array}$

Land, originally purchased for $30,000, is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?

For each of the following, determine the amount of net income or net loss for the year.

The assets and liabilities of Amos Moving Services at March 31, 2014, the end of the current year, and its revenue and expenses for the year are listed below. The capital of the owner was $180,000 at April 1, 2013, the beginning of the current year. Mr. Amos invested an additional $25,000 in the business during the year. $\begin{array}{llll}\text { Accounts Payable } & \$ 2,000 & \text { Miscellaneous Expense } &\$ 1,030\\\text { Accounts Receivable } & \$ 10,340 & \text { Office Expense } &\$1,240\\\text { Cash } & \$ 21,420 & \text { Supplies } & \$1,670\\\text { Fees Earned } & \$ 73,450 & \text { Wages Expense } &\$23,550\\\text { Land } & \$ 47,000 & \text { Drawing }&\$16,570\\Building&\$ 157,630\end{array}$ Prepare an income statement for the current year ended March 31, 2014.