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Exam 1: Introduction to Accounting and Business

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Question 91

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If a corporation had net income of $60,000 and $20,000 in cash dividends were declared and paid then the retained earnings account would increase by $40,000.

A) True
B) False

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Question 92

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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). Place your answers in the space provided below.Hint: Use the interrelationships among the financial statements to solve this problem.

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Question 93

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The accountant for Franklin Company prepared the following list of account balances from the company's records for the year ended December 31,2011: $\begin{array}{llll}\text { FeesEarned } & \$ 165,000 & \text { Cash } & \$ 30,000 \\\text { Accounts Receivable } & 14,000 & \text { Selling Expenses } & 44,000 \\\text { Equipment } & 64,000 & \text { Capital Stock } & 7,000 \\\text { Accounts Payable } & 22,000 & \text { Retained Earnings } & 23,000 \\\text { Salaries \& Wages Expense } & 40,000 & \text { Prepaid Rent } & 2,000 \\\text { Dividends } & 5,000 & \text { Income Taxes Expense } & 13,000 \\\text { Salaries \& Wages Payable } & 15,000 & \text { Rent Expense } & 20,000\end{array}$ Based on this information,is Franklin Company profitable? Explain your answer by including net income or loss.

If a building is appraised for $85,000,offered for sale at $90,000,and the buyer pays $80,000 cash for it,the buyer would record the building at $85,000.

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

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

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

Cash dividends paid to stockholders decrease assets and increase equity.

No significant differences exist between the accounting standards issued by the FASB and the IASB.

Within the United States,the dominant body in the primary development of accounting principles is the

Who among the following uses financial reports?

Explain the meaning of the business entity concept.

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

Ramierez Company received its first electric bill in the amount of $60 which will be paid next month.How will this transaction affect the accounting equation?

Which of the following is not true of accounting principles?

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

Managerial accounting information is used by external and internal users equally.

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

Identify each of the following as an (1)increase in stockholders' equity,or a (2)decrease in stockholders' equity.

Receiving a bill or otherwise being notified that an amount is owed is recorded until the amount is paid.