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Exam 1: Introduction to Accounting and Business

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Question 81

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Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000 (a) Compute the ratio of liabilities to owner's equity for each year. (b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

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Question 82

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Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -The second statement prepared

A) Income statement
B) Balance sheet
C) Statement of owner's equity
D) Statement of cash flows

E) A) and B)
F) All of the above

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Question 83

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

Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000Compute the ratio of liabilities to owner's equity for each year. Round to two decimal places.

The accountant for Flagger Company prepared the following list of accounting equation element balances from the company's records for the year ended December 31:? $\begin{array} { l r l r } \text { Fees earned } & \$ 165,000 & \text { Cash } & \$ 30,000 \\\text { Accounts receivable } & 14,000 & \text { Selling expenses } & 44,000 \\\text { Equipment } & 42,000 & \text { Flagger, capital } & 36,000 \\\text { Accounts payable } & 12,000 & \text { Interest income } & 3,000 \\\text { Salaries and wages expense } & 40,000 & \text { Rent expense } & 51,000 \\\text { Income taxes payable } & 5,000 & \text { Prepaid rent } & 2,000 \\\text { Notes payable } & 20,000 & \text { Income taxes expense } & 18,000\end{array}$ Prepare an income statement for Flagger Company in good form.

Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -The connecting link between the income statement and balance sheet

Which of the following is true regarding a limited liability company?

The accounting equation may be expressed as

The accountant for Scott Industries prepared the following list of accounting equation element balances from the company's records for the year ended December 31: ​ $\begin{array} { l r l r } \text { Fees earned } & \$ 165,000 & \text { Cash } & \$ 30,000 \\\text { Accounts receivable } & 14,000 & \text { Selling expenses } & 44,000 \\\text { Equipment } & 64,000 & \text { Scott, capital } & 27,000 \\\text { Accounts payable } & 12,000 & \text { Interest income } & 3,000 \\\text { Salaries and wages expense } & 40,000 & \text { Prepaid rent } & 2,000 \\\text { Income taxes payable } & 5,000 & \text { Income taxes expense } & 18,000 \\\text { Notes payable } & 20,000 & \text { Rent expense } & 20,000\end{array}$ -Based on the information for Scott Industries, is it profitable? Explain your answer.

What are the three sections of the statement of cash flows?

The year-end balance of the owner's capital account appears in

A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below.?

Match each of the following characteristics with the financial statement that best describes it. Each may be used more than once. -The first statement prepared

Ting Hsu is the owner of Hsu's Financial Services. At the end of its accounting period, December 31, of Year 1, Hsu's has assets of $575,000 and owner's equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts:? (a) Hsu's liabilities as of December 31 of Year 1. (b) Hsu's liabilities as of December 31 of Year 2, assuming that assets increased by $56,000 andowner's equity decreased by $32,000. (c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000,liabilities were $450,000, and there were no additional investments or withdrawals.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid cash for the purchase of a one-year insurance policy

Net income and net profit do not mean the same thing.

Using the following accounting equation elements and their balances, prepare, in good format a balance sheet in report form for Bright Futures Company for the month ended August 31. $\begin{array} { l r } \text { Telephone expense } & \$ 1,150 \\\text { Cash } & 3,000 \\\text { Accounts payable } & 1,540 \\\text { Jason Bright, drawing } & 800 \\\text { Fees earned } & 15,700 \\\text { Rent expense } & 1,400 \\\text { Supplies } & 140 \\\text { Accounts receivable } & 1,500 \\\text { Computer equipment } & 20,000 \\\text { Jason Bright, capital (August 1) } & 14,320 \\\text { Wages expense } & 4,800 \\\text { Utilities expense } & 750 \\\text { Notes payable } & 2,400 \\\text { Office expense } & 420\end{array}$

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Used by large business

The financial statements of a proprietorship should include the owner's personal assets and liabilities.

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Provided a service to a customer on account