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Exam 1: An Introduction to Accounting

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Question 61

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Briefly distinguish between financial accounting and managerial accounting.

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Financial accounting is designed to sati...

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Question 62

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Define the term "accounting period." How does this term relate to the "matching concept" as it pertains to the income statement?

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An accounting period is the span of time...

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Question 63

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Explain some of the accounting similarities and differences between not-for-profit organizations and for-profit businesses.

During 2015,Pace Company issued common stock to stockholders for $12,000,purchased land for $3,200 cash,and paid cash dividends of $1,000 to the company's owners.Enter each of these three events into the horizontal financial statements model,below.Indicate dollar amounts of increases and decreases.For cash flows,show whether they are operating activities (OA),investing activities (IA),or financing activities (FA).Precede the amount with a minus sign if the transaction reduces that section of the equation or cash flow. Enter 0 if there would be no entry in a column.

Which of the following could describe the effects of an asset exchange transaction on a company's financial statements?

Retained earnings reduces a company's commitment to use its assets for the benefit of its stockholders.

Which resource providers lend financial resources to a business with the expectation of repayment with interest?

Indicate how each of the following transactions affect assets by entering + for increase,- for decrease,or NA if total assets are not affected.Enter only one item for each answer. _______ 1)Issued stock to investors. _______ 2)Borrowed cash from the bank. _______ 3)Provided services for cash. _______ 4)Paid operating expenses. _______ 5)Purchased land for cash. _______ 6)Paid cash dividend to the stockholders. _______ 7)Repaid the bank loan.

From what three sources does a business obtain its assets?

Garrison Company acquired $23,000 by issuing common stock.Which of the following choices accurately reflects how this event affects the company's financial statements?

Classify each of the following events as an asset source (AS),asset use (AU),asset exchange (AX),or not applicable (NA). _______ 1)Borrowed cash from the bank. _______ 2)Issued stock for cash. _______ 3)Invested cash in the common stock of another company. _______ 4)Performed services and collected cash. _______ 5)P aid cash for operating expense. _______ 6)Purchased equipment for cash. _______ 7)Paid dividends to stockholders. _______ 8)Repaid the bank loan with cash.

The Financial Accounting Standards Board is a privately funded organization with authority for establishing accounting standards for businesses in the US.

Ramirez Company experienced the following events during 2015: 1.Acquired $50,000 cash by issuing common stock 2.Borrowed $25,000 cash from a creditor 3.Provided services to customers for $38,000 cash 4.Paid $32,000 cash for operating expenses 5.Paid a cash dividend of $2,500 to stockholders 6.Purchased land with cash,$30,000 Required: a)Show how each of these events affects the accounting equation.Precede the amount with a minus sign if the event reduces that section of the equation.Enter NA for items not affected. The first event is done as an example. b)Calculate the total amount of assets,liabilities,common stock,and retained earnings at the end of the period.

International accounting standards are formulated by the IASB.What does that acronym stand for?

Which type of accounting information is intended to satisfy the needs of external users of accounting information?

What is meant by the term "stakeholders?"

Indicate whether each of the following statements about equity is true or false. _______ a)Operating expenses reported on the income statement decrease retained earnings. _______ b)Owners' equity and liabilities can be viewed either as sources of assets or claims to assets of the business. _______ c)Retained earnings is increased by loans received from a bank. _______ d)Dividends paid to stockholders decrease common stock. _______ e)Owners' equity is the residual interest in the company resulting from the difference between assets and liabilities.

An asset source transaction increases a business's assets and the claims to assets.

Which of the following could represent the effects of an asset exchange transaction on a company's financial statements?

During 2015,Morsch Company issued common stock to stockholders for $10,000;purchased land for $2,000 cash;provided services to customers for $8,000;paid cash operating expenses of $6,200;and paid cash dividends of $1,000 to the company's owners.Enter each of these events into the horizontal financial statements model,below.Indicate dollar amounts of increases and decreases.For cash flows,show whether they are operating activities (OA),investing activities (IA),or financing activities (FA).Precede the amount with a minus sign if the transaction reduces that section of the equation or cash flow. Enter 0 if there would be no entry in a column.