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Exam 1: Accounting and Business

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Question 21

True/False

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The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.

A) True
B) False

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Question 22

Multiple Choice

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Cash investments made by the owner in the business are reported on the statement of cash flows in the

A) financing activities section
B) investing activities section
C) operating activities section
D) supplemental statement

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

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Question 23

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Name and describe the four primary financial statements for a corporation.

How does the payment of rent for equipment affect the accounting equation?

Which of the following is not a business transaction?

Managerial accountants would be responsible for providing information regarding

The following data were taken from Miller Company's balance sheet: ​ Dec. 31, Year 2 Dec. 31, Year 1 Total liabilities $150,000 $105,000 Total stockholders' equity 75,000 60,000 ​ (a) Compute the ratio of liabilities to stockholders' equity. Round your answer to one decimal place. (b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Paid wages

A corporation is a business that is legally separate and distinct from its owners.

All companies must use a calendar year as their fiscal year.

(a) A vacant lot acquired for $83,000 cash is sold for $127,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) stockholders' equity? ​ (b) Assume that the seller owes $52,000 on a loan for the land. After receiving the $127,000 cash in (a), the seller pays the $52,000 owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) stockholders' equity?

Which of the following is not a certification for accountants?

Reports only revenues and expenses

Using the following accounts and their amounts, prepare in good format an income statement for Bright Futures Company for the month ended August 31. $\begin{array}{lr}\text { Tel ephone expense } & 1,150 \\\text { Cash } & 3,000 \\\text { Accounts payable } & 1,540 \\\text { Dividends } & 800 \\\text { Fees earned } & 15,700 \\\text { Rent expense } & 1,400 \\\text { Supplies } & 140 \\\text { Accounts receivable } & 1,500 \\\text { Computer equipment } & 17,600 \\\text { Common stock } & 10,000 \\\text { Retained earnings (August } 1) & 4,320 \\\text { Wages expense } & 4,800 \\\text { Utilities expense } & 750 \\\text { Office expense } & 420\end{array}$ ?

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Purchased supplies on credit

Match each transaction with its effect on the accounting equation. Each letter may be used more than once.

Redfox Pest Control Service had revenues of $425,000 and expenses of $338,000 for the current year, ended June 30. At the beginning of the year, the common stock was $110,000 and the retained earnings was $70,000. During the year, shareholders purchased an additional $25,000 in stock. Dividends of $16,750 were paid. What is the balance of stockholders' equity at the end of the year?

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

Any twelve-month accounting period adopted by a company is known as its fiscal year.

Explain the meaning of: