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Exam 1: Introduction to Accounting and Business

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Question 51

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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?

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Question 52

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Which of the following is a service business?

A) Microsoft
B) Dell Computers
C) Facebook
D) Walmart

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

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Question 53

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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

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Easy and cheap to organize

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the

The accounting equation may be expressed as

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.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Comprises 70% of business entities in the United States

Bob Johnson is the sole owner of Johnson's Carpet Cleaning Service.Bob purchased a personal automobile for $10,000 cash plus he took out a loan for $20,000 in his name.Describe how this transaction is related to the business entity concept.

Using the following accounting equation elements and their balances,prepare,in good form,an income statement for Heavenly Futures Company for the month ended August 31.​​

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

Martin Blair is the owner and operator of Martin Consultants.At December 31 of the current year,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)Martin Blair,capital,as of December 31. (b)Martin Blair,capital,as of December 31 of the next year,assuming that assets increased by $12,000and liabilities increased by $15,000. (c)Martin Blair,capital,as of December 31 of the next year,assuming that assets decreased by $8,000and liabilities increased by $14,000.

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:​ Prepare an income statement for Flagger Company in good form.

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Owned by two or more individuals

How does receiving a bill to be paid next month for services received affect the accounting equation?

Eric Wood,CPA,was organized on January 1 as a proprietorship.List the errors that you find in the following financial statements and prepare the corrected statements for the three months ended March 31.​ ​ ​

Identify each of the following as either internal or external users of accounting information.

The assets and liabilities of Thompson Computer Services at March 31, 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, the beginning of the current year. Mr. Thompson invested an additional $25,000 in the business during the year. ​ -A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below.​ ​ Prepare a statement of cash flows for Linda's Design Services for the year ended December 31.​

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

Financial accounting reports are relevant only to users within the business.