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Exam 1: Introduction to Accounting and Business

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Question 31

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Paying an account payable increases liabilities and decreases assets.

A) True
B) False

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Question 32

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Profit is the difference between

A) assets and liabilities
B) the incoming cash and outgoing cash
C) the assets purchased with cash contributed by the owner and the cash spent to operate the business
D) the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services.

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

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Question 33

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select whether each of the following activities would be reported on the Statement of Cash Flows as an Operating Activity, an Investing Activity, a Financing Activity, or does not appear on the Cash Flow Statement.

Given the following: Beginning capital $ 58,000 Ending capital $ 30,000 Owner's withdrawals $ 25,000 Calculate net income or net loss.

The assets and liabilities of S&P Day Spa at December 31, 2014 and its revenue and expenses for the year are listed below. The capital of the owner was $68,000 at January 1, 2014. The owner invested an additional $10,000 during the year. Prepare a balance sheet for the year ended December 31, 2014.

The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

A summary of cash flows for Lopez Wedding Planning for the year ended December 31, 2011 is shown below. Cash receipts: Cashreceived from customers $~~~~~~~~~\$ 57,361$ Cashreceived from bank loan $~~~~~~~~~15.000$ Prepare a statement of cash flows for Lopez Wedding Planning for the year ended December 31, 2011.

If total liabilities decreased by $46,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is

Which of the following is not a certification for accountants?

Simpson Auto Body Repair purchased $20,000 of Machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly installments. (a) How will the purchase affect the accounting equation? (b) How will the payment of the first monthly installment affect the accounting equation?

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

If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total owner's equity was a $200,000 increase.

Purchasing supplies on account increases liabilities and decreases equity.

Which of the following isnot a characteristic of a corporation?

The objectivity concept requires that

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

On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of owner's equity (John Wong's capital) as of July 1 of the current year?

The total assets and total liabilities of Paul's Pools, a proprietorship, at the beginning and at the end of the current fiscal year are as follows: $\begin{array}{ll}&Jan.~ 1&Dec.~ 31\\\hline\text { Total assets } & \$ 280,000 &\$475,000\\\text { Total liabilities } & 205,000 &130,000\end{array}$

Selected transactions completed by a proprietorship are described below. Indicate the effects of each transaction on assets, liabilities, and owner's equity by inserting "+" for increase and "-" for decrease in the appropriate columns at the right. If appropriate, you may insert more than one symbol in a column. $\begin{array}{ll}&&A&L&OE\\\hline(a) & \text{Received cash owner as an additional investment} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(b) & \text{Purchased supplies on account} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(c) & \text{Paid rent for the curent month} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(d) & \text{Received cash for services sold to customers} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(e) & \text{Returned some defective supplies purchased in (b)} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(f) & \text{Paid insuratice premiums in advance} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(g) & \text{Paid cash to creclitor for purchases in(b)} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(h) & \text{Charged customers for services sold on account} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(i) & \text{Paid cash to a customer as a refund for an overcharge} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(j) & \text{Received cash on account from customers} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(k) & \text{Owner withdrew cash for personal use} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(I) & \text{Recorded the cost of supplies used during the year} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(m) & \text{Received invoice for electricity used} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(n) & \text{Paidwages} &\_\_\_\_&\_\_\_\_&\_\_\_\_\\(o) & \text{Purchased a truck for cash} &\_\_\_\_&\_\_\_\_&\_\_\_\_\end{array}$

The accounting equation can be expressed as Assets - Liabilities = Owner's Equity.