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Exam 1: Introduction to Accounting and Business

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Question 41

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Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

A) FASB
B) IRS
C) SEC
D) AICPA

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

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verified

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Question 42

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Receiving payments on an account receivable increases both equity and assets.

A) True
B) False

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Question 43

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The assets section of the balance sheet normally presents assets in

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.

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Accounting information users need reports about the economic activities and condition of businesses.

Which of the following is a manufacturing business?

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

The assets and liabilities of the company are $128,000 and $84,000,respectively.Stockholders' equity should equal

Allen Marks is the sole stockholder of Great Marks Company.As at December 31,2013,Great Marks Company has assets of $940,000 and liabilities of $300,000.During 2014,Allen Marks purchased an additional $73,000 of capital stock and received $33,000 in cash dividends from the business.What is the amount of net income of Great Marks Company during 2014,assuming that as of December 31,2014,assets were $995,000,and liabilities were $270,000?

Krammer Company has liabilities equal to one fourth of the total assets.Krammer's stockholders' equity is $45,000.Using the accounting equation,what is the amount of liabilities for Krammer?

On March 1,2014,Cook's Catering Company Capital Stock balance was $30,000 and the balance of Retained Earnings was $120,000.During March,dividends of $31,000 were declared and paid by the business.Assets,liabilities,revenues,and expenses at March 31,2014,were as follows: Present,in good form, (a)an income statement for March, (b)a retained earnings statement for March,and (c)a balance sheet as of March 31.

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

For accounting purposes,the business entity should be considered separate from its owners in which of the following forms of business?

The assets and liabilities of S&P Day Spa at December 31,2014 and expenses for the year are listed below.The retained earnings balance was $68,000 at January 1,2014. Prepare a retained earnings statement for the current year ended December 31,2014.

The accountant for Franklin Company prepared the following list of account balances from the company's records for the year ended December 31,2011: $\begin{array}{llll}\text { FeesEarned } & \$ 165,000 & \text { Cash } & \$ 30,000 \\\text { Accounts Receivable } & 14,000 & \text { Selling Expenses } & 44,000 \\\text { Equipment } & 64,000 & \text { Capital Stock } & 7,000 \\\text { Accounts Payable } & 22,000 & \text { Retained Earnings } & 23,000 \\\text { Salaries \& Wages Expense } & 40,000 & \text { Prepaid Rent } & 2,000 \\\text { Dividends } & 5,000 & \text { Income Taxes Expense } & 13,000 \\\text { Salaries \& Wages Payable } & 15,000 & \text { Rent Expense } & 20,000\end{array}$ Determine the total liabilities at the end of 2011 for Franklin Company.

Shiny Kar Company had the following transactions.For each transaction,show the effect on the accounting equation by putting the amount and direction (plus,minus,or NC for no change)in each box of the table below. $\begin{array}{|l|l|l|l|} \hline& \text { Assets } & \text { Liabilities: }&\text { Stockholders'Equity } \\\hline \text { a. Shiny Kar paid } \$ 5,000 \text { in cash dividends to stockholders. } & & \\\hline \text { b. Shiny Kar Company sold } 2 \text { cars for a total of } \$ 55,000 \text { on account. } & & \\\hline\text { c. The cost of the cars sold in (b) above was } \$ 40,000 \text {. }\\\hline\text { d. Shiny Kar received } \$ 35,000 \text { payment for a car previously sold on account. }\\\hline\text { e. Sliny Kar paid } \$ 450 \text { for advertising. }\\\hline\text { f. ShinyKar purchased } \$ 150 \text { of cleaning suppliess on account. }\\\hline\end{array}$

Financial accounting provides information to all users,while the main focus for managerial accounting is to provide information to the management.

Determine the missing amount "X" for each of the following: $\begin{array}{|l|l|l|}\hline \text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \\\hline \text { a. } \$ 78,500 & \$ 37,600 & X \\\hline \text { b. } \mathrm{X} & \$ 53,280 & \$ 145,000 \\\hline \text { c. } \$ 49,500 &X& \$ 34,000 \\\hline\end{array}$

The principal financial statements for a corporation are the income statement,the retained earnings statement,the balance sheet,and the budget.