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Exam 1: Introduction to Accounting and Business

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Question 21

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Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using cash that had been obtained from the initial investment by Donnie Darnell.​ Which entity or entities (Darnell Company, Joseph Company, and Donnie Darnell) should record the transaction involving the computer equipment on their accounting records?

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Darnell Co...

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Question 22

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If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.

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B) False

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Question 23

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The monetary unit assumption

Match each transaction with its effect on the accounting equation. Each letter may be used more than once. -Purchased supplies on credit A)Increase assets, increase liabilities B)Increase liabilities, decrease stockholders' equity C)Increase assets, increase stockholders' equity D)No effect E)Decrease assets, decrease liabilities F)Decrease assets, decrease stockholders' equity

Match each of the following characteristics with the financial statement it describes. Each financial statement may be used more than once. -A formal presentation of the accounting equation A)Income statement B)Balance sheet C)Statement of stockholder's equity D)Statement of cash flows

For each of the following companies, identify whether they are a service, retail, or manufacturing business.

Company G has a ratio of liabilities to stockholders' equity of 0.12 and 0.28 for Year 1 and Year 2, respectively. In contrast, Company M has a ratio of liabilities to stockholders' equity of 1.13 and 1.29 for the same period.​ REQUIRED: Based on this information, which company's creditors are more at risk and why? Should the creditors of either company fear the risk of nonpayment?

Match the following business types with each business listed below. Each may be used more than once. -A supermarket A)Service business B)Manufacturing business C)Retail business

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

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 stockholders' equity as of July 1 of the current year?

Which of the following items relates to separating the reporting of business and personal economic transactions?

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.

Match the following business types with each business listed below. Each may be used more than once. -A hospital A)Service business B)Manufacturing business C)Retail business

Resources owned by a business are known as

The initials GAAP stand for

Match the following business types with each business listed below. Each may be used more than once. -A book publisher A)Service business B)Manufacturing business C)Retail business

As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $940,000 and liabilities of $300,000. During Year 2, stockholders invested an additional $73,000 and received $33,000 in dividends from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $995,000 and liabilities were $270,000?

Indicate whether each of the following accounts represents an asset, liability, or stockholders' equity: (a)Accounts Payable (b)Wages Expense (c)Common Stock (d)Accounts Receivable (e)Dividends (f)Land

Which of the following is not true of accounting principles?

Debts owed by a business are referred to as