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Exam 1: An Introduction to Accounting

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Question 1

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Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

A) Securities and Exchange Commission.
B) U.S.Congress.
C) International Accounting Standards Board.
D) Financial Accounting Standards Board.

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

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D

Question 2

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The following transactions apply to the Garber Corporation for 2015,its first year in business. 1)Issued stock to investors,$48,000. 2)The company borrowed $42,000 cash from the bank. 3)Services were provided to customers and $50,000 cash was received. 4)The company acquired land for $44,000. 5)The company paid $34,000 rent for the building where it does its business. 6)The company paid $3,200 for supplies that were used during the period. 7)The company sold the land acquired in item 5 for $44,000. 8)A dividend of $1,000 was paid to the owners. 9)Repaid $20,000 of the loan described in item 2. Required: a.Prepare an income statement,statement of changes in equity,and balance sheet for 2015.Precede the amount with a minus sign if the transaction reduces that section of the financial statement. b.Prepare a statement of cash flows for 2015.

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Question 3

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Use the following information to answer questions Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. ) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues. 4) Paid expenses of $250. 5) Paid a $50 dividend. During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. ) 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. -The amount of assets on Packard's 2016 balance sheet is

Which of the following financial statements provides information about a company as of a specific point in time?

Santa Fe Company was started on January 1,2016,when it acquired $9,000 cash by issuing common stock.During 2016,the company earned cash revenues of $4,500,paid cash expenses of $3,750,and paid a cash dividend of $250.Based on this information,

How does the payment of cash dividends to stockholders affect the accounting equation? Is it considered an asset source,asset use,or asset exchange transaction?

Indicate whether each of the following statements about liabilities is true or false. _______ a)A net loss on the income statement decreases liabilities. _______ b)The acquisition of a bank loan increases both assets and liabilities. _______ c)The accounting equation requires that liabilities be equal to equity. _______ d)The amount of a company's liabilities is equal to (assets - equity). _______ e)Liabilities are reported on the statement of cash flows of a business.

Use the following information to answer questions Lexington Company engaged in the following transactions during 2015,its first year in operation: (Assume all transactions are cash transactions) 1.Acquired $6,000 cash from issuing common stock. 2.Borrowed $4,400 from a bank. 3.Earned $6,200 of revenues. 4.Incurred $4,800 in expenses. 5.Paid dividends of $800. Lexington Company engaged in the following transactions during 2016: 1.Acquired an additional $1,000 cash from the issue of common stock. 2.Repaid $2,600 of its debt to the bank. 3.Earned revenues,$9,000. 4.Incurred expenses of $5,500. 5.Paid dividends of $1,280. -The amount of liabilities on Lexington's 2016 balance sheet was

Borrowing cash from the bank is an example of which type of transaction?

Which of the following represents effects of an asset use transaction on a company's financial statements?

If the total equity claimed by owners of Vargas Construction is $150,000 and liabilities are $75,000,what are total assets?

In which section of a statement of cash flows would the payment of cash dividends be reported?

Use the following information to answer questions The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000;Liabilities = ?;Common Stock = $15,000;Revenue = $22,000;Dividends = $1,500;Beginning Retained Earnings = $3,500;Ending Retained Earnings = $7,500. -The amount of liabilities reported on the end-of-period balance sheet was

Use the following information to answer questions Lexington Company engaged in the following transactions during 2015,its first year in operation: (Assume all transactions are cash transactions) 1.Acquired $6,000 cash from issuing common stock. 2.Borrowed $4,400 from a bank. 3.Earned $6,200 of revenues. 4.Incurred $4,800 in expenses. 5.Paid dividends of $800. Lexington Company engaged in the following transactions during 2016: 1.Acquired an additional $1,000 cash from the issue of common stock. 2.Repaid $2,600 of its debt to the bank. 3.Earned revenues,$9,000. 4.Incurred expenses of $5,500. 5.Paid dividends of $1,280. -The net cash flow from financing activities on Lexington's 2016 statement of cash flows was

Liabilities represent the future obligations of a business entity.

Borrowing money from the bank is an example of an asset source transaction.

Which of the following cash transactions results in no net change in assets?

Indicate whether each of the following statements about markets is true or false. _______ a)Financial resources can be provided to a business by conversion agents. _______ b)Resource owners are the businesses that transform resources into products that satisfy consumer desires. _______ c)Labor resources include the both the physical and intellectual labor of a business's employees. _______ d)Conversion agents purchase their resources from resource owners. _______ e)Consumers are the main providers of resources in any market.

Yi Company provided services to a customer for $5,500 cash.As a result of this event,

As of December 31,2016,Bristol Company had $100,000 of assets,$40,000 of liabilities and $25,000 of retained earnings.What percentage of Bristol's assets were obtained through investors?