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Exam 1: Introducing Accounting in Business

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Question 41

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The major activities of a business include:

A) Operating, investing, making a profit
B) Investing, making a profit, operating
C) Making a profit, operating, borrowing
D) Operating, investing, financing
E) Investing, making a profit, financing

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

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Question 42

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Beginning assets were $437,600,beginning liabilities were $262,560,common stock issued during the year totaled $45,000,revenue for the year was $414,250,expenses for the year were $280,000,dividends declared was $22,700,and ending liabilities is $$350,000. What was the beginning equity for the year?

A) $700,160
B) $787,600
C) $187,600
D) $612,560
E) $175,040

F) A) and E)
G) D) and E)

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Question 43

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Expenses decrease retained earnings and are the costs incurred to earn revenues.

FastForward has the following beginning cash balance and cash transactions for the month of January.Using this information,prepare a statement of cash flows. $\begin{array}{|l|l|r|}\hline \text { a. } & \text { Beginning cash balance } & \$ 3,200 \\\hline \text { b. } & \text { Cash investment by stockholders } & 15,000 \\\hline \text { c. } & \text { Cash payment toward long-term loan } & 1,000 \\\hline \text { d. } & \text { Cash payment of rent } & 1,800 \\\hline \text { e. } & \text { Purchased equipment for cash } & 7,500 \\\hline \text { f. } & \text { Purchased store supplies for cash } & 1,500 \\\hline \text { g. } & \text { Cash collected from customers } & 7,750 \\\hline \text { h. } & \text { Cash dividends paid } & 2,000 \\\hline \text { i. } & \text { Cash payment of wages } & 4,000\\\hline\end{array}$

Accounts payable appear on which of the following statements?

. Classify the following activities according to the appropriate section of the statement of cash flows:

Identifying business activities requires selecting transactions and events relevant to an organization.Which of the following events would be recorded in the accounting records of Acme Car Wash?

At the beginning of the year,a company had $120,000 worth of liabilities.During the year,assets increased by $160,000,and at year-end they equaled $360,000.Liabilities decreased $20,000 during the year.Calculate the beginning and ending values of equity.

A company paid its landlord $15,000 cash for this month's rent.Enter the appropriate amounts for this transaction into the accounting equation format shown below: $\begin{array} { | c | c | c | } \hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \\\hline & & \\\hline\end{array}$

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

The financial statement that shows beginning and ending retained earnings balances and the effects of net income (loss) and a dividend for the period is the:

The objectivity principle:

According to the cost principle,it is preferable for managers to report the most current estimate of an asset's value.

The balance sheet shows whether or not the firm achieved its primary objective of earning a profit.

Beginning assets were $437,600,beginning liabilities were $262,560,common stock issued during the year totaled $45,000,revenue for the year was $414,250,expenses for the year were $280,000,dividends declared was $22,700,and ending liabilities is $$350,000. What is the ending equity for the year?

The International Accounting Standards Board (IASB)

Explain the role of accounting in the information age.

Owner financing refers to resources contributed by creditors or lenders.

Match each of the following transactions and events to the accounting principle applicable to recording and reporting them:

How do revenues and expenses affect net income?