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Exam 1: Introducing Financial Accounting

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Question 131

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The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

A) Cash was received from providing services to a customer.
B) Cash was received in exchange for common stock.
C) Equipment was purchased on credit.
D) Supplies were purchased for cash.
E) Advertising expense for the month was paid in cash.

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

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Question 132

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Match each of the following items 1 through 8 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement. a. Income statement b. Statement of retained earnings c. Balance sheet d. Statement of cash flows _____ 1. Assets. _____ 2. Dividends. _____ 3. Revenues. _____ 4. Cash from investing activities. _____ 5. Expenses. _____ 6. Liabilities. _____ 7. Cash from operating activities. _____ 8. Cash from financing activities.

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1. C; 2. B...

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Question 133

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Cragmont has beginning equity of $277,000, net income of $63,000, dividends of $25,000, and no additional investments by stockholders during the period. Its ending equity is:

Risk is:

The primary objective of financial accounting is to:

A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

The Superior Company acquired a building for $500,000. The building was appraised at a value of $575,000. The seller had paid $300,000 for the building 6 years ago. Which accounting principle would require Superior to record the building on its records at $500,000?

The records of Roadmaster Auto Rentals, Inc. show the following information as of December 31. The owner, Rob Fletcher, the sole stockholder, received a dividend of $52,000 during the year. Prepare a December income statement, a December statement of retained earnings, and a December 30 balance sheet.

Explain the accounting equation and define its terms.

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of stockholders' equity as of August 31 of the current year?

Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice.

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

From the information given below, prepare a November income statement, a November statement of retained earnings, and a November 30 balance sheet. On November 1 of the current year, Victoria Garza began Garza Décor, Inc. with an initial investment of $50,000 cash. On November 30, her records showed the following (alphabetically arranged) items and amounts.

Internal users include lenders, shareholders, brokers and managers.

The ______________ assumption assumes business will continue operating indefinitely instead of being closed or sold.

Internal operating activities include research and development, distribution, and human resources.

An accounting information system communicates data to help users make better decisions.

All of the following are classified as liabilities except: