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Exam 1: Introduction to Accounting and Business

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Question 51

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A corporation is a business that is legally separate and distinct from its owners.

A) True
B) False

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Question 52

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The balance sheet represents the accounting equation.

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B) False

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Question 53

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Most businesses in the United States are

Donner Company is selling a piece of land adjacent to their business.An appraisal reported the market value of the land to be $120,000.The Focus Company initially offered to buy the land for $107,000.The companies settled on a purchase price of $115,000.On the same day,another piece of land on the same block was sold for $122,000.Under the cost concept,what is the amount that will be used to record this transaction in the accounting records?

At the end of its accounting period,December 31,2011,Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000.Using the accounting equation and considering each case independently,determine the following amounts. a.Hsu's liabilities as of December 31,2011. b.Hsu's liabilities as of December 31,2012,assuming that assets increased by $56,000 and stockholders' equity decreased by $32,000. c.Net income or net loss during 2012,assuming that as of December 31,2012,assets were $592,000,liabilities were $450,000,and there were no additional capital stock sales or dividends paid in 2012.

Which of the following group of companies are all examples of a merchandising 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 Balance Sheet at December 31,2014.

Assets are

The monetary value charged to customers for the performance of services or sales is called a(n)

Discuss internal and external users of accounting information.What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

Which of the following groups are considered to be internal usersof accounting information?

Which of the following is not a general-purpose financial statement?

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

Amos Moving Services' account balances at March 31,2014,the end of the current year,are listed below. The Retained Earnings balance was $180,000 at April 1,2013,the beginning of the current year. $\begin{array}{llll}\text { AccountsPayable } & \$ 2,000 & \text { Miscellaneous Expense } & \$ 1,030 \\\text { Accounts Receivable } & 10,340 & \text { Office Expense } & 1,240 \\\text { Cash } & 21,420 & \text { Sipplies } & 1,670 \\\text { FeesEarned } & 73,450 & \text { Wages Expense } & 23,550 \\\text { Land } & 47,000 & \text { Dividends } & 16,570 \\\text { Building } & 157,630 & \text { Capital Stock } & 25,000\end{array}$ Based on the data provided for Amos Moving Services,prepare an income statement for the current year ended March 31,2014.

The accounting equation can be expressed as Assets - Liabilities = Stockholders' Equity.

Company G has a ratio of liabilities to stockholders' equity of 0.12 and 0.28 for 2010 and 2011,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?

A business is an organization in which basic resources or inputs,like materials and labor,are assembled and processed to provide outputs in the form of goods or services to customers.

Which of the following is not a certification for accountants?

From the following list of accounts taken from Lamar's accounting records,identify those that would appear on the income statement.