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Exam 1: Introducing Accounting in Business

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Question 41

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Fees earned (but not yet received in cash) by a business in exchange for services that it has provided appear on which of the following statements?

A) Balance sheet
B) Statement of Cash Received
C) Statement of retained earnings
D) Statement of cash flows
E) Schedule of Accounts Receivable

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

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Question 42

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Discuss the relationship of risk to return.

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Net income is related to return.Risk is ...

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Question 43

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Annie's Attic has the following account balances for the dates given: $\begin{array} { | l | r | r | } \hline &{ \text { September } 1 } & \text { September 30 } \\\hline \text { Cash } & \$ 40,000 & 60,000 \\\hline \text { Accounts Receivable } & 40,000 & 38,000 \\\hline \text { Accounts Payable } & 6,000 & ? \\\hline\end{array}$ Its net income for September 1 through September 31 was $20,000 and there were no investments by the owners or dividends paid.Determine the equity at both September 1 and September 30.

______________ is the area of accounting aimed at serving external users.

Owner financing refers to resources contributed by creditors or lenders.

Beginning Assets were $437,600,Beginning Liabilities were $262,560,Common Stock sold 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?

The income statement reports on operating activities at a specific point in time.

Planning refers to defining an organization's ideas,goals and actions.

You are reviewing the accounting records of Cathy's Antiques,Inc.owned by Cathy Miller.You have uncovered the following situations.Compose a memo to Ms.Miller that cites the appropriate accounting principle and the suggested action for each separate situation. In August,a check for $500 was written to Wee Day Care Center.This amount represents child care for her son Brandon. Cathy plans a Going out of Business Sale for May,since she will be closing her business for a month-long vacation in June.She plans to reopen July 1 and will continue operating Cathy's Antiques indefinitely. Cathy received a shipment of pine furniture from Quebec,Canada.The invoice was stated in Canadian dollars. Joseph Clark paid $1,500 for a dining table.The amount was recorded as revenue.The table will be delivered to Mr.Clark in six weeks.

Use the following information as of December 31 to determine equity. Liabilities…………………….$141,000 Cash………………………… 57,000 Equipment………………….. 206,000 Buildings…………………… 175,000

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

Revenue is properly recognized:

Net income is:

On December 15,2010,Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in 2011.Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2011 and not 2010?

Businesses can take all of the following forms except:

Match each of the following with the appropriate section of the Statement of Cash Flows

Dividends are expenses of a business.

From the information given,prepare a November statement of retained earnings. On November 1 of the current year,Lois Bell began Lois Bell,Interior Design as a corporation with an initial investment of $50,000 cash.On November 30 her records showed the following (alphabetically arranged)selected accounts and amounts: $\begin{array}{|l|r|l|r|}\hline \text { Accounts payable } & \$ 12,000 & \text { Office furnishings } & \$ 40,000 \\\hline \text { Accounts receivable } & 23,000 & \text { Dividends } & 6,000 \\\hline \text { Cash } & 17,200 & \text { Rent expense } & 3,600 \\\hline \text { Fees earned } & 30,000 & \text { Salaries expense } & 6,200 \\\hline \text { Notes payable } & 4,250 & \text { Telephone expense } & 250 \\\hline\end{array}$

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 purchased for $570,000.At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

The financial statement that describes where a company's cash came from and where it went during the period is the: