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Exam 1: Introduction to Accounting and Business

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Question 1

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For each of the following companies, identify whether it is a service, merchandising, or manufacturing business. $\begin{array} { | l | l | } \hline \text { A. } & \text { Dillards } \\\hline B . & \text { Time Warner Cable } \\\hline C . & \text { General Motors } \\\hline D . & \text { Netflix } \\\hline E . & \text { Stanley Steemer } \\\hline F . & \text { Sony } \\\hline G . & \text { Best Buy } \\\hline H . & \text { Banana Republic } \\\hline \text { I. } & \text { H \& R Block } \\\hline\end{array}$

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Question 2

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The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

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B) False

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If the liabilities owed by a business total $300,000 and stockholder's equity is equal to $300,000, then the assets also total $300,000.

At December 31, 2011, Martin Consultants has assets of $430,000 and liabilities of $205,000. Using the accounting equation and considering each case independently, determine the following: a. Total Stockholders' Equity as of December 31, 2011. b. Total Stockholders' Equity as of December 31, 2012, assuming that assets increased by $12,000 and liabilities increased by $15,000 in 2012. c. Total Stockholders' Equity as of December 31, 2012, assuming that assets decreased by $8,000 and liabilities increased by $14,000 during 2012.

The year-end balance of the retained earnings account appears in

Indicate whether each of the following represents an asset, liability, or stockholder's equity item.

Identify each of the following as either internal or external users of accounting information. $\begin{array} { | l | l | } \hline \text { A. } & \text { Payroll Manager } \\\hline \text { B. } & \text { Bank } \\\hline \text { C. } & \text { President's Secretary } \\\hline \text { D. } & \text { Internal Revenue Service } \\\hline \text { E. } & \text { Raw Material Vendors } \\\hline \text { F. } & \text { Social Security Administration } \\\hline G . & \text { Health Insurance Provider } \\\hline H . & \text { Managerial Accountant } \\\hline\end{array}$

List the five steps in the process by which accounting provides information to users.

On May 7, Carpet Barn Company offered to pay $83,000 for land that had a selling price of $105,000. On May 15, Carpet Barn accepted a counteroffer of $95,000. On June 5, the land was assessed at a value of $115,000 for property tax purposes. On December 10, Carpet Barn Company was offered $135,000 for the land by another company. At what value should the land be recorded in Carpet Barn Company's 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.

The initials GAAP stand for

Expenses are recorded when

How does receiving a bill to be paid next month for services received affect the accounting equation?

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the company paid $55,000 in cash dividends and issued an additional $33,000 of capital stock. Calculate the net income for the year.

Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity, an investing activity, a financing activity, or not at all.

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)

Which of the following would not normally operate as a service business?

.Which of the following is true in regard to a Limited Liability Company?

All of the following statements regarding the ratio of liabilities to stockholders' equity are true except