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Exam 1: An Introduction to Accounting

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Question 101

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Ramirez Company experienced the following events during Year 1:Acquired $50,000 cash by issuing common stockBorrowed $25,000 cash from a creditorProvided services to customers for $38,000 cashPaid $32,000 cash for operating expensesPaid a cash dividend of $2,500 to stockholdersPurchased land with cash, $30,000Required:Show how each of these events affects the accounting equation. Enter NA for items not affected. The first event is done as an example.Calculate the total amount of assets, liabilities, common stock, and retained earnings at the end of the period.

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Question 102

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Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $3,600 cash from issuing common stock.2) Borrowed $2,500 from a bank.3) Earned $3,400 of revenues.4) Incurred $2,460 in expenses.5) Paid dividends of $460.Lexington Company engaged in the following transactions during Year 2:1) Acquired an additional $800 cash from the issue of common stock.2) Repaid $1,510 of its debt to the bank.3) Earned revenues, $4,800.4) Incurred expenses of $2,870.5) Paid dividends of $1,000. The amount of total assets on Lexington's balance sheet at the end of Year 1 was:

A) $1,100.
B) $6,840.
C) $6,580.
D) $3,860.

E) B) and C)
F) All of the above

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Question 103

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Which of the following is an accurate definition of the term "asset?"

Wing Company paid $20,000 cash in salaries to its employees. Which of the following shows the impact of this transaction on Wing's accounting equation? $\begin{array}{ccccc} \text { Assets} &=& \text { Liabilities} & + \text { stockholcers }{ }^{\prime} \text { equity } \\\end{array}$ A. $\begin{array}{llcc}&+/-&&&& \text {n/a }&&&&&& \text {n/a } \\\end{array}$ B. $\begin{array}{llcc}&+&&&&& \text {n/a } &&&&&&&+ \\\end{array}$ C. $\begin{array}{llcc} &-& &&&& \text { n/a } &&&&&&&-\\\end{array}$ D. $\begin{array}{llcc}&+&&&&&&+&&&&&&& \text {n/a } \\\end{array}$

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $48,0002) borrowed $29,000 from its bank3) provided consulting services for $47,000 cash4) paid back $19,000 of the bank loan5) paid rent expense for $11,0006) purchased equipment for $16,000 cash7) paid $3,400 dividends to stockholders8) paid employees' salaries of $25,000 What is Yowell's notes payable balance at the end of Year 1?

Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = I Decrease = D Not Affected = NAPerez Company paid $220,000 cash in salaries to its employees. $\quad$ $\quad$ $\quad$ $\quad$$\text { Balance Sheet }$ $\text { Assets }=\text { Liabilities }+\quad \text { Stockholders' Ecuity }$

Which of the following is false regarding managerial accounting information?

Which of the following could represent the effects of an asset source transaction on a company's financial statements?

At the end of Year 2, retained earnings for the Baker Company was $2,650. Revenue earned by the company in Year 2 was $2,900, expenses paid during the period were $1,550, and dividends paid during the period were $950. Based on this information alone, what was the amount of retained earnings at the beginning of Year 2?

Borrowing cash from the bank is an example of which type of transaction?

Wyatt Company was formed on January 1, Year 1, when it acquired $50,000 cash from issuing common stock. Which of the following shows the impact of this transaction on Wyatt's accounting equation? $\begin{array}{ccccc} \text { Assets} &=& \text { Liabilities} & + \text { stockholcers }{ }^{\prime} \text { equity } \\\end{array}$ A. $\begin{array}{llcc}&+/-&&&& \text {n/a }&&&&&& \text {n/a } \\\end{array}$ B. $\begin{array}{llcc}&+&&&&& \text {n/a } &&&&&&&+ \\\end{array}$ C. $\begin{array}{llcc} &-& &&&& \text { n/a } &&&&&&&-\\\end{array}$ D. $\begin{array}{llcc}&+&&&&&&+&&&&&&& \text {n/a } \\\end{array}$

Delta Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Delta's statements?

Which resource providers lend financial resources to a business with the expectation of repayment with interest?

Fill in the blanks indicated by the alphabetic letters in the following financial statements. These financial statements were prepared for the company's first year of operations, and all transactions were for cash.

Indicate whether each of the following statements about the types of transactions is true or false.An asset source transaction increases total assets and increases claims to assets.The issuance of stock to stockholders for cash would be an example of an asset exchange transaction.Purchasing equipment for cash is an example of an asset use transaction.Paying a dividend to stockholders is an example of an asset use transaction.Making a payment on a bank loan is an example of an asset exchange transaction.

Jackson Company paid $500 cash for salary expenses. Which of the following choices accurately reflects how this event affects the company's financial statements?

Northern Corporation invested $800 cash in South Company stock.As a result of this transaction:

If total assets decrease, then which of the following statements is true?

The following events occurred for Ringgold Company during Year 1, its first year of operations:Issued stock to investors for $45,000 cashBorrowed $25,000 cash from the local bankProvided services to its customers and received $32,000 cashPaid expenses of $28,000Paid $22,000 cash for landPaid dividend of $12,000 to stockholdersRepaid $10,000 of the loan listed in item 2Required:Show the effects of the above transactions on the accounting equation, below. Include dollar amounts of increases and decreases. Enter NA for items not affected. If one section is affected by an increase and also a decrease, enter each part on a separate line.The first event is done for you. After entering all the events, calculate the total amounts of assets, liabilities, and stockholders' equity at the end of the year. $\begin{array}{lrrrr}\text { Event number } & \text { Assets } & = & \text { Liabilities } & \text { SH Equity } \\1 . & 45,000 && \text { NA } & 45,000\\2.\\3.\\4.\\5.\\6.\\7.\\\text{Total}\end{array}$

Which of the following financial statements provides information about a company as of a specific point in time?