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Exam 1: An Introduction to Accounting

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Question 71

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Financial accounting information is usually less detailed than managerial accounting information.

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B) False

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Question 72

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What is meant by the term double-entry bookkeeping?

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All transactions affect the accounting e...

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Question 73

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The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $33,000; Liabilities = ?; Common Stock = $6,300; Revenue = $13,600; Dividends = $1,400; Beginning Retained Earnings = $4,400; Ending Retained Earnings = $8,300.Based on this information, the amount of expenses on Calloway's income statement was

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 = NANorth Company issued a note to purchase a building. $\quad$ $\quad$ $\quad$ $\quad$$\text { Balance Sheet }$ $\text { Assets }=\text { Liabilities }+\quad \text { Stockholders' Ecuity }$

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues cash. 4) Paid expenses of $250. 5) Paid a $50 dividend.During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750 cash. 4) Incurred expenses of $360. 5) Paid dividends of $100. What is the amount of Packard Company's net cash flow from financing activities for Year 2?

Pinehurst Company was formed in Year 1 and experienced the following accounting events during the year: Issued common stock for $15,000 cash.Earned cash revenue of $28,000.Paid cash expenses of $20,500. These were the only events that affected the company during the year. Required: Write the accounting equation and record the effects of each accounting event under the appropriate general ledger account heading. Enter 0 for items not affected.Prepare an income statement for Year 1 and a balance sheet as of December 31, Year 1.

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders 8) paid employees' salaries of $21,000 What is Yowell's net cash flow from operating activities?

On January 1, Year 2, Chavez Company had beginning balances as follows: $\begin{array}{ll}\text { Assets } & =\$ 12,500 \\\text { Liabilities } & =\$ 4,500 \\\text { Common Stock } & =\$ 3,000\end{array}$ During Year 2, Chavez paid dividends to its stockholders of $2,000. Given that ending retained earnings was $6,000, what was Chavez's net income for the Year 2?

Which of the following items would appear in the financing activities section of the statement of cash flows?

In a market, a company that manufactures cars would be referred to as a business.

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues cash. 4) Paid expenses of $250. 5) Paid a $50 dividend.During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750 cash. 4) Incurred expenses of $360. 5) Paid dividends of $100. What is the net cash inflow from operating activities on Packard's statement of cash flows for Year 2?

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,600 cash from the issue of common stock.2) Borrowed $1,070 from a bank.3) Earned $1,250 of revenues cash.4) Paid expenses of $380.5) Paid a $180 dividend.During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $975 of common stock.2) Repaid $675 of its debt to the bank.3) Earned revenues of $1,400 cash.4) Paid expenses of $620.5) Paid dividends of $230.What is the amount of total assets that will be reported on Packard's balance sheet at the end of Year 2?

Liabilities are shown on the:

Which of the following items would appear in the cash flow from financing activities section of a statement of cash flows?

The transactions listed below apply to Bates Company for its first year in business. Assume that all transactions involve the receipt or payment of cash.Transactions for Year 1:Issued common stock to investors for $25,000 cashBorrowed $18,000 from the local bankProvided services to customers for $28,000 cashPaid expenses amounting to $21,400Purchased a plot of land for $22,000 cashPaid a dividend of $15,000 to its stockholdersRepaid $12,000 of the loan listed in number 2 Required:Fill in the headings to the accounting equation shown below.Show the effects of the above transactions on the accounting equation.________ = ________ + ________Event Number

How does the payment of cash dividends to stockholders affect the accounting equation? Is it considered an asset source, asset use, or asset exchange transaction?

Indicate whether each of the following statements about retained earnings is true or false.A dividend paid to stockholders decreases retained earnings.Issuing common stock for cash increases retained earnings.The amount of net income for a period must equal retained earnings.The purchase of a truck decreases retained earnings.The amount of net income for a period increases retained earnings.

Perez Company paid a $300 cash dividend. Which of the following choices accurately reflects how this event affects the company's financial statements?

Young Company reported the following balance sheet for the end of Year 1: $\begin{array}{c}\text { Young Company }\\\text { Balance Sheet}\\\text { For the Year Ended December 31, Year 1}\\\begin{array}{lr}\text { Assets: }\\\\\text { Cash } & \$ 58,800 \\\text { Land } & \underline{ 25,500} \\\text { Total assets } & \underline{ \$ 84,300 }\\\text { Liabilities: }\\\\\text { Motes payable}&\\\text { stockholders' equity:}&\underline{\$18,000}\\\\\text { Common stock } & 50,000 \\\text { Retained earnings } & \underline{16,300} \\\text { Total stockholders' equity } & \underline{66,300 }\\\text { Total liabilities and stockholders' equity } & \underline{\$ 84,300}\end{array}\end{array}$ During Year 2, Young reported the following transactions:Repaid $9,000 to a local bank on a note payableProvided services to clients for $27,400 cashPaid operating expenses of $20,200Paid $4,500 cash dividends to stockholders Required: Prepare Young Company's balance sheet as of December 31, Year 2.

The types of resources needed by a business are financial, physical, and labor resources.