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Exam 2: Analyzing Business Transactions

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Question 51

True/False

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When cash is paid to a creditor, the firm's liabilities decrease.

A) True
B) False

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Question 52

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When the owner writes a company check to pay the firm's electric bill,

A) assets and owner's equity increase.
B) assets decrease and expenses increase.
C) assets and liabilities decrease.
D) expenses increase and owner's equity increases.

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

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Question 53

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The owner's investment or equity in a business is called

When revenue and expenses are equal, the firm is said to ___________________.

On December 1, 2013, Geneva Jordan opened her new business with the following assets and liabilities. Complete the accounting equation for the firm. $\begin{array} { l r l r } \text { Accounts Payable } & \$ 1,100 & \text { Prepaid Rent } & \$ 6,000 \\\text { Cash } & 3,950 & \text { Loans Payable } & 15,500 \\\text { Equipment } & 26,200 & \text { Supplies } & 1,250\end{array}$ Assets $________ = Liabilities $________ + Owner's Equity $________

Which financial statement is reported as of a specific date?

The three-line heading of a financial statement shows who, what, and ___________________.

Amounts that a business must pay in the future are known as

The rent paid for future months is a(n)

The figure below shows the transactions for Sawyer Architecture Services during June. Greg Sawyer opened this business on June 1 with a capital investment of $72,000 (Transaction 1). $\begin{array}{|c|c|c|c|c|c|c|c|c|c|}\hline \text { Trans } & & \text { Assets } & & = & \text { Liab. } & &&{\text { Owner's Equity }} \\\hline & \text { Cash } & \text { Accts } & \text { Supp } & \text { Equip } & \text { Accts } & & \text { G. Sawyer, } & \text { Rev. } & \text { Expense } \\\hline & & \text { Rec } & & & \text { Pay } & & \text { Capital } & & \\\hline\\\hline 1 & +72,000 & & &&&&+72,000 \\\hline 2 & -8,200 & & & +8,200 \\\hline 3 & & 5,200 & & &&&&+5,200 \\\hline 4 & & & & +3,680 & +3,680 \\\hline 5 & -3,500 & &&&&& & &-3,500 \\\hline 6 & +670 & -670 & & & \\\hline 7 & -2,400 & & & &&&-,400 \\\hline 8 & -450 & & +450 & & \\\hline \text { Bal } & 58,120+ & 4,530+ & 450+ & 11,880= & 3,680 & + & 69,600+ & 5,200+ & -3,500 \\\hline\end{array}$ -Prepare the balance sheet for Sawyer Architecture Services as of June 30, 2013.