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Exam 1: An Introduction to Accounting

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Question 21

Multiple Choice

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When a business provides services for cash,which elements of the accounting equation are affected?

A) Revenue and Expense
B) Cash and Revenue
C) Cash and Expense
D) Cash and Dividends

E) A) and C)
F) A) and B)

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Question 22

Multiple Choice

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Santa Fe Company was started on January 1,Year 1,when it acquired $9,000 cash by issuing common stock.During Year 1,the company earned cash revenues of $4,500,paid cash expenses of $3,750,and paid a cash dividend of $250.Which of the following is true based on this information?

A) The December 31,Year 1 balance sheet would show total equity of $8,750.
B) The Year 1 income statement would show net income of $500.
C) The Year 1 statement of cash flows would show net cash inflow from operating activities of $4,500.
D) The Year 1 statement of cash flows would show a net cash inflow from financing activities of $8,750.

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

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Question 23

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Liabilities are obligations of a business to relinquish assets,provide services,or accept other obligations.

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

Hazeltine Company issued common stock for $200,000 cash.What happened as a result of this event?

Li Company paid cash to purchase land.What happened as a result of this business event?

An asset source transaction increases a business's assets and the claims to assets.

The following information applies to the questions displayed below. 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 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment costing $12,000 7) paid $3,000 dividends to stockholders 8) paid employees' salaries, $21,000 -What is Yowell's ending notes payable balance?

At the end of Year 2,retained earnings for the Baker Company was $3,500.Revenue earned by the company in Year 2 was $1,500,expenses paid during the period were $800,and dividends paid during the period were $500.Based on this information alone,what was the amount of retained earnings at the beginning of Year 2?

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

The value created by a business is created by its assets.

Algonquin Company reported assets of $50,000,liabilities of $22,000 and common stock of $15,000.Based on this information only,what is the amount of the company's retained earnings?

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

The following information applies to the questions displayed below. 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 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment costing $12,000 7) paid $3,000 dividends to stockholders 8) paid employees' salaries, $21,000 -What is Yowell's net income?

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 the elements of Delta's statements?

Which of the following is an example of revenue?

Mayberry Company paid $30,000 cash to purchase land.What happened as a result of this business event?

Which of the following is a (are) permanent account(s) ?

Which financial statement matches asset increases from operating a business with asset decreases from operating the business?

Turner Company reported assets of $20,000 (including cash of $9,000) ,liabilities of $8,000,common stock of $7,000,and retained earnings of $5,000.Based on this information,what can be concluded?