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Exam 1: An Introduction to Accounting

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Question 51

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

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a) False b) False c) True d) True e) Fal...

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Question 52

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Young Company provided services to a customer for $6,500 cash. As a result of this event,

A) total assets decreased.
B) total liabilities increased.
C) net income increased.
D) cash flow from financing activities increaseD.Providing services to a customer for cash increases assets and equity on the balance sheet. It also increases revenue, and therefore, net income on the income statement, and increases cash from operating activities on the statement of cash flows.

E) A) and D)
F) A) and B)

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Question 53

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Rosemont Company began operations on January 1, 2013, and on that date issued stock for $60,000 cash. In addition, Rosemont borrowed $50,000 cash from the local bank. The company provided services to its customers during 2013 and received $35,000. It purchased land for $70,000. During the year, it paid $10,000 cash for salaries and $9,000 cash for supplies that were used up in its operations. Stockholders were paid cash dividends of $8,000 during the year. Required: a) List the transactions from the information above (for example, issued common stock for $60,000) and indicate in which section of the statement of cash flows each transaction would be reported. b) What would the amount be for net cash flows from operating activities? c) What would be the amount of the total assets for the Rosemont Company at the end of 2013? d) What would the end-of-year balance be for the retained earnings account? e) What would the end-of-year balance be for the cash account?

Mineola Company paid $30,000 cash to purchase land. As a result of this business event,

As a result of this transaction,

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

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

Both liabilities and equity are sources of a business's assets.

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

What is Yi's net cash flow from investing activities?

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

Jarvis Company experienced the following events during 2012 (all were cash events): 1. issued a note 2. purchased land 3. provided services to customers 4. repaid part of the note in event 1 5. paid operating expenses 6. paid a dividend to stockholders 7. issued common stock Required: Indicate how each of these events affects the accounting equation by writing the letter I for increase, the letter D for decrease, and NA for no effect under each of the components of the accounting equation. The first is done for you as an example.

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 in operation, and all transactions were for cash.

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

Yang Company reported the following balance sheet for the end of 2012: During 2013, Yang reported the following transactions: • Repaid $8,000 to a local bank on a note payable • Provided services to clients for $26,400 cash • Paid operating expenses of $19,200 • Paid $3,500 cash dividends to stockholders Required: Prepare Yang Company's balance sheet as of December 31, 2013

During 2013, Wynona Company issued common stock to stockholders for $12,000, purchased land for $3,200 cash, and paid cash dividends of $1,000 to the company's owners. Enter each of these three events into the horizontal financial statements model, below. Indicate dollar amounts of increases and decreases. For cash flows, show whether they are operating activities (OA), investing activities (IA), or financing activities (FA).

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

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

The amount of liabilities on La Paz's 2013 balance sheet was

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