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Exam 1: Introduction to Accounting and Business

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Question 1

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Shiny Kar Company had the following transactions.For each transaction,show the effect on the accounting equation by putting the amount and direction plus,minus,or NC for no change in each box of the table below.

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Question 2

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Gomez Service Company paid its first installment on a note payable in the amount of $2,000.How will this transaction affect the accounting equation?

A) increase liabilities Notes Payable and decrease assets Cash
B) decrease assets Cash and decrease stockholders' equity Note Payable Expense
C) decrease assets Cash and decrease assets Notes Receivable
D) decrease assets Cash and decrease liabilities Notes Payable

E) A) and B)
F) None of the above

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Question 3

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Identify each of the following as either internal or external users of accounting information.

Selected transactions completed by a corporation are described below.Indicate the effects of each transaction on assets,liabilities,and stockholders' equity by inserting "+" for increase and "−" for decrease in the appropriate columns at the right.If appropriate,you may insert more than one symbol in a column.

The objectivity concept requires that

The year-end balance of the retained earnings account appears in

The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below. The common stock was $120,000 and the retained earnings were $60,000 at April 1, the beginning of the current year. During the year, shareholders purchased an additional $25,000 in stock. -Prepare a statement of retained earnings for the current year ended March 31.

How does the purchase of equipment by signing a note affect the accounting equation?

Which of the items below is not a business entity?

Which of the following are guidelines for behaving ethically? I.Identify the consequences of a decision and its effect on others. II) Consider your obligations and responsibilities to those affected by the decision. III) Identify your decision based on personal standards of honesty and fairness.

The role of accounting is to provide many different users with financial information to make economic decisions.

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

Which of the following is not a business transaction?

The following are examples of external users of accounting information except

Discuss internal and external users of accounting information.What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

The accounting equation may be expressed as

If total liabilities decreased by $46,000 during a period of time and stockholder's equity increased by $60,000 during the same period,the amount and direction increase or decrease of the period's change in total assets is

The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.

Collins Landscape Company purchased various landscaping supplies on account to be used for landscape designs for its customers.How will this business transaction affect the accounting equation?

Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions.