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Exam 1: Accounting in Action

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Question 61

Multiple Choice

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Financial information that is capable of making a difference in a decision is

A) faithfully representative.
B) relevant.
C) convergent.
D) generally accepted.

E) A) and D)
F) A) and C)

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Question 62

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For each of the following, indicate whether the transaction increased (+), decreased (-), or had no effect (NE) on assets, liabilities, and stockholders' equity using the following format. Assets = Liabilities + Stockholders' Equity 1. Issued stock in exchange for cash. 2. Billed customers for services performed. 3. Purchased equipment on account. 4. Paid dividends. 5. Paid for equipment purchased in 3. above.

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Question 63

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As of June 30, 2018, Actual Tigers Company has assets of $100,000 and stockholders' equity of $40,000. What are the liabilities for Actual Tigers Company as of June 30, 2018?

If supplies that have been purchased are used in the course of business, then

Financial statements are the major means of communicating accounting information to interested parties.

Fat Possum's Service Shop started the year with total assets of $330,000 and total liabilities of $240,000. During the year, the business recorded $630,000 in revenues, $420,000 in expenses, and paid dividends of $60,000. Stockholders' equity at the end of the year was

The historical cost principle requires that when assets are acquired, they be recorded at

The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities.

In the retained earnings statement, revenues are listed first, followed by expenses, and net income (or net loss).

Liabilities of a company are owed to

Match the items below by entering the appropriate code letter in the space provided. A. CPA B. Budgeting C. SEC D. Proprietorship E. Economic entity assumption F. Corporation G. Assets H. Equities I. Expenses J. Transaction 1. Activities of an entity must be kept separate from its owner's activities. 2. Consumed assets or services. 3. Ownership is limited to one person. 4. Offers expert accounting service to the general public. 5. Creditor and ownership claims against the assets of the business. 6. A separate legal entity under state laws. 7. Government agency that can mandate accounting rules. 8. Quantifying goals and objectives. 9. Future economic benefits. 10. Economic events recorded by accountants. Answers to Matching

Which of the following would not be considered an external user of accounting data for the GHI Company?

At the beginning of the year, Shaolin Company had total assets of $520,000 and total liabilities of $210,000. Answer the following questions viewing each situation as being independent of the others. (1) If total assets increased $200,000 during the year, and total liabilities decreased $75,000, what is the amount of stockholders' equity at the end of the year? (2) During the year, total liabilities increased $230,000 and stockholders' equity decreased $90,000. What is the amount of total assets at the end of the year? (3) If total assets decreased $40,000 and stockholders' equity increased $130,000 during the year, what is the amount of total liabilities at the end of the year?

Accountants rely on a fundamental business concept-ethical behavior-in reporting financial information.

The final step in solving an ethical dilemma is to

Financial accounting provides economic and financial information for all of the following except

Stahl Consulting started the year with total assets of $60,000 and total liabilities of $15,000. During the year, the business recorded $48,000 in catering revenues and $30,000 in expenses. Stahl issued stock of $9,000 and paid dividends of $15,000 during the year. Stockholders' equity changed by what amount from the beginning of the year to the end of the year?

The basic accounting equation states that Assets = Liabilities.

For each of the following, describe a transaction that will have the stated effect on the elements of the accounting equation. (a) Increase one asset and decrease another asset. (b) Increase an asset and increase a liability. (c) Decrease an asset and decrease a liability. (d) Increase an asset and increase stockholders' equity. (e) Increase one asset, decrease one asset, and increase a liability.

The mere recording of economic events is called ______________, and is just one part of the _______________ process.