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    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2

Russell 's Consulting Services provided $1,000 of services to the local college and immediately. collected $700,
but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:
 
increasing both Cash and Accounts Receivable; and increasing Revenues
   
ABC Co. performs $200 of services for a customer but does not get paid right away. Demonstrate how ABC Co. would record this transaction
in the accounting equation by completing the following sentence. Note: enter one answer for each blank.
 
ABC Co. would increase the Accounts (Payable/ Receivable) _______________ account and increase the
(Cash/ Revenue) ______________ account in the accounting equation.
 
Receivable; Revenue
   
Match each item on the left with its correct definition on the right.


 

   
Melton's Door Company pays rent on the building facilities of $5,000 on May 1. Show how to record this transaction in the accounting equation.
 
Rent Expense will be increased.
   
Which statements below define equity? (Check all that apply)
 
Claims of the owner(s) on the assets of the business.

It is the accumulated revenues and owner's investments less the accumulated expenses
and withdrawals since the company began

Equity is equal to assets minus liabilities.
   
When using the accounting equation, recording the purchase of equipment for cash would include an
increase to the ______________  (Cash/ Equipment/Supplies) account and a decrease to the
Cash (Cash/ Equipment/Supplies) account.
 
Equipment  
How would you characterize a company's Accounts Receivable account?
 
It is an asset account.
   
The expanded accounting equation is defined as:
Assets = Liabilities + Owner's Capital + Revenue - Expenses - Owner's Withdrawals.
Do not include "account" or "accounts" in your answer.
   
Which of the following statements is/ are true regarding the effect of revenues on the equity of a business?
(Check all that apply.)
 
Revenues cause owner's equity to increase.
Revenues that increase equity have many forms, such as consulting services and rental revenue.
   
Bob's Bakery receives its utility bill of $800 for the month and pays it immediately. Record this transaction in the accounting equation.
 
Increase Expenses and decrease Cash.
   
When recording transactions into the accounting equation, which of the following statements are correct? (Check a// that apply.)
 
The accounting equation must always remain in balance.
At least two accounts will be affected when recording a transaction.
After recording the transaction, total assets will always equal total liabilities plus owner's equity.
   
Owner investments cause a(n) (increase/decrease) increase in owner equity and are entered directly in the
Owner's _____________ (Capital/Withdrawals/Revenue) account.
 
Capital  
From the following statements, identify the correct definition of a liability.
 
A liability is an amount owed to a creditor.
   
When supplies are purchased on credit it means that: (Check all that apply.)
 
the Accounts Payable account will be increased.
the business will pay for the supplies at a later time.
a liability has been incurred.
   
On 6/ 25, supplies costing $1,000 were purchased, but only $400 of this amount was paid on 6/ 25.
The remainder of the bill went on account. To record this transaction on 6/ 25: Supplies
would be increased by $1,000 (1,000 / 400 / 600);
Cash would be decreased by $400 (1,000 / 400/ 600) and Accounts Payable would be
increased by $600 (1, 000 / 400/ 600)
 
Supplies costing $1,000 were purchased.
Only $400 was paid out in cash.
Accounts payable increased by $600 ($1,000-400)
   
Given the statements below, choose the most accurate definition of owner withdrawals.
 
Assets an owner takes from the business for personal use.
Cost of assets or services used to earn revenues.
Assets earned from a company's earning activities.
Resources owned or controlled by a company.
Cash or other assets an owner puts into the business.
   
The correct definition of revenues is Revenues increase (increase / decrease) equity (liabilities / equity)
and are the assets or monies earned from a company's earnings activities.
   
If a customer makes a partial payment of $100 on a service for which you have already billed him,
you would record this transaction into the accounting equation by
 
increasing Cash and decreasing Accounts Receivable
   
Which of the following statements represent(s) how expenses affect equity? (Check all that apply.)
 
Higher expenses result in lower total equity.
If expenses increase, then total equity decreases
   
Given the following list of accounts, identify which are classified as liabilities. (Check all that apply.Wages Payable
 
Notes Payable
Taxes Payable
Accounts Receivable
Owner's Capital
Cash
Owner's Withdrawals
Accounts Payable
   
Given the following lists of accounts, choose the one that contains only assets.
 
Cash, Building, Supplies, Accounts Receivable
   
An owner withdraws $60 cash for personal use. You would record this transaction in the accounting equation by decreasing
the (cash/ accounts payable/ accounts receivable) cash account and (increasing/decreasing) increasing the Withdrawals account.
 
Cash; increasing  
To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to
(Equipment / Supplies/ Cash) Supplies and a decrease to (Equipment/ Supplies/ Cash) Cash.
 
Supplies; Cash  
Given the statements below, choose the most accurate definition of owner investments.
 
Cash or other assets an owner puts into the business.
   
Each of the financial statements on the left are described on the right. Identify the description that goes with each financial statement
 

   
Describe the order in which a company prepares financial statements.
 
Income Statement
Statement of Owner's Equity
Balance Sheet
Statement of Cash Flows
   
Jack Pickle decided to start a small business. His initial investment was $4,000. Demonstrate how to record this transaction in
the accounting equation
 
Increase Cash by $4,000; Increase J. Pickle, Capital by $4,000
   
Net income is calculated using the following formula:
Revenues (expenses / revenues / assets) – expenses (expenses / revenues/ assets) = Net income.
Use one word for each blank
 
Revenues; expenses  
Identify the importance of accounting by selecting the statement(s) that is (are) correct below. (Check all that apply.)
 
Accounting information helps users make business and financial decisions.
Accounting is a system that identifies, records, and communicates financial information.
   
Which statement(s) below define(s) why accounting information is useful? (Check all that apply.)
 
It is essential to help make business decisions.
It records, summarizes and reports business transactions.
It is helpful in comparing the performance of one company against a competitor.
   
The correct definition of an income statement includes which of the following?
 
The statement describes a business's revenues and expenses over a period of time.
   
Buying and selling of long-term assets such as land and equipment would be included in the
(operating/investing/financing) investing activities section of the Statement of Cash Flows.
 
Investing
   
Match the definition on the left with its correct type of business activity on the right
 

   
The date line of a balance sheet depicts a specific day and not a period of time.
 
True
   
Ethics can be defined as: (Check all that apply)
 
beliefs that distinguish right from wrong.
accepted standards of good and bad behavior.
   
The four major types of transactions that affect equity in a business are revenues, expenses, owner's withdrawals, and owner's investments.
Note: enter one word for each blank. Do not use the word "account" or "accounts" in your answer.
 
Revenues; expenses
   
Select internal users of accounting information from the choices below. (Check all that apply.)
 
Officers
Managers
   
Users of accounting information can be divided into two main groups. These groups include:
 
internal and external
   
Identify the roles of the International Accounting Standards Board and IFRS. (Check all that apply.)
 
The IASB issues IFRS to increase comparability of accounting reports between companies in different countries.
The IASB and the FASB are trying to create a single set of accounting standards for global use.
The IASB issues IFRS that identify preferred accounting practices.
   
Identify the main sections on a statement of cash flows. (Check all that apply.)
 
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
   
Select the statement below which is true regarding risk as it pertains to business and accounting.
 
Risk is the uncertainty about the return we will earn.
   
The area of accounting that serves the needs of internal users is referred to as (managerial/financial) managerial accounting.
   
What is a shareholder or owner?
 
The person(s) who own(s) a business.
   
Identify some of the reasons why Congress passed the Sarbanes-Oxley Act. (Check all that apply.)
 
To help curb financial abuses at companies that issue their stock to the public.
To require public companies to apply both accounting oversight and stringent internal controls.
To improve the transparency, accountability and truthfulness in reporting transactions.
   
Bob's Bakery is making a partial payment of $70 for baking supplies it purchased in a previous month.
Record this transaction in the accounting equation of Bob's Bakery by decreasing the Accounts Payable
(Accounts Payable/ Accounts Receivable/ Supplies) account and decreasing the Cash (Cash/ Supplies) account.
   
Recall which of the following statements are true regarding U.S. GAAP and IFRS. (Check all that apply.)
 

   
Owner withdrawals cause a(n) (increase / decrease) decrease in owner's equity and are recorded directly in the
owner's (capital / withdrawal / equity) withdrawal account.
 
Decrease; withdrawal  
The Dodd-Frank Act was passed to: Select all that apply
 
protect the taxpayer.
promote accountability and transparency.
protect consumers.
   
Which of the following external users rely on a business's financial accounting information?
 
Regulators
   
Which of the statement(s) below define(s) an asset? (Check all that apply
 
An amount owned.
Controlled by the business.
Resources with future benefits.
   
Both U.S. GAAP and IFRS require the same four basic financial statements.
 
True
   
Other names for equity in a sole proprietorship include
 
owner's equity and owner's capital
   
An income statement reports a company's net income or net loss during a period.
Which of the following accounts would appear on an income statement? (Check all that apply.)
 
Wages Expense
Rent Expense
Service Revenue
Rent Revenue
   
The three factors that must exist for a person to commit fraud include opportunity, rationalization, and pressure.
 
Opportunity; rationalization
   
The correct definition of a balance sheet includes which of the following statements? (Check all that apply.)
 
The statement reports the financial position of a company at a point in time
The statement reports assets, liabilities and equity at a point in time.
The statement reports the equality of the accounting equation at any point in time.
   
In every financial statement, there exists single and double underlines.
Choose the statement below that describes what these are for and when to use them.
 
A single-ruled line denotes an addition or subtraction and double underlines indicate the final totals.
   
Identify the broad opportunity areas of accounting. (Check all that apply.)
 
Taxation
Managerial
Financial
   
A creditor:
 
Loans money or other resources to a business
   
The heading of every financial statement contains several line items. Identify the correct items from
the list below. (Check all that apply.)
 

   
Given that Jacob's Chocolates had owner investments of $4,000; net income during the period of $10,000;
and owner withdrawals of $300 calculate the ending balance in the Owner's Capital account.
 
$13,700
 
10,000 + 4,000 – 300 = 13,700
   
An internal user of accounting information is: (Check all that apply.)
 
a user who is directly involved in managing and operating an organization.
a marketing manager.
a human resource manager.
   
The statement of owner's equity explains changes in equity from net income (or loss) and from any owner _______ and ________
over a period of time. (Select the accounts below which will correctly complete this question.)
 
investments, withdrawals
   
Complete the following statement regarding risk analysis.
Higher risk implies higher, but riskier, expected (outcomes/ returns/ investment) _____________.
 
returns  
Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all
that apply.)
 
Accounts Payable
Cash
l.M. Greasy, Capital
Equipment
Supplies
   
Which of the following statements best represents the reason for the accounting equation?
 
The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.
   
Identify which of the following lists of accounts would belong on the statement of owner's equity.
 
Owner's Capital and Owner's Withdrawal
   
Which organization has the authority to create Generally Accepted Accounting Principles?
 
SEC
   
Which of the following correctly depicts the accounting equation?
 
Assets = Liabilities + Equity
   
Both U.S. GAAP and IFRS include similar guidance for accounting.
 
True
   
Match the statements on the left with whether they apply to private accounting, public accounting or both
 

   
What are Generally Accepted Accounting Principles?
 
They are the concepts and rules that govern financial accounting practice.
   
Select the statement that best defines "return" when used in business and accounting.
 
Return is the income received from an investment.
   
Return on assets is computed as Net Income divided by Total Assets.
 
True
   
What does a business need accounting information?
 
Accounting records business transactions & communicates financial information
   
Users who do not directly run the org & have limited access to accounting info are known as __________ users.
 
External
   
Managerial accounting is focused on the needs of
 
Internal users
   
Accounting opportunities:
Managerial
Taxation
Financial
   
Three factors that must exist for a person to commit fraud:
 
Opportunity
Pressure
Rationalization
   
Importance of accounting:
 
Accounting information helps users make business and financial decisions
   
Generally accepted accounting principles (GAAP) wants information to have:
 
Faithful representation
Relevance
   
Users of accounting info can divided into 2 main groups:
 
Internal & external
   
The FASB conceptual framework consists of all of the following:
 
Objectives
Qualitative characteristics
Elements
Recognition & measurement
   
Owner investments cause a(n) _______ in equity
 
Increase
   
The area of accounting that serves the decision-making needs of internal users is referred to as
(managerial/financial/research) ____ accounting.
 
Managerial
   
The principle which states that accounting information is based on actual cost is called the
 
Measurement principle
   
Broad opportunity areas of accounting:
 
Financial
Managerial
Taxation
   
An employee that has unpaid bills might exhibit the following fraud factor:
 
Pressure
   
The principle which says that revenue is recognized when goods or services are provided to customers at an amount
expected to be received from the customer is known as the
 
revenue recognition principle
   
What are Generally Accepted Accounting Principles?
 
The concepts and rules that govern financial accounting practice.
   
The principle which states that a company should record expenses it incurred in the same period as the revenue it generated is known as the
 
Expense recognition principle
   
Definition of an asset:
 
Something of value that a business owns or controls
   
Which of the following statements best represents the reason for the accounting equation?
 
The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.
   
Which of the following correctly depicts the accounting equation?
 
Assets = Liabilities + Equity
   
Another name for the expense recognition principle is:
 
Matching principle
   
Which of the following statements below lists the rules of entering transactions into the accounting equation?
 
Accounting equation must always remain in balance so that assets always equal sum of liabilities & equity
   
Which of the statement(s) below define(s) an asset?
 
A resource owned
Resources with future benefits
Resources controlled by the business
   
Which of the following statements explain(s) how the accounting equation applies to businesses?
 
The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.
   
Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted
of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by:
 
increasing Cash; increasing Common Stock
   
Accounts classified as liabilities
 
wages payable
notes payable
accounts payable
taxes payable
   
Which of the statements correctly represents the accounting equation?
 
What a business owns will always equal what it owes to creditors and owners.
   
Smith Company purchased $100 of supplies for her business and paid immediately. She would record this transaction
in the accounting equation by which of the following?
 
Decrease Cash; increase Supplies.
   
When using the accounting equation, recording the purchase of equipment for cash would include an increase to
the _______(Cash/Equipment/Supplies) account and a decrease to the _______ (Cash/Equipment/Supplies) account.
 
Equipment, cash
   
Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock.
Demonstrate how to record this transaction in the accounting equation.
 
Increase Cash by $4,000; Increase Common Stock by $4,000.
   
The Accounts Payable account is a(n) ______ account.
 
Liability
   
To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase
to ______(Equipment/Supplies/Cash) and a decrease to ______ (Equipment/Supplies/Cash).
 
Supplies, cash
   
Specific accounting principle
 
Usually created by a pronouncement from an authoritative body
 
On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation by:
 
increasing Supplies, and increasing Accounts Payable
   
Principle that requires a business to be accounted for separately from its owner(s) and from any other entity.
 
Business Entity Assumption
   
Accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users.
 
Full Disclosure Principle
   
Jackson Company purchased office equipment costing $3,000 for his business and paid immediately. Record this transaction
in the accounting equation by:
 
decreasing Cash; increasing Equipment
   
Russell's Consulting Services Company provided $1,000 of services to the local college and immediately collected $700, but
the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:
 
increasing both Cash and Accounts Receivable; and increasing Revenues
   
Johna's Plant Nursery Company pays the salaries of its two employees. How will this transaction affect the accounting equation?
 
Equity will be decreased.
Salaries expense will be increased.
   
From the following statements, select the one that describes the effect of dividends on equity.
 
Dividends cause equity to decrease.
   
On 6/25, supplies costing $1,000 were purchased, but only $400 of this amount was paid on 6/25. The remainder of the bill went on account.
To record this transaction on 6/25: Supplies would be increased by $_________ (1,000/400/600); Cash would be decreased by
$ _______(1,000/400/600) and Accounts Payable would be increased by $ ______(1,000/400/600).
 
1000; 400; 600
   
Dividends are resources paid to the stockholders.
 
True
   
Jackson's Catering Company provided cookies worth $3,000 to the local college. The college paid immediately. Record this transaction
in Jackson's accounting equation by:
 
increasing Cash; increasing Revenues
   
Jackson's Programming paid its June rent of $500 cash. Demonstrate how to use the accounting equation to record the transaction by
completing the following sentence. Jackson would decrease ______(expenses/cash/revenues) and increase ______(expenses/equity/revenues)
in the accounting equation
 
Cash, expenses
   
Melton's Door Company pays rent on the building facilities of $5,000 on May 1. Show how to record this transaction in the accounting
equation of Melton's Door Company.
 
Rent Expense will be increased.
   
Dividends cause a(n) _____(increase/decrease) in equity and are recorded directly in the _____(retained earnings/dividends/equity)
 
Decrease, dividends
   
Given the statements below, choose the most accurate definition of dividends.
 
Outflow of resources to stockholders.
   
Russell's Consulting Services Company provided $1,000 of services to the local college and immediately collected $700, but the
college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:
 
increasing both Cash and Accounts Receivable; and increasing Revenues
   
Johna's Plant Nursery Company pays the salaries of its two employees. How will this transaction affect the accounting equation?
Select all that apply.
 
Equity will be decreased.
Salaries expense will be increased.

    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2