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Exam 1: An Introduction to Accounting

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Question 111

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Canton Company was formed in 2013 and experienced the following accounting events during the year: 1. issued common stock for $10,000 cash 2. earned cash revenue of $15,000 3. paid cash expenses of $13,000. These were the only events that affected the company during the year. Required: a) Write the accounting equation and record the effects of each accounting event under the appropriate general ledger account heading. b) Prepare an income statement for 2013 and a balance sheet as of December 31, 2013.

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Question 112

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A business's temporary accounts include revenues, expenses, and retained earnings.

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Question 113

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During 2013, Bledsoe Company earned $6,700 of cash revenue, paid cash dividends of $950 to owners and paid $5,000 for cash expenses. Liabilities were unchanged. Which of the following accurately describes the effect of these events on the elements of the company's financial statements?

The Ruiz Company began operations on January 1, 2013 and on that date issued $30,000 of common stock for cash. In addition, the company borrowed $20,000 from the bank. It provided services to its customers during 2013 and received $36,000 cash. During the year, it paid $40,000 cash for land, $10,000 for salaries, and $6,000 in cash dividends to the owners. Required: 1) Write an accounting equation and record the effects of each transaction under the appropriate heading. (Use specific accounting titles below the statement elements) 2) Prepare an income statement and a balance sheet for the 2013 accounting period.

The following transactions apply to the Grant Corporation for 2013, its first year in business. 1) Issued stock to investors, $24,000. 2) The company borrowed $21,000 cash from the bank. 3) Services were provided to customers and $24,000 cash was received. 4) The company loaned $5,000 to another company. 5) The company acquired land for $22,000. 6) The company paid $12,000 rent for the building where it does its business. 7) The company paid $1,600 for supplies that were used during the period. 8) The company sold the land acquired in item 5 for $22,000. 9) A dividend of $5,000 was made to the owners. 10) Repaid $10,000 of the loan described in item 2. Required: Prepare a statement of cash flows for 2013.

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000 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 Yi's net cash flow from investing activities?

Falcon Company earned $15,000 of cash revenue. Which of the following choices accurately reflects how this event affects the company's financial statements?

The accounting term "reliability" refers to information that is consistent from one accounting period to the next.

The year-end financial statements of Greenway Company contained the following elements and corresponding amounts: Assets = $20,000; Liabilities = ?; Common Stock = $5,000; Revenue = $11,000; Dividends = $750; Beginning Retained Earnings = $3,750; Ending Retained Earnings = $7,000. The amount of liabilities reported on the end-of-period balance sheet was

Varghese Company paid cash to purchase land. As a result of this accounting event

A business's temporary accounts include revenues, expenses, and retained earnings.

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.

Indicate how each of the following transactions affect assets by entering + for increase, - for decrease, or NA if total assets are not affected. _______ 1) Issued stock to investors. _______ 2) Borrowed cash from the bank. _______ 3) Provided services for cash. _______ 4) Purchased land for cash. _______ 5) Paid operating expenses. _______ 6) Paid cash dividend to the stockholders. _______ 7) Repaid the bank loan.

At the beginning of 2012, Gratiot Company's accounting records had the general ledger accounts and balances shown in the table below. During 2012, the following transactions occurred: 1. received $95,000 cash for providing services to customers 2. paid salaries expense, $50,000 3. purchased land for $12,000 cash 4. paid $4,000 on note payable 5. paid operating expenses, $22,000 6. paid cash dividend, $2,500 Required: a) Record the transactions in the appropriate general ledger accounts. Record the amounts of revenue, expense, and dividends in the retained earnings column. Provide appropriate titles for these accounts in the last column of the table. b) What is the amount of total assets as of December 31, 2012? c) What is the amount of total stockholders' equity as of December 31, 2012?

La Paz Company engaged in the following transactions during 2012, its first year in operation: (Assume all transactions are cash transactions) 1) Acquired $3,000 cash from issuing common stock. 2) Borrowed $2,200 from a bank. 3) Earned $3,100 of revenues. 4) Incurred $2,400 in expenses. 5) Paid dividends of $400. La Paz Company engaged in the following transactions during 2013: 1) Acquired an additional $500 cash from the issue of common stock. 2) Repaid $1,300 of its debt to the bank. 3) Earned revenues, $4,500. 4) Incurred expenses of $2,750. 5) Paid dividends of $640. The net cash flow from financing activities on La Paz's 2013 statement of cash flows was

Classify each of the following events as an asset source (AS), asset use (AU), asset exchange (AX), or not applicable (NA). _______ 1) Borrowed cash from the bank. _______ 2) Issued stock for cash. _______ 3) Invested cash in the common stock of another company. _______ 4) Paid cash for operating expense. _______ 5) Performed services and collected cash. _______ 6) Purchased equipment for cash. _______ 7) Repaid the bank loan with cash. _______ 8) Dividends paid to the stockholders.

If a company's total assets decreased while liabilities and common stock were unchanged, and no dividends were paid, then

As of December 31, 2012, Montross Company had $400 cash. During 2013, Montross earned $1,200 of cash revenue and paid $800 of cash expenses. The amount of cash shown on the 2013 balance sheet would be

Flagstone Company was founded on January 1, 2013. During 2013, the company experienced the following events: 1. earned cash revenue of $25,000 2. paid cash expenses of $20,500 3. issued common stock for $15,000 cash 4. paid cash dividend of $1,000 to owners. Required: a) Write an accounting equation and record effects of each accounting event under appropriate general ledger account headings, showing dollar amounts of increases and decreases and totals at the end of the year. b) Prepare the 2013 income statement and balance sheet for Flagstone Company.

During 2013, Saranac Company earned $12,000 of cash revenue and paid $8,200 of cash expenses and $600 in dividends 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).