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Exam 1: Accounting in Action

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Question 111

True/False

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External transactions involve economic events between the company and some other enterprise or party.

A) True
B) False

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Question 112

Multiple Choice

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The partnership form of business organization

A) is a separate legal entity.
B) is a common form of organization for service-type businesses.
C) enjoys an unlimited life.
D) has limited liability.

E) None of the above
F) C) and D)

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Question 113

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A proprietorship is a business

Owners' claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses.

A service proprietorship shows five transactions summarized below. The effect of each transaction on the accounting equation is shown, and also the new balance of each item in the equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.

All of the financial statements are for a period of time except the

Determine the missing amount for each of the following.

All of the following are advantages cost has over other valuations except that it

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

At September 1, the balance sheet accounts for Stanley's Restaurant were as follows: The following transactions occurred during the next two days: Stanley invested an additional $22,000 cash in the business. The accounts payable were paid in full. (No payment was made on the notes payable.) Instructions Prepare a balance sheet at September 3, 2009.

Accountants do not have to worry about issues of ethics.

Net income results when

Use the following information for questions 144-146. Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses. Stahl made an additional investment of $3,000 and withdrew cash of $5,000 during the year. -The net income reported by Stahl Consulting for the year was

Compute the missing amount in each category of the accounting equation.

Sources of increases to owner's equity are

Owner's equity is decreased by all of the following except

Selected transactions for Parton Company are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities, and owner's equity. Sample: Made initial cash investment in the business. The answer would be-Increase in assets and increase in owner's equity. 1. Paid monthly utility bill. 2. Purchased new display case for cash. 3. Paid cash for repair work on security system. 4. Billed customers for services performed. 5. Received cash from customers billed in 4. 6. Withdrew cash for owner's personal use. 7. Incurred advertising expenses on account. 8. Paid monthly rent. 9. Received cash from customers when service was rendered.

If total liabilities increased by $14,000 during a period of time and owner's equity decreased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

As of December 31, 2009, Sievers Company has assets of $35,000 and owner's equity of $20,000. What are the liabilities for Sievers Company as of December 31, 2009?

At October 1, Smithson Enterprises reported owner's equity of $35,000. During October, the owner made additional investments of $2,000 and the company earned net income of $6,000. If owner's equity at October 31 totals $40,000, what amount of owner drawings were made during the month?