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Exam 1: Introduction to Accounting and Business

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Question 41

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Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using cash that had been obtained from the sale of capital stock to Donnie Darnell. Which entity or entities (Darnell Company, Joseph Company, Donnie Darnell) should record the transaction involving the computer equipment on their accounting records?

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Darnell Co...

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Question 42

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The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles.

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Question 43

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A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

About 90% of the businesses in the United States are organized as corporations.

Net income and net profit do not mean the same thing.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.

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

Selected transaction data of a business for September are summarized below. Determine the following amounts for September: (a) total revenue, (b) total expenses, (c) net income.

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The retained earnings statement (RE) , the balance sheet (B) , and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

Which of the following groups are considered to be internal usersof accounting information?

Profit is the difference between

An account receivable is a claim against a customer arising from a sale on account.

Determine the missing amount "X" for each of the following: $\begin{array} { | l | l | l | } \hline \text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \\\hline \text { a. } \$ 78,500 & \$ 37,600 & \mathrm { X } \\\hline \text { b. } \mathrm { X } & \$ 53,280 & \$ 145,000 \\\hline \text { c. } \$ 49,500 & \mathrm { X } & \$ 34,000 \\\hline\end{array}$

Expenses are assets that are used up during the process of earning revenue.

The accounting equation can be expressed as Assets - Liabilities = Stockholders' Equity.

Earning revenue

Goods purchased on account for future use in the business, such as supplies, are called

Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

Match the following accounts to the financial statement where they can be found. (Hint: Some of the accounts can be found in more than one financial statement.) A. Balance Sheet B. Income Statement C. Statement of Cash Flows D. Retained Earnings Statement $\begin{array} { | l | l | } \hline \# & \text { Account } \\\hline 1 . & \text { Dividends } \\\hline 2 . & \text { Revenues } \\\hline 3 . & \text { Supplies } \\\hline 4 . & \text { Land } \\\hline 5 . & \text { Accounts Payable } \\\hline 6 . & \text { Accounts Receivable } \\\hline 7 . & \text { Operating Activities } \\\hline 8 . & \text { Wages Expense } \\\hline 9 . & \text { Net Income } \\\hline 10 . & \text { Cash } \\\hline\end{array}$

The debt created by a business when it makes a purchase on account is referred to as an