510 Chapter 1 Homeowork

If a company is considering the purchase of a parcel of land that was acquired by the seller for $85,000, is offered for sale at $150,000, is assessed for tax purposes at $95,000, is considered by the purchaser as easily being worth $140,000, and is purchased for $137,000, the land should be recorded in the purchaser's books at:

$137,000.

If equity is $300,000 and liabilities are $192,000, then assets equal:

$492,000. Asset= liability + equity

A corporation is:

A business legally separate from its owners.

Assets created by selling goods and services on credit are:

Accounts receivable.

The accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:

Business entity assumption.

Indicate in which financial statement each item would most likely appear, by selecting income statement, balance sheet, or statement of cash flows from the drop down provided. Legal expense Postage expense Salaries expense Janatorial expense advertising expense

Income statement

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

One asset increases $1,300 and another asset decreases $1,300, causing no effect.

The primary objective of financial accounting is to:

Provide accounting information that serves external users.

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):

balance sheet

Indicate in which financial statement each item would most likely appear, by selecting income statement, balance sheet, or statement of cash flows from the drop down provided. supplies furniture

balance sheet

Identify each of the following items as revenues, expenses, or withdrawals from the drop down provided. advertising expense wages expense rent expense insurance expense

expenses

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

income statements

Creditors' claims on assets are called:

liabilities

Identify each of the following items as revenues, expenses, or withdrawals from the drop down provided. consulting revenue service revenue

revenues

Indicate in which financial statement each item would most likely appear, by selecting income statement, balance sheet, or statement of cash flows from the drop down provided. Net decrease (or increase) in cash

statement of cash flows

Identify each of the following items as revenues, expenses, or withdrawals from the drop down provided. owner withdrawl

withdrawls