Intro to Accounting Chp. 2

any financial event that changes the resources of the firm

A business transaction is:

liabilities at the beginning and end of the period

All of the following information is contained on the statment of owner's equity except: A) net income or net loss for the period B) oeners equity at the beginning and end of the period C) withdrawals and additional investments for the period D) liabilities at the beginning and end of the period

Accounts Payable

Amounts that a business must pay in the. future are known as?

The payment of $1,200 to a creditor on account

Describe a transaction that will cause Accounts Receivable to decrease and Cash to increase by $2,800.

Equipment increase of 6,700$ and Accounts Payable increase of 6,700$

Elizabeth Tolliver purchased a computer fofr 6,700$ on account for her business. What is the effect of this transaction?

$75,000

Home interiors has assets of $120,000 and liabilities of $45,000. hwat is the owner's equity?

total assets will remain the same

If a business issues a check for 100$ to purchase office supplies, what is the effect on the accounting equation?

This is an additional investment by the owner recorded at the cost of the tools to the owner

If an owner gives personal tools to the business, how is the transaction recorded?

$7,000

If assests are 17,000 and owners equity is 10,000, liabilities are?

The opposite side of the accountin equation will decrease because a decrease in assest results in a corresponding decrese in either a liability or the owners equity

If one side of the fundamental accounting equation increases, what will hapen to the other side? Why?

The income statment is prepared first because the net income or loss is needed to complete the statment of owner's equity. The staement of owner's equity is prepared next to update the change in owner's equity. The balance sheet is prepared last.

In what order are th efinancial statements prepared? Why?

100,000

Pauline Palmer began a new business by depositing $100,000 in the business account. Shew rote two checks from the business account: $20,000 for office furniture and $5,000 for office supplies. What is her financial interst in the company?

Beginning capitol + net income - withdrawals + additioal investments = ending capitol

The Statement of Owners Equity is calculated as follows?

firm's address

The balance sheet heading includes each of the following except? A) title of the report B) date of the report C) firms address D) firms name

the income statement

The financial statment that is prepared first is?

the amount of net income or net loss

The income statement shows?

$40,000 decrease

U Fix It hardware had revenues of $105,000 and expenses of $60,000. How does this affect owner's equity?

decrease the owners equity in the business

What affect do withdrawals have on the basic account equation?

Revenue increases owner's equity. Expenses decrease owner's equity

What effect dies revenue and expenses have on owner's equity?

revenues and expenses for a period of time

What information is contained in the income statement?

assets, liabilities, and owner's equity on a specific date

What information is contained on the balance sheet?

the firms name (who), title of the statement (what), time period covered (when)

What information is included in the financial statement headings?

Buying for cash results in an immediate decrease in cash, buying on account results in a liability recored as accoutns payable

What is the difference between buying for cash and buying on account?

increase

When a business pays cash for salaries, assets decrease and expenses?

determine the location of the property

When analyzing the effect of a business transaction, which of the following isnot a step taken to describe the finanacial event?

assets and owners equity increase

When the owner invests equipment in a business?

assets decrease and owners equity decreases

When the owner withdraws cash for personal use?

Balance Sheet

Which financial statement is reported as of a specific date?

accounts payable

Which of the following is a liability account?

The payemnt of the monthly utility bill

Which of the following is an example of an expense?

it is in balance after every transaction

Which of the following satements regarding the fundamental accounting equation is accurate?

a sale of merchandise on credit

Which transaction below increases an asset and the owners equity?