RETL 261 Chapter 1 Homework 1

Identify each of the following items as assets, liabilities, or equity from the drop down provided. 1. Land 2. Wages Payable 3. Equipment 4. Accounts Payable 5. Accounts Receivable 6. Supplies

1. Assets 2. Liabilities 3. Assets 4. Liabilities 5. Assets 6. Assets

Identify each of the following items as revenues, expenses, or withdrawals from the drop down provided. 1. Utilities Expense 2. Service Revenue 3. Wages Expense 4. Owner Withdrawal 5. Rent Expense 6. Rental Revenue 7. Insurance Expense 8. Consulting Revenue

1. Expenses 2. Revenues 3. Expenses 4. Withdrawals 5. Expenses 6. Revenues 7. Expenses 8. Revenues

Identify the following questions as most likely to be asked by an Internal user or an External user of accounting information. 1. Which inventory items are out of stock? 2. Should we make a 5-year loan to that business? 3. What are the costs of our product's ingredients? 4. Should we buy, hold, or sell a company's stock? 5. Should we spend additional money for redesign of our product? 6. Which firm reports the highest sales and income? 7. What are the costs of our service to customers?

1. Internal User 2. External User 3. Internal User 4. External User 5. Internal User 6. External User 7. Internal User

Identify the following users as either an Internal user or an External user. 1. Research and Development Executive 2. Human Resources Executive 3. Politician 4. Shareholder 4. Distribution Manager 6. Creditor 7. Production Supervisor 8. Purchasing Manager

1. Internal User 2. Internal User 3. External User 4. External User 5. Internal User 6. External User 7. Internal User 8. Internal User

Identify the accounting principle or assumption that best reflects each situation. 1. A company reports details behind financial statements that would impact users' decisions. 2. Financial statements reflect the assumption that the business continues operating. 3. A company records the expenses incurred to generate the revenues reported. 4. Each business is accounted for separately from its owner or owners. 5. Revenue is recorded when products and services are delivered. 6. Information is based on actual costs incurred in transactions.

1. Full Disclosure Principle 2. Going-Concern Assumption 3. Expense Recognition (matching) principle 4. Business Entity Assumption 5. Revenue Recognition Principle 6. Measurement (cost) principle

Determine whether each of the following accounting duties mainly involves financial accounting, managerial accounting, or tax accounting. 1. Internal Auditing 2. External Auditing 3. Cost Accounting 4. Budgeting 5. Enforcing tax laws 6. Planning transactions to minimize taxes 7. Preparing external financial statements 8. Analyzing external financial reports

1. Managerial Accounting 2. Financial Accounting 3. Managerial Accounting 4. Managerial Accounting 5. Tax Accounting 6. Tax Accounting 7. Financial Accounting 8. Financial Accounting

Identify the accounting principle or assumption that best explains each situation. 1. In December of this year, Chavez Landscaping received a customer's order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. Chavez should record the revenue from the customer order in March of next year, not in December of this year. 2. If $51,000 cash is paid to buy land, the land is reported on the buyer's balance sheet at $51,000. 3. Mike Derr owns both Sailing Passions and Dockside Digs. In preparing financial statements for Dockside Digs, Mike makes sure that the expense transactions of Sailing Passions are kept separate from Dockside Digs's transactions and financial statements.

1. Revenue Recognition Principle 2. Measurement (cost) principle 3. Business Entity Principle

Identify the following users as either External users or Internal users.

External Users: Customers Suppliers External Auditors Business Press District Attorney Shareholders Lenders FBI & IRS Consumer Group Voters Internal Users: managers controllers

Complete the following table with either a yes or no regarding the attributes of a proprietorship, partnership, corporation, and limited liability company (LLC). Attribute Present: 1. Business Taxed 2. Limited Liability 3. Legal Entity

Proprietorship: 1. No 2. No 3. No Partnership: 1. No 2. No 3. No Corporation: 1. Yes 2. Yes 3. Yes LLC: 1. No 2. Yes 3. Yes

Determine whether each description best refers to a sole proprietorship, partnership, corporation, or LLC. 1. Micah & Nancy own Financial Services, which pays a business inc. tax. Micah & Nancy don't have personal responsibility for the debts of Financial Services. 2. Riley & Kay own Speedy Packages, a courier service. Both are liable for the debts of the business. 3. IBC Services does not have separate legal existence apart from the 1 person who owns it. 4. Trent Company is owned by Trent Malone, who is liable for the company's debts. 5. Ownership of Zander Company is divided into 1,000 shares of stock. The company pays a business inc. tax. 6. Physio Products does not pay a business inc. tax & has 1 owner. The owner has unlimited liability for business debt. 7. AJ Company pays a business inc. tax and has two owners. 8. Jeffy Auto is a separate legal entity from its owner, & doesn't pay a business inc. tax.

1. Corporation 2. Partnership 3. Sole Proprietorship 4. Sole Proprietorship 5. Corporation 6. Sole Proprietorship 7. Corporation 8. Limited Liability Company