The Accounting Equation

Doug John is the owner and operator of John's Janitorial Services. At the end of its accounting period, December 31, John's Janitorial Services has assets of $500,000 and liabilities of $275,000. Using the accounting equation, what is the owner's equity?

$225,000

Sam's Lawn Service incurred $500 labor expense and promised to pay the labor agency within 30 days. Which account increased?

Accounts payable

Steve's Supply Service received $1,000 cash from a customer which was owed to the business from the previous month. Which of the following accounts decreases?

Accounts receivable

Which of the following is correct?

Business owners and managers need financial information to make decisions.

A cost accountant, whose role is to advise the management on the most appropriate course of action based on the cost efficiency and capability, can take professional courses and receive which certification?

CMA (Certified Management Accountant)

Which is true about certified public accountants (CPAs)?

Certified public accountants (CPAs) must pass a written exam, complete a specific amount of work experience, and take ongoing continuing education classes. Private accountants can be certified public accountants (CPAs)

Which of the following are most likely to be users of managerial accounting information?

Company Managers

Faith West has a consulting business. She received $10,000 in cash from a client for services rendered. The effect of this transaction on the accounting equation is __________.

Increase assets and increase owner's equity

David Thomas made a cash purchase of $830 for office furniture in cash. This transaction would __________.

Increase one asset and decrease another asset

Who plans, organizes, and runs the business?

Internal users (insiders)

Marie opens a new business and on January 3, Marie contributes $10,000 in cash to capitalize her business. On January 4, Marie purchases $2,500 in equipment on account, payable in 30 days. On January 10, she purchases $6,000 worth of product and related supplies on account, payable in 30 days. On January 15, she pays her first month's rent of $2,500. On January 16, she collects $2,000 in cash in payment from the sale of product. Which of these transactions affect the liability account?

Marie purchases $6,000 worth of product

Which type of accountant typically spends the most time preparing and analyzing internal and external financial statements?

Private accountants

which type of accountant typically spends the most time preparing and analyzing internal and external financial statements?

Private accountants

Accounting is __________.

The process of keeping track of financial transactions and analyzing and processing financial information to make informed business decisions and communicate the financial position of a company.

Forensic accountants __________.

Utilize analytical and investigative skills to review financial records and operational structure

The left side of a T-account is called __________ and the right side of a T-account is called ___________, and the normal balance side of an account is______________.

debit/credit/the side that is increased

What financial statement could you use to determine the company's profitability and report expenses?

income Statement

External users (outsiders) include which of the following?

investors, creditors, taxing authorities, regulatory agencies, labor unions, customers, and economic planners outside the business

Who must follow government-mandated U.S. or international guidelines when recording, preparing, and reporting financial information?

publicly-traded companies