Acc 201 Ch 2

If services are rendered for credit, then

stockholders' equity will increase.

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that

the SEC often mandates guidelines when no accounting principles exist.

If an individual asset is increased, then

there must be an equal decrease in another asset.

Communication of economic events is the part of the accounting process that involves

preparing accounting reports.

An income statement

presents the revenues and expenses for a specific period of time.

A small neighborhood barber shop that is operated by its owner would likely be organized as a

proprietorship.

The first step in solving an ethical dilemma is to

recognize an ethical situation and the ethical issues involved.

Retained earnings at the end of the period is equal to

retained earnings at the beginning of the period plus net income minus dividends.

If supplies that have been purchased are used in the course of business, then

stockholders' equity will decrease.

If total liabilities decreased by $25,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?

$10,000 decrease

The Duce Company has five plants nationwide that cost a total of $100 million. The current fair value of the plants is $500 million. The plants will be recorded and reported as assets at

$100 million.

Misra Company compiled the following financial information as of December 31, 2013: Revenues $170,000 Retained earnings (1/1/13) 30,000 Equipment 40,000 Expenses 125,000 Cash 45,000 Dividends 10,000 Supplies 5,000 Accounts payable 20,000 Accounts receivable 35,000 Common stock 40,000 Misra's stockholders' equity on December 31, 2011 is

$105,000.

Mofro's Computer Repair Shop started the year with total assets of $270,000 and total liabilities of $180,000. During the year, the business recorded $450,000 in computer repair revenues, $270,000 in expenses, and Mofro paid dividends of $45,000. Mofro's stockholders' equity changed by what amount from the beginning of the year to the end of the year?

$135,000.

During the year 2013, Dilego Company earned revenues of $45,000, had expenses of $28,000, purchased assets with a cost of $5,000 and paid dividends of $3,000. Net income for the year is

$17,000.

Mofro's Computer Repair Shop started the year with total assets of $270,000 and total liabilities of $180,000. During the year, the business recorded $450,000 in computer repair revenues, $270,000 in expenses, and Mofro paid dividends of $45,000. The net income reported by Mofro's Computer Repair Shop for the year was

$180,000.

Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $10,000 in expenses. Stahl issued stock of $3,000 and paid dividends of $5,000 during the year. The stockholders' equity at the end of the year was

$19,000.

If total liabilities increased by $15,000 and stockholders' equity increased by $10,000 during a period of time, then total assets must change by what amount and direction during that same period?

$25,000 increase

At October 1, Arcade Fire Enterprises reported stockholders' equity of $35,000. During October, common stock of $5,000 was issued and the company posted a net loss of $2,000. If stockholders' equity at October 31 totals $35,000, what amount of dividends were paid during the month?

$3,000

Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $10,000 in expenses. Stahl issued stock of $3,000 and paid dividends of $5,000 during the year. Stockholders' equity changed by what amount from the beginning of the year to the end of the year?

$4,000.

Kennedy Company issued stock to Ed Kennedy in exchange for his investment of $25,000 cash in the business. The company recorded revenues of $185,000, expenses of $140,000, and had paid dividends of $10,000. What was Kennedy's net income for the year?

$45,000.

Barsuk Company began the year with stockholders' equity of $217,000. During the year, Barsuk issued stock for $294,000, recorded expenses of $840,000, and paid dividends of $56,000. If Barsuk's ending stockholders' equity was $581,000, what was the company's revenue for the year?

$966,000.

At October 1, Arcade Fire Enterprises reported stockholders' equity of $36,000. During October, no stock was issued and the company posted a net loss of $4,000. If stockholders' equity at October 31 totals $32,000, what amount of dividends were paid during the month?

0$

Which of the following will not cause a change in the stockholders' equity of a business?

An increase in prepaid expenses.

If the transaction causes an asset account to decrease, which of the following related effects may occur?

An increase of equal amount in another asset account.

The basic accounting equation cannot be restated as

Assets + Liabilities = Stockholders' Equity.

All of the financial statements are for a period of time except the

Balance Sheet

Which of the following techniques are not used by accountants to interpret and report financial information?

Special memos for each class of external users.

The amount of stockholders' equity in a business is not affected by

The percentage of total assets held in cash.

Which of the following is true regarding the corporate form of business organization?

The revenues of corporations are greater than the combined revenues of partnerships and proprietorships.

Which of the following is not an advantage of the corporate form of business organization?

Unlimited personal liability for stockholders

All of the following are steps in analyzing ethics cases in financial reporting except

a. identify the alternatives and weigh the impact of each alternative on various stakeholders. b. contact law enforcement regarding any violations of corporate ethics codes c. recognize an ethical situation and the ethical issues involved. d. identify and analyze the principle elements in the situation. b

Sources of increases to stockholder's equity are

additional investments by owners.

Bright Eyes Downtown Diner received a bill of $600 from the Jronand Wine Advertising Agency. The owner, A. A. Bondy, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is

an increase in Accounts Payable and a decrease in Retained Earnings.

If total liabilities increased by $8,000, then

assets must have increased by $8,000, or stockholders' equity must have decreased by $8,000.

If expenses are paid in cash, then

assets will decrease.

Druganaut Company buys a $21,000 van on credit. The transaction will affect the

balance sheet only.

In order to increase comparability, in recent years, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

convergence

Martin Corporation purchased land in 2007 for $290,000. In 2013, it purchased a nearly identical parcel of land for $460,000. In its 2013 balance sheet, Martin valued these two parcels of land at a combined value of $920,000. By reporting the land in this manner, Martin Corp. has violated the

cost principle

Revenues would not result from

issuance of common stock.

Financial accounting provides economic and financial information for all of the following except

managers.

Matador Company purchases $1,300 of equipment from Danger Mouse Inc. for cash. The effect on the components of the basic accounting equation of Matador Company is

no change in total assets.

The body of theory underlying accounting is not based on

physical laws of nature.