Accounting Chap 1

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

$108,000.

Use the following information for Meeker Corp. to determine the amount of equity to report. Cash $ 70,000 Buildings 125,000 Equipment 205,000 Liabilities 130,000

$270,000.

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of owner's equity as of August 31 of the current year?

$32,100.

All of the following are classified as liabilities except:

Accounts Receivable. Notes Payable. Wages Payable. Accounts Payable. Taxes Payable.

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

Advertising expense for the month was paid in cash.

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Assets increase $12,000 and equity increases $12,000.

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?

Assets increase by $75,000 and liabilities increase by $75,000.

Grandmark Printing pays the current month's rent of $2,000 to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?

Assets would decrease $2,000 and equity would decrease $2,000.

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.

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

Business entity assumption

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

Going concern assumption

Accounting is an information and measurement system that:

Identifies, records and communicates information about business activities by interpreting info and designing info systems to allow business to make better decisions

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

Income statement.

All of the following are external users of accounting information except:

Lenders. Shareholders. Board of directors. Chief executive officer (CEO).

When expenses exceed revenues, the result is called:

Net loss.

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.

On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Revenue recognition principle

The rule that (1) requires revenue to be recognized when goods or services are provided to customers (2) at the amount expected to be received from the customer is called the:

Revenue recognition principle

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner; net income (or net loss); withdrawals; and the ending balance, is the:

Statement of owner's equity.

Revenues are:

The increase in equity from a company's sales of products and services.

A balance sheet lists:

The types and amounts of assets, liabilities, and equity of a business as of a specific date.

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Total assets, total liabilities, and total equity are unchanged.

Distributions of cash or other resources by a business to its owners are called:

Withdrawals.

The area of accounting aimed at serving the decision making needs of internal users is:

managerial accounting