Accounting Chapter 1

Common Stock

Certificates that evidence ownership in a company

Find X Assets [x]= Liabilities[$25,000] + Common Stock[$48,000] + Retained Earnings[$50,000]

$123,000

Find X Assets [$75,000]= Liabilities[$15,000] + Common Stock[x] + Retained Earnings[$42,000]

$18,000

Find X Assets [$40,000]= Liabilities[X] + Common Stock[$7,000] + Retained Earnings[$30,000]

$3,000

How many financial statements does a company prepare each accounting period?

4

what kind of activity is paying cash dividends?

A financing activity

Which of the financial statements are required by the generally accepted accounting principles (GAAP)?

All

Stockholders' Equity

Common Stock + Retained Earnings

The Statement of Changes in Stockholders' Equity is used to inform the creditors how their stake in the company changed over the period. This statement is:

False

The primary purpose of managerial accounting is to prepare financial statements in accordance with a reporting framework (e.g. GAAP).

False

The stockholders of a business have a priority claim to its assets in the event of liquidation. This statement is:

False

Durango Company started Year 2 with beginning balances of $1,000 cash, $500 note payable, and $400 common stock. During the year, Durango generated $400 of cash revenue and $300 of cash expenses. Durango also purchased land for $900 cash. If the note payable is due on January 1, Year 3, was it a good idea to purchase the land?

No, because the company will not have enough cash to pay off the note.

What does negative retained earnings indicate?

The company has lost some or all of the owner's investment

Chester Company earned $12,500 of cash revenue, paid $7,500 for cash expenses, and paid a $200 cash dividend to its owners. Which of the following statements is true?

The net cash inflow from operating activities was $5,000 (Rev-Exp)

Kilgore Company experienced the following events during its first accounting period. (1) Borrowed $10,000 cash from a creditor. (2) Earned $5,000 of cash revenue. (3) Paid $2,000 cash to pay off a portion of its note payable. (4) Paid cash dividends amounting to $100. (5) Paid $2,200 cash for operating cash expenses. Based on this information, what is the amount of expense shown on the income statement?

$2,200

Find X Assets [$125,000]= Liabilities[$45,000] + Common Stock[$60,000] + Retained Earnings[X]

$20,000

Kilgore Company experienced the following events during its first accounting period. (1) Issued common stock for $5,000 cash. (2) Earned $3,000 of cash revenue. (3) Paid a $4,000 cash to purchase land. (4) Paid cash dividends amounting to $400. (5) Paid $2,200 of cash expenses. Based on this information, the amount of cash flow from investing activities appearing on the statement of cash flows is

$4,000 outflow

At the time of liquidation, Owens Company reported assets of $260,000, liabilities of $180,000, common stock of $90,000 and retained earnings of ($10,000). What amount of Fairchild's assets are the shareholders entitled to receive?

$80,000 (260,000-180,000)

Indicate how the following event would be classified on a statement of cash flows: Paid $10,000 cash on the loan from Bank

Financing Activity

what is the accounting equation for: Sold Land for cash at an amount equal to its cost?

Assets[increase/decrease] = Liabilities[na] +Common Stock[na] + Retained Earnings[na]

Which of the following financial statements is prepared as of a specific date?

Balance Sheet

Ending cash balance is shown on which of the following financial statements?

Balance Sheet and Statement of Cash Flows

What account on the left side of the accounting equation increased when the revenue account increased?

Cash

Assume that Harris Company acquires $3,600 cash from creditors and $4,200 cash from investors. If Harris Company has net income of $2,000 and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?

Creditors: $3,600 Investors: $6,200

Assume that Harris Company acquires $3,600 cash from creditors and $4,200 cash from investors. If Harris Company has a net loss of $4,900 cash and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?

Creditos: $2,900 Investors: $0

Assume that Harris Company acquires $3,600 cash from creditors and $4,200 cash from investors. If Harris Company has a net loss of $2,000 cash and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?

Creditos: $3,600 Investors: $2,200

Indicate how the following event would be classified on a statement of cash flows: Paid a cash dividend of $5,000 to the stockholders

Financing Activity

Indicate how the following event would be classified on a statement of cash flows: Borrowed $5,000 cash from Bank

Financing Activity

Indicate how the following event would be classified on a statement of cash flows: Received $50,000 cash from the issue of common stock

Financing Activity

Net income appears on which of the following financial statements?

Income Statement and Statement of Changes in Stockholders' Equity

The statement of cash flows presents

Information in three categories including operating, investing, and financial activities

Indicate how the following event would be classified on a statement of cash flows: Purchased land for $6,000 cash

Investing Activities

Indicate how the following event would be classified on a statement of cash flows: Sold land for $9,000

Investing Activity

If total assets increase, then...

Liabilities, common stock, or retained earnings must increase.

What is the process of dividing up assets and allocating them to resource providers (creditors and investors)?

Liquidation

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). The market value of the land was determined to be $24,000 at the end of the accounting period.

NA

Indicate how the following event would be classified on a statement of cash flows: Hired an accountant to keep the books

NA

Indicate how the following event would be classified on a statement of cash flows: Paid $14,000 cash for salary expense

Operating Activity

Indicate how the following event would be classified on a statement of cash flows: Paid $2,800 cash for utilities expense

Operating Activity

Indicate how the following event would be classified on a statement of cash flows: Performed Services for $25,000 cash

Operating Expense

A company can have a negative balance in retained earnings. This statement is:

True

Emerald Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $50,000 cash from the issue of common stock Borrowed $45,000 cash from the state bank Earned $120,000 of cash revenue Paid $180,000 cash expenses The company was liquidated at the end of Year 1. Based on this information

The creditor (the bank) would receive $35,000 ( In this case the business incurred a $60,000 loss ($120,000 Revenue − $180,000 Expenses). As a result, the stockholders would receive zero. The $60,000 loss would more than wipe out their $50,000 investment. Indeed, even the creditor would suffer a $10,000 loss. At the end of the Year 1 there would only be $35,000 cash left in the business ($50,000 from investors + $45,000 from the bank, $120,000 from revenue − $180,000 of expenses).

Watt Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $6,000 cash from the issue of common stock. Borrowed $3,000 cash from the state bank. Earned $4,000 of cash revenue. Paid $2,000 cash expenses. The company was liquidated at the end of Year 1. Based on this information

The stockholders would receive $8,000 this case the business earned $2,000 ($4,000 Revenue − $2,000 Expenses). As a result, the stockholders would receive $8,000 in the liquidation ($6,000 original investment + $2,000 retained earnings).

Accounting provides a service to society by gathering and reporting information about a company's profit potential. This statement is

True

Businesses earn profits by converting financial, physical, and labor resources into goods and services that satisfy consumer demands. This statement i

True

The balance of accounts reported on the Balance Sheet carry forward from one period to the next. This statement is:

True

Which of the following are shown on the Balance Sheet? (a)Total assets (b)Land (c)Common Stock (d)Net Change in Cash (e)Revenue (f)Notes Payable (g)Stockholders' Equity (h)Total Liabilities and Stockholders' Equity (i)Expenses (j)Net Income (k)Ending cash balance (l)Beginning cash balance (m)Dividends

a, b, c, f, g, h, k

The statement of changes in stockholders' equity presents

an explanation of the changes in the beginning and ending balances of stockholders' equity

Which of the following are shown on the Income Statement? (a)Total assets (b)Land (c)Common Stock (d)Net Change in Cash (e)Revenue (f)Notes Payable (g)Stockholders' Equity (h)Total Liabilities and Stockholders' Equity (i)Expenses (j)Net Income (k)Ending cash balance (l)Beginning cash balance (m)Dividends

e, i, j

A net loss occurs when

expenses are greater than revenue

Stockholders

individuals or institutions that have contributed assets or services to a business in exchange for an ownership interest in the business

Paul Savage purchased a restaurant named Burger Haven from Larry Jones. The purchase would cause the number of reporting entities to

remain constant

A cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease. This statements is...

true

Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund. The $1,000 was paid to WKUX, a local radio station that designed and played an advertising campaign to educate the public about Vicky's predicament. The campaign resulted in the collection of $20,000 cash, and VHRF paid $12,000 to Mercy Hospital to cover Vicky's outstanding hospital cost. The remaining $8,000 was donated to the National Cyclist Fund. What was the effect on cash in the WKUX Entity?

$1,000 increase for advertising revenue

Smokey Enterprises began operations by receiving $100,000 cash from its sole owner Jessica Jones. During its first year of operations, the business earned $20,000 in cash from operations and paid $15,000 in cash expenses during the year. During its first year of operations, Smokey Enterprises would report net income of

$5,000

The following information was drawn from Gore, Inc.'s statement of cash flows. (1) $2,000 net cash outflow from investing activities. (2) $3,000 net cash inflow from financing activities. (3) $6,000 net increase in the cash balance. Based on this information, the amount of cash flow from operating activities appearing on the statement of cash flows must be a

$5,000 net cash flow (inflow-outflow= $1,000 Net increase-$1000)

Kilgore Company experienced the following events during its first accounting period. (1) Issued common stock for $5,000 cash. (2) Earned $3,000 of cash revenue. (3) Paid a $4,000 cash to purchase land. (4) Paid cash dividends amounting to $400. (5) Paid $2,200 of cash expenses. The market value of the land at the end of the accounting period was $4,300. Based on this information the amount of total assets appearing on the year-end balance sheet is?

$5,400 [$5,000 + 3,000 - 4,000 - 400 -2,200= $1,400 + $4,000 (land is an asset) ]

Retained earnings at the beginning of the period was $300. During the period, Kilgore Company earned revenue of $1,100 and incurred expenses of $400. Assuming dividends paid to stockholders were $200, the ending balance in retained earnings must have been:

$800 (Beg. Retained Earnings + Net Income - Divendends (Net Income= Revenue-Expenses)

Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund. The $1,000 was paid to WKUX, a local radio station that designed and played an advertising campaign to educate the public about Vicky's predicament. The campaign resulted in the collection of $20,000 cash, and VHRF paid $12,000 to Mercy Hospital to cover Vicky's outstanding hospital cost. The remaining $8,000 was donated to the National Cyclist Fund. What was the effect on cash in the Karen White Entity?

-$1,000 decrease for contribution

What is an asset?

A resource that will be used to produce revenue.

Simpson Company paid cash to purchase land. This event is

An asset exchange transaction

What type of transaction caused this effect? Assets[-+]= Liabilties[NA] + Equity[NA]

An asset exchange transaction

Barnett Company paid a cash dividend. This event is

An asset use transaction

Liability

An obligation to pay cash in the future

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Paid $6,000 cash to purchase land.

Asset Exchange

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Purchased additional land for $2,500 cash.

Asset Exchange

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Acquired $16,000 cash from the issue of common stock.

Asset Source

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Acquired an additional $1,000 cash from the issue of common stock.

Asset Source

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Borrowed $10,000 cash from New South Bank.

Asset Source

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Provided additional services for $6,000 cash.

Asset Source

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Provided boarding services for $10,500 cash.

Asset Source

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Paid $2,400 cash for utilities expense.

Asset Use

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Paid a $1,500 cash dividend to the stockholders.

Asset Use

What is an accurate depiction of the accounting equation?

Assets= Liabilities + Common Stock + Retained Earnings

Juarez Company acquired $1,200 from the issue of common stock. What shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets[$1,200]= Liabilties[na] + Common Stock[$1,200] + Retained Earnings [na]

Fen Company paid a $300 cash dividend. What shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets[$300]=Liabilities[na] + Common Stock[na] + Retained Earnings[$300]

Ocean Breeze Co. paid $500 cash for expenses related to advertising for the period. What shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets[($500)]= Liabilities[na] + Common Stock[na] + Retained Earnings [($500)]

Daemon Company paid cash to purchase land. What would show how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets[+-]= Liabilities[na] + Common Stock[na] + Retained Earnings[na]

What is the accounting equation for: Provided services to clients for cash?

Assets[increase] = Liabilities[na] +Common Stock[na] + Retained Earnings[increase]

The land that Martin Co. paid $75,000 to purchase in the prior year had an appraised market value of $100,000 at the end of the current reporting period. What shows how the change in market value will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets[na]= Liabilities[na] + Common Stock [na] + Retained Earnings [na]

What type of financial statements provides information about a company as of a specific point of time?

Balance Sheet

What statement model shows the effects of paying a dividend?

Balance Sheet: Assets[-] = Liabilities[na] + Equity[-] Income Statement: Rev[na]-Exp.[na] = Net Inc[na]

What is normally shown first on the statement of cash flows?

Cash flow from operating activities

The Statement of Changes in Stockholders' Equity shows changes in which of the following accounts?

Common Stock and Retained Earnings

Public accountants perform _____ to ensure that financial information provided by a Company to investors is in accordance with G.A.A.P.?

Conduct an audit

What are the three primary types of reporting entities?

Consumers, Resource Owners, and Businesses

What term describes a distribution of the Company's assets back to the owners of the business?

Dividends

Assets

Economic resources that will be used by a business to produce revenue

Ollie Company experienced the following events during its first-year operations. (1)Acquired $72,000 cash from the issue of common stock. (2)Borrowed $26,000 from the First City Bank. (3)Earned $59,000 of cash revenue. (4)Incurred $43,000 of cash expenses. (5)Paid a $7,000 cash dividend. (6)Paid $43,000 to purchase land. What Event numbers will affect the income statement?

Event #3 & #4

Certain transactions entered into the accounting equation will cause the equation not to balance. This statement is

False

Companies maintain accounting records that show assets at the amount of their market value because that information is more relevant than the historical cost. This statement is

False

Resource owners want to provide resources to businesses with high profit potential because those businesses will pay higher taxes. This statement is

False

Generally Accepted Accounting Principles (GAAP) are designed to provide guidance for

Financial Accounting

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the

Income Statement

Creditors

Individuals or Institutions that have loaned goods or services

Morrison Company experienced a business event that had the following effect on its accounting equation. Assets[$25,000]= Liabilties[$25,000] + Common Stock[NA] + Retained Earnings [na] What would cause this effect?

Paid off debt

Which term describes assets earned from operations that have been reinvested into the business?

Retained Earnings

Ollie Company experienced the following events during its first-year operations. (1)Acquired $72,000 cash from the issue of common stock. (2)Borrowed $26,000 from the First City Bank. (3)Earned $59,000 of cash revenue. (4)Incurred $43,000 of cash expenses. (5)Paid a $7,000 cash dividend. (6)Paid $43,000 to purchase land. Prepare an income statement?

Revenue: $59,000 Expenses: $43,000 Net Income: $16,000

Ellen Elder and her brother, Buster started Elder Company when they each invested $600 in the company. After the investments there will be.

Three reporting entities (Ellen Elder, Buster, and Elder Company)

At the end of Year 1, Clayton Company had $6,000 of cash, $7,000 land, $2,000 of liabilities, $3,000 of common stock, and $8,000 of retained earnings. During Year 2, Clayton experienced the following events. Borrowed $1,500 cash. Earned $6,500 of cash revenue. Paid $4,000 of cash expenses. Paid $5,000 cash to purchase land. Based on this information the amount of total assets, total liabilities, and retained earnings appearing on the Year 2 financial statements is

Total Assets= $17,000 Total Liabilities= $3,500 Retained Earnings= $10,500

A cash expense is an economic sacrifice that will cause assets and retained earnings to decrease. This statement is...

True

A cash revenue is an economic benefit that will cause assets and retained earnings to increase. This statement is...

True

Alexis Company was started in Year 1. At the end of Year 1 the Company had the following accounting equation. Assets (Cash[$600] + Land[$2,200]) = Liabilities (Notes Payable[$1,000]) + Stockholders' Equity (Common Stock[$1,400] + Retained Earnings[$400]) If at the end of Year 1 an appraiser provides a certified opinion that the market value of the land is $2,800 the company would continue to list the land on its books at $2,200. This statement is

True

Owners of the business who contribute money to the business take more risk than creditors who loan money to the business. This statement is

True

The Statement of Changes in Stockholders' Equity is measured for a period of time such as a year. This statement is:

True

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the Company on first day of the year. How would you appropriately reflect the cash transactions between these reporting entities?

`John Hamiltion: $50,000 increase Sauce-It-Up: $450,000 increase Stone Creek Bank: $500,000 decrease

The income statement presents?

a comparison of the benefits and the sacrifices a company experiences from its operations.

Sims Company earned cash revenue by providing services to its customers. This event is

an asset source transaction

Sims Company received cash from the issue of a note payable to a bank. This event is

an asset source transaction

Sims Company received cash from the issue of common stock. This event is

an asset source transaction

What type of an event happens when you received cash from the issue of stock, borrowed cash from creditors, or earned cash revenue?

an asset source transaction

What type of transaction caused this effect? Assets[-]= Liabilities[NA] + Equity[-]

an asset use transaction

The following accounting equation represents the financial position of Qualtro Company. Assets (Cash[$400] + Land[$2,200]) = Liabilities (Notes Payable[$800]) + Stockholders' Equity (Common Stock[$1,200] + Retained Earnings[$600]) Based on this equation, Qualtro - can pay a $600 cash dividend -can pay off its note payable -can pay a $300 cash dividend -Can pay only $600 of its notes payable

can pay a $300 cash dividend

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the restaurant on first day of the year. This statement includes how many reporting entities?

three reporting entities (John Hamilton, Stone Creek Bank, and Sauce-It-Up)

How accounting transactions are recorded will vary depending on the entity perspective taken. This statement is

true

Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund. The $1,000 was paid to WKUX, a local radio station that designed and played an advertising campaign to educate the public about Vicky's predicament. The campaign resulted in the collection of $20,000 cash, and VHRF paid $12,000 to Mercy Hospital to cover Vicky's outstanding hospital cost. The remaining $8,000 was donated to the National Cyclist Fund. What was the effect on cash in the Mercy Hospital Entity?

$12,000 increase for medical care

What is the accounting equation for: paid cash to reduce the principal on the bank note?

Assets[decrease] = Liabilities[decrease] +Common Stock[na] + Retained Earnings[na]

The balance sheet presents...

a list of a company's assets and the source of those assets.

Wig Wam Inc. experienced a business event that had the following effect on its accounting equation. Assets[$50,000] = Liabilities[$50,000] + Common Stock[na] + Retained Earnings[na] What would cause this?

a loan from a creditor

Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund. The $1,000 was paid to WKUX, a local radio station that designed and played an advertising campaign to educate the public about Vicky's predicament. The campaign resulted in the collection of $20,000 cash, and VHRF paid $12,000 to Mercy Hospital to cover Vicky's outstanding hospital cost. The remaining $8,000 was donated to the National Cyclist Fund. What was the effect on cash in the Public Entity?

$20,000 decrease from contrbutions

At the beginning of Year 2, Jones Company had a balance in common stock of $200,000 and a balance of retained earnings of $5,000. During Year 2, the following transactions occurred: Issued common stock for $50,000 Earned net income of $30,000 Paid dividends of $10,000 Issued a note payable for $20,000 Based on the information provided, what is the total stockholders' equity on December 31, Year 2?

$275,000 (The total stockholder's equit= Ending Common Stock + Ending Retained Earnings. ending common stock is calculated as: beginning common stock + stock Issued or $200,000 + $50,000 = $250,000 ending common stock. ending retained earnings is calculated as: beginning retained earnings + Net income - Dividends or $5,000 + $30,000 - $10,000 = $25,000 ending retained earnings. Finally, ending common stock of $250,000 + ending retained earnings of $25,000 = total stockholders' equity of $275,000.)

Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund. The $1,000 was paid to WKUX, a local radio station that designed and played an advertising campaign to educate the public about Vicky's predicament. The campaign resulted in the collection of $20,000 cash, and VHRF paid $12,000 to Mercy Hospital to cover Vicky's outstanding hospital cost. The remaining $8,000 was donated to the National Cyclist Fund. What was the effect on cash in the National Cyclist Fund Entity?

$8,000 increase for donations

Kilgore Company experienced the following events during its first accounting period. (1) Issued common stock for $5,000 cash. (2) Earned $3,000 of cash revenue. (3) Paid $4,000 cash to purchase land. (4) Paid cash dividends amounting to $400. (5) Paid $2,200 of cash expenses. Based on this information the amount of net income is

$800 (Revenue-Expenses)

Karen White helped organize a charity fund to help cover the medical expenses of her friend, Vicky Hill, who was seriously injured in a bicycle accident. The fund was named the Vicky Hill Recovery Fund (VHRF). Karen contributed $1,000 of her own money to the fund. The $1,000 was paid to WKUX, a local radio station that designed and played an advertising campaign to educate the public about Vicky's predicament. The campaign resulted in the collection of $20,000 cash, and VHRF paid $12,000 to Mercy Hospital to cover Vicky's outstanding hospital cost. The remaining $8,000 was donated to the National Cyclist Fund. What was the effect on cash in the Vicky Hill Recovery Fun Entity?

- $21,000 increase for cash contributions -$1,000 decrease for payment of adverstising -$12,000 decrease for payment of hospital bills -$8,000 decrease for donation to National Cyclist Fund

The following items were drawn from the financial statements of Rogers Company: (1) Assets (2) Stockholders' Equity (3) Salary expense (4) Land (5) Rent revenue (6) Notes payable (7) Cash collected from the issue of stock (8) Common stock (9) Cash paid for dividends (10) Cash (11) Liabilities (12) Dividends (13) Cash paid to purchase land (14) Retained earnings Which of the items listed above were drawn from the balance sheet?

1, 2, 4, 6, 8, 10, 11, and 14

Alexis Company was started in Year 1. At the end of Year 1 the Company had the following accounting equation. Assets (Cash[$600] + Land[$2,200]) = Liabilities (Notes Payable[$1,000]) + Stockholders' Equity (Common Stock[$1,400] + Retained Earnings[$400]) During Year 2, the company experienced the following accounting events. -Paid of $500 of its note payable. -Earned $700 of cash revenue. -Paid $400 of cash expenses. -Paid a $100 cash dividend. Based on this information alone, what percent of the company's assets at the end of Year 2 were provided by creditors?

20% [Liabilities (notes payable) /Assets (cash and land)] $500 ÷ ($300 + $2,200) = 20%

Alexis Company was started in Year 1. At the end of Year 1 the Company had the following accounting equation. Assets (Cash[$600] + Land[$2,200]) = Liabilities (Notes Payable[$1,000]) + Stockholders' Equity (Common Stock[$1,400] + Retained Earnings[$400]) During Year 2, the company experienced the following accounting events. -Paid of $500 of its note payable. -Earned $700 of cash revenue. -Paid $400 of cash expenses. -Paid a $100 cash dividend. Based on this information alone, what percent of the company's assets at the end of Year 2 were provided by earnings?

24% Retained Earnings / Assets $600 ÷ ($300 + $2,200) = 24%

Classify event as an asset source, use, or exchange transaction or as not applicable (NA). Paid $3,500 cash for salary expense

Asset Use

What is the accounting equation for: paid a cash dividend to the stockholders?

Assets[decrease] = Liabilities[na] +Common Stock[na] + Retained Earnings[decrease]

What is the accounting equation for: paid utilities expenses with cash?

Assets[decrease] = Liabilities[na] +Common Stock[na] + Retained Earnings[decrease]

What is the Accounting Equation for: Acquiring cash from the issue of common stock?

Assets[increase] = Liabilities[na] +Common Stock[increase] + Retained Earnings[na]

Which of the following types of businesses require financial information to operate effectively?

For profit, governmental entities, and non-profit

Businesses obtain assets from what three sources?

Investors, Operations, Creditors

What represents the obligations to repay debts, may increase when assets increase, and have priority in business liquidations?

Liabilities