Accounting Ch. 1-3 Exam Review

Costs of doing business

Expenses

Provides information for decision makers outside of the organizayion

Financial Accounting

Owned by stockholders whose liability is limited to the amount they have invested in the business

Corporation

Hudson Signs, Inc., needs funds, and Alley Hudson, the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Hudson might organize the business. Explain each answer. What forms of organization will enable the owners of Hudson Signs, Inc., to limit their risk of loss to the amounts they have invested in the business? If ___________ fails and cannot pay its liabilities, creditors ______ force the owners to pay the business's debts from the owner's personal assets. Therefore, the _____ an investor can expect to lose on an investment in these businesses is the amount invested.

Corporations, limited partners of a Limited-liability partnership and Limited-liability company Any of these businesses; cannot; most

During the​ year, ChemDry Corporation has $290,000 in​ revenues, $155,000 in​ expenses, and $12,000 in dividend declarations and payments. Net income for the year was: A. $135,000 B. $147,000 C. $167,000 D. $290,000

$135,000

During​ February, assets increased by $88,000 and liabilities increased by $32,000. Equity must have: A. Decreased by $120,000 B. Decreased by $56,000 C. Increased by $120,000 D. Increased by $56,000

D. Increases by $56,000

Mulligan Corporation ended its fiscal year on September​ 30, 2021​, with cash of $72 ​million, accounts receivable of $22 ​million, property and equipment of $32 ​million, and other​ long-term assets of $24 million. The​ company's liabilities consist of accounts payable of $38 million and​ long-term notes payable of $18 million. Mulligan Corporation has total​ stockholders' equity of $94 ​million; of this​ total, common stock is $32 million. Solve for the​ company's ending retained earnings and then prepare Mulligan ​Corporation's balance sheet at September​ 30, 2021. Use a proper heading on the balance sheet.

1. First find the company's retained earnings balance: 94 million (SE) - 32 (Common Stock) = 62 million 2. Create the balance sheet Mulligan Corporation Balance Sheet September 30, 2021 Assets: (in millions) Current Assets: Cash $ 72 Accounts Receivable 22 Total Current Assets: 94 Property and Equipment 32 Other Long-Term Assets. 24 Total Assets. $150 Liabilities (in millions) Current Liabilities: Accounts Payable $38 Total Current Liabilities 38 Long Term Notes Payable. 18 Total Liabilities. 56 Stockholder's Equity. (in millions) Common Stock $32 Retained Earnings 62 Total Stockholder's Equity 94 Total Stockholder's Equity & Liabilities $ 150

The following are the assets and liabilities of Donna O'Dell Realty​ Company, as of August ​31, 2021. Also included are​ revenue, expense, and selected​ stockholders' equity figures for the year ended on that date​ (amounts in​ millions): Prepare an income statement (go to Math Lab to see the given attached balance sheet with this problem)

Donna O'Dell Realty Company Income Statement Year ended August 31, 2021 Revenue: (in millions) Total Revenue $25.7 Expenses: Interest Expense $0.5 Salary and other employee expenses. 13.4 Other expenses 6.1 Total Expenses $20 Net Income $5.7

The following are the assets and liabilities of Donna O'Dell Realty​ Company, as of August ​31, 2021. Also included are​ revenue, expense, and selected​ stockholders' equity figures for the year ended on that date​ (amounts in​ millions): Requirement 2. What amount of dividends did Donna O'Dell declare during the year ended August ​31, 2021​? ​(Hint: Prepare a statement of retained​ earnings)

Donna O'Dell Realty Company Statement of Retained Earnings Year ended August 31, 2021 Retained Earnings, August 31 2020: $1.7 Add: Net Income for Period: 5.7 Subtotal: 7.4 Less: Dividends Declared (1.7) Retained Earnings, August 31 2021: 5.7

Identify the letter on the screenshot that refers to each of the following​ features on the screenshot of an Excel file:

E: Quick Access Tool bar B: file name H: ribbon tabs I: ribbon C: column headers L: formula bar D: insert function dialog box G: row headers J: active cell

Pandora's Music Genome Project makes music recommendations to a subscriber based on the​ subscriber's thumbs-up and​ thumbs-down ratings of​ songs, the songs that the subscriber listens​ to, and other factors.​ Pandora's Music Genome Project is an example of: A. Machine learning B. Robotic Process Automation C. Spreadsheets D. Data Analytics

A

The Cheesecake Factory Incorporated​ (NASDAQ: CAKE​) was started by Evelyn Overton when she sold cheesecakes from her basement in Detroit in the 1940s. Its first restaurant opened in Beverly​ Hills, California in 1978. The Cheesecake Factory has been a publicly held corporation since 1993 and currently operates over 300 restaurants under The Cheesecake Factory as well as several other brand​ names, both in the United States and abroad. Its fiscal year end is the Tuesday closest to December 31 each year. To follow are Cheesecake​ Factory's four basic financial statements for its most recent​ year, the year ending December ​31, 2019. How much in total resources does The Cheesecake Factory have to work with ​(in thousands)? (Look at Balance, Income, RE and Cash flow statement on My Math Lab) A. $2,840,593 B. $244, 515 C. $831,599 D. $58,416

A. $2,840,593 - find this value in the total assets section in the Balance Sheet

Identify the letter on the screenshot that refers to each of the following​ features on the screenshot of an Excel file:

A: Zoom Slider K: worksheet tabs F: insert sheet icon

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Accounts Receivable

Asset

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Equipment

Asset

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Land

Asset

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Merchandise Inventory

Asset

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Prepaid Expenses

Asset

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Supplies

Asset

Economic resources that are expected to produce a benefit in the future

Assets

Advanced Instruments had retained earnings of $370,000 at December​ 31, 2020. Net income for 2021 totaled $235,000​, and dividends declared for 2021 were $80,000. How much retained earnings should Advanced report at December​ 31, 2021​? A. $370,000 B. $525,000 C. $450,000 D. $605,000

B

Assets are usually reported at their A. Current market value B. Historical cost C. Appraised value D. None of the above

B

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). How much in total debt does the company have?

B

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). What assets does the company have?

B

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). What is the company's financial position at the end of the year?

B

Mason Corporation began the year with cash of $140,000 and land that cost $15,000. During the year Mason earned service revenue of $260,000 and had the following​ expenses: salaries, $159,000​; ​rent, $85,000​; and​ utilities, $21,000. At​ year-end Mason​'s cash balance was down to $23,000. How much net income​ (or net​ loss) did Mason experience for the​ year? A. $16,000 B. $(5,000) C. $(122,000) D. $101,000

B. $(5,000)

The Cheesecake Factory Incorporated​ (NASDAQ: CAKE​) was started by Evelyn Overton when she sold cheesecakes from her basement in Detroit in the 1940s. Its first restaurant opened in Beverly​ Hills, California in 1978. The Cheesecake Factory has been a publicly held corporation since 1993 and currently operates over 300 restaurants under The Cheesecake Factory as well as several other brand​ names, both in the United States and abroad. Its fiscal year end is the Tuesday closest to December 31 each year. To follow are Cheesecake​ Factory's four basic financial statements for its most recent​ year, the year ending December ​31, 2019. How much does The Cheesecake Factory owe to creditors​ (in thousands)? (Look at Balance Sheet of Cheesecake on My Math Lab because this is where you would find a company's liabilities and be able to determine its financial position in an exact period of time) A. $1,654,264 B. $2,268,851 C. $614,587 D. $2,840,593

B. $2,268,851 Add current and non current liabilities to get total liabilities

Which type of business organization provides the least amount of protection for bankers and other creditors of a​ company? A. Partnership B. Corporation C. Proprietorship D. Both a and c

B. corporation

Also called the statement of financial position

Balance sheet

1. Compute the missing amount for each company (Amounts are in millions)

Beginning RE for Emerald Corp: $30 Beginning Assets for Barry Inc: $18 Ending Assets for Emerald Corp: $85 Ending Common Stock for Lally Co.: $11 Ending RE for Lally Co: $26 Ending Liabilities for Barry, Inc: $6 Ending RE for Barry, Inc: $6 Net Income for Emerald Corp: $16 Revenues for Lally Co.: $168 Net Income for Lally Co: $22 Expenses for Barry Inc: $34 Net Income for Barry Inc: $6

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). How much cash did the company generate and spend during the year?

C

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). How much cash was generated by operating activities?

C

Wilson had no stock transactions in 2021​, so the change in​ stockholders' equity for 2021 was due to net income and dividends. If dividends were $80,000​, how much was Wilson​'s net income for 2021​? Use the accounting equation and the statement of retained earnings. A. $518,000 B. $438,000 C. $598,000 D. $678,000

C. $598,000 570,000 - 40,000 = 530,000 36,000 - 24,000 = 12,000 530,000 - 12,000 = 518,000 518,000 + 80,000 = $598,000

Which of the following is the most accurate statement regarding ethics as applied to decision making in​ accounting? A. It is impossible to learn ethical decision​ making, since it is just something you decide to do or not to do. B. Ethics has no place in​ accounting, because accounting deals purely with numbers. C. Ethics involves making difficult choices under pressure and should be kept in mind in making every​ decision, including those involving accounting. D. Ethics is becoming less and less important as a field of study in business

C. Ethics involves making difficult choices under pressure and should be kept in mind in making every​ decision, including those involving accounting.

To be​ useful, information must have which of the following fundamental qualitative​ characteristics? A. Expediency and relevance B. Faithful representation and diversity C. Faithful representation and relevance D. Timeliness and affordability

C. Faithful representation and relevance

Identify the accounting​ concept, assumption, or principle that best applies to each of the following​ situations: General Motors, wants to determine which division of the company—Chevrolet or Cadillac—is more profitable.

Entity Assumption

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Retained Earnings

Equitt

Insider claims of a business

Equity

Responsibilities of the members of society to each other

Ethical duties

Identify the accounting​ concept, assumption, or principle that best applies to each of the following​ situations: Burger King, the restaurant​ chain, sold a store location to McDonald​'s. How can Burger King determine the sale price of the store—by a professional​ appraisal, Burger King​'s original​ cost, or the amount actually received from the​ sale?

Historical Cost Principle

Identify the accounting​ concept, assumption, or principle that best applies to each of the following​ situations: You get an especially good buy on a laptop​, paying only $300 when it normally costs $800. What is your accounting value for this laptop?

Historical Cost Principle

States that assets should be recorded at their actual cost on the date of purchase

Historical cost principle

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). How well did the company perform during the year?

I

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). What were the company's net sales for the year?

I

Statement that answers the question "How well did the company perform during the period?"

Income statement

Entities that provide money to finance a company's operations

Investors and creditors

A debt payable to an outsider

Liability

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Accounts Payable

Liability

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Accrued Expenses Payable

Liability

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Long Term debt

Liability

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Notes Payable

Liability

The following are the assets and liabilities of Mary Burke Realty​ Company, as of January ​31, 2021. Also included are​ revenue, expense, and selected​ stockholders' equity figures for the year ended on that date​ (amounts in​ millions):

Mary Burke Realty Company Balance Sheet January 31, 2021 Assets: (in millions) Current Assets: Cash $ 57.5 Accounts Receivable 0.9 Total Current Assets: 58.4 Property and Equipment 1.4 Investment Assets. 79.3 Other Long-Term Assets. 9.5 Total Assets. $148.6 Liabilities (in millions) Current Liabilities: $1.7 Long Term Liabilities: 102.4 Total Liabilities. 104.1 Stockholder's Equity. (in millions) Common Stock $39.8 Retained Earnings 4.7 (Total Assets - Liabilities - Stock = RE) Total Stockholder's Equity 53.8 Total Stockholder's Equity & Liabilities $ 148.6

Total Revenues less Total Expenses

Net Income

Which line flows from the income statement to the statement of retained earnings?

Net income

A business organization form with two or more owners who are each personally liable for all of the business's debts

Partnership

Hudson Signs, Inc., needs funds, and Alley Hudson, the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Hudson might organize the business. Explain each answer. What form of organization will give creditors the maximum protection in the event that Hudson Signs​, ​Inc., fails and cannot pay its​ debts? If a __________ fails and cannot pay its liabilities, creditors __________________ to pay the businesses debts from their personal assets. This type of organization affords more protection for creditors than a ___________________.

Partnership Partnership; can force the partners; proprietorship because there are two or more owners to share this liability

A business organization form with a single owner who is personally liable for all of the business's debts

Propreitorship

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). Did the company declare a dividend during the year?

R

For each of the following​ questions, indicate which financial statement would most likely be used to provide the information. Use the following​ abbreviations: Income statement​ (I), Statement of retained earnings​ (R), Balance sheet​ (B), and Statement of cash flows​ (C). Why did the company's retained earnings change during the year?

R

Inflows of resources resulting from delivering goods or services to customers

Revenues

Hudson Signs, Inc., needs funds, and Alley Hudson, the president, has asked you to consider investing in the business. Answer the following questions about the different ways that Hudson might organize the business. Explain each answer. What forms of business organizations will give Alley Hudson the most freedom to manage the business as she wishes? This type of organization offers the most freedom because _________.

Sole proprietorship There is a single owner, so the owner has absolute control over the business

Identify the accounting​ concept, assumption, or principle that best applies to each of the following​ situations: Inflation has been abound​ 2.5% for some time. Village Realtors is considering measuring its land values in​ inflation-adjusted amounts

Stable Monetary Unit Assumption

Reports cash flows from operating, investing and financing activities during the period

Statement of cash flows

Classify the following items as an asset​ (A), a liability​ (L), or​ stockholders' equity​ (S) for Target Corporation​, a large​ retailer: Common Stock

Stockholders Equity

Identify the missing amount for each of the following​ situations: Total Assets = Total Liabilities + Stockholder's Equity 1. X = $260,000 + $410,000 2. $100,000 = $80,000 + X 3. $410,000 = X + $290,000

Total Assets = $670,000 Stockholder's Equity: $20,000 Total Liabilities: $120,000

What are the three questions that are important to consider when making an ethical decision?

Who will be affected by this decision? Is the action legal? How will the decision make me feel afterward?

Mechanical part of accounting

bookkeeping

Provides information for managers of the organization

managerial accounting

Good business and accounting principles require the exercise of good judgment. How should ethics be incorporated into making accounting judgments? Why is ethics important? Ethics is a factor that __________________. Ideally, for each decision,_____________________.

should be included in every business and accounting decision, beyond the potential economic and legal consequnces honesty and truthfulness should prevail, considering the rights of others.