Accounting Chapter 1 Review Study

Social Science Economics Finance

Accounting Chapter 1 Review

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Terms in this set (50)

which of the following is an external user of accounting information? labor unions

Mangement (inside) Which of the following would not be considered an external user of accounting data for the Mangement (inside)
LMN Company?

which of the following would not be considered internal users of accounting data for a company? creditors of a company (outside

a. Regulatory agencies.

b. Customers.

which one of the following is not an external user of accounting information?

c. Investors.

d. *All of these answers choices are external users.

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting Recording
process?

All of the following services offered by public accountants except tax planning

Which describes the major services performed by public accountants? auditing, taxation, management consulting

Preparing tax returns and engaging in tax planning is performed by both public and private accountants

A private accountant can perform many activities in a business organization but would not work in external auditing

GAAP stands for Generally Accepted Accounting Principles

Capial is an owner's permanent investment in the business

Revenues would no result from initial investment of cash by owner

sources of increases to owner's equity are additional investments by owners

a. Assets - Liabilities = Owner's Equity.

b. Assets - Owner's Equity = Liabilities.

the basic accounting equation cannot be restated as

c. Owner's Equity + Liabilities = Assets.

d.** Assets + Liabilities = Owner's Equity.

owner's equity is decreased by all of the following except owner's investments

a net loss will result during a time period when expenses exceed revenues

If total liabilities decreased by $40,000 and owner's equity increased by $30,000 during a period of time, then total A=-40,000+30,000

assets must change by what amount and direction during that same period? A=-10,000 (decrease)

If total liabilities decreased by $40,000 and owner's equity decreased by $30,000 during a period of time, then A=-40,000+-30,000=-70,000

total assets must change by what amount and direction during that same period? A= $70,000 decrease

If total liabilities decreased by $30,000 and owner's equity decreased by $15,000 during a period of time, then A=-30,000+-15,000

total assets must change by what amount and direction during that same period? A=$45,000 decrease

If total liabilities decreased by $60,000 and owner's equity increased by $30,000 during a period of time, then total A=-60,000+30,000

assets must change by what amount and direction during that same period? A=$30,000 decrease

If total liabilities increased by $9,000 during a period of time and owner's equity decreased by $25,000 during the A=+9000+-25,000

same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n) A=$16000 decrease

The accounting equation for Cineo Enterprises is as follows:

$135,000 = $75,000 + $60,000

(office equipment expense is considered a liability)
Assets Liabilities Owner's Equity

$120,000 = $60,000 + $60,000

If Cineo purchases office equipment on account for $15,000, the accounting equation will change to

Assets Liabilities Owner's Equity

A=L+OE

As of June 30, 2016, Little Giantz Company has assets of $100,000 and owner's equity of $60,000. What are the
$100,00=L+$60,000

liabilities for Little Giantz Company as of June 30, 2016?

L=$40,000

owner's equity is increased by revenues

owner's equity is decreased by expenses

If total liabilities increase by $6,000 then assets increase by $6,000, or stockholders' equity decrease by $6,000.

Collection of a $1,500 Accounts Receivable increase an asset $15,000; decrease an asset $15,000

Revenues are Gross increases in owner's equity resulting from business activities

If an individual asset is increased, then there must be an equal decrease in another asset.

if services are rendered for credit, then owner's equity will increase

As of December 31, 2016, Cancon Company has assets of $42,000 and owner's equity of $22,000. What are the 42,000=L+22,000

liabilities for Cancon Company as of December 31, 2016? L=20,000

which of the following events is not a business transaction? Hired employees

Revenues>Expenses

Net income results when

Revenues exceeds expenses

owner's capital at the end of the period is equal to owner's capital at the beginning of the period plus net income minus drawings.
 Accounting Chapter 1 Review Opening
Study
Assets = Liabilities + Owners Equity

300000 = 200000 + Owners equity

Opening owners equity = 100000

Eli's Electronic Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During

the year, the business recorded $400,000 in electronic repair revenues, $300,000 in expenses, and Eli withdrew For the year

$50,000. Eli's Owner's Capital balance at the end of the year was

Retained earnings = sales - expenses - drawings

Retained earnings = 400,000-300,000-50,000 = 50,000

Closing equity = Opening equity + Retained earnings

Closing equity = 100,000 +50,000 = 150,000

Eli's Electronic Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During Net income= Revenue-expense

the year, the business recorded $400,000 in electronic repair revenues, $300,000 in expenses, and Eli withdrew 400,000-300,000=100,000

$50,000. The net income reported by Eli's Electronic Repair Shop for the year was Net income=100,000

Eli's Electronic Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During Change in owner's capital=(Revenue-Expense)-Draws

the year, the business recorded $400,000 in electronic repair revenues, $300,000 in expenses, and Eli withdrew

$50,000. Eli's Owner's Capital balance changed by what amount from the beginning of the year to the end of the COC=(400,000-300,00)-50,000

year? COC=$50,000

the balance sheet is frequently referred to as statement of financial position

Martha Innocenzi Ito began the Innocenzi Company by investing $75,000 of cash in the business. The company Net income=Rev-Exp.

recorded revenues of $555,000, expenses of $410,000, and had owner drawings of $30,000. What was Innocenzi's NI=555,000-410,000

net income for the year? NI=145,000

Ending owner's equity=Beg. owner's equity total+investments+(Rev-Exp)-Draws

El Centro Company began the year with owner's equity of $30,000. During the year, El Centro received additional
30,000+42,000+(x-120,000)-12,000=112,000

owner investments of $42,000, recorded expenses of $120,000, and had owner drawings of $12,000. If El Centro's
x=172,000

ending owner's equity was $112,000, what was the company's revenue for the year?
Revenue=172,000

Beg.OE+investment+(Rev-Ex)-Draws=end owner's equity

Letty Company began the year with owner's equity of $105,000. During the year, Letty received additional owner
105,000+147,000+(x-420,00)-28,000=290,000

investments of $147,000, recorded expenses of $420,000, and had owner drawings of $28,000. If Letty's ending
x=486,000

owner's equity was $290,000, what was the company's revenue for the year?
Rev=$486,000

Beg owner's equity=Beg. assets-beg.liabilities

320,000-240,000=80,000

Foxes Service Shop started the year with total assets of $320,000 and total liabilities of $240,000. During the year,

the business recorded $630,000 in revenues, $450,000 in expenses, and owner drawings of $60,000. Owner's
End owner's equity=beg. OE+(Rev.-Exp.)-Draws

equity at the end of the year was

80,000+(630,000-450,000)-60,000

EOE=200,000

Net Income=Rev.-Exp.

Foxes Service Shop started the year with total assets of $320,000 and total liabilities of $240,000. During the year,
NI=630,000-450,000

the business recorded $630,000 in revenues, $450,000 in expenses, and owner drawings of $60,000.
NI=180,000

Mirah Company compiled the following financial information as of December 31, 2016:
Total assets=Equip.+cash+suppl.+accounts rec.

Revenues $340,000
80,000+90,000+20,000+70,000=

Owner's Capital (1/1/16) 140,000

Total assets=260,000
Equipment 80,000

Expenses 240,000

Cash 90,000

Owner's Drawings 20,000

Supplies 20,000

Accounts payable 40,000

Accounts receivable 70,000

Mirah's assets on December 31, 2016 are:

Mirah Company compiled the following financial information as of December 31, 2016:
Beg. OE+(Rev.-Exp.)-Draws=EOE

Revenues $340,000
140,000+(340,000-240,000)-20,000

Owner's Capital (1/1/16) 140,000

EOE=$220,000
Equipment 80,000

Expenses 240,000

Cash 90,000

Owner's Drawings 20,000

Supplies 20,000

Accounts payable 40,000

Accounts receivable 70,000

Mirah's owner's equity on December 31, 2016 is:

Teamboo Company's owner's equity at the beginning of August 2016 was $740,000. During the month, the Beg. OE+Net Income-Draws=EOE

company earned net income of $175,000 and owner's drawings were $80,000. At the end of August 2016, what is 740,000+175,000-80,000=

the balance in owner's equity? EOE=835,000

On January 1, 2016, Utah Utility Company reported owner's equity of $705,000. During the year, the owner End. owner's equity-beg. owner's equity+Draws=Net income

withdrew cash of $30,000. At December 31, 2016, the balance in owner's equity was $795,000. What amount of net 795,000-705,000+30,000=

income or net loss would the company report for 2016? Net income=120,000

Beg. OE=Beg. Assets-Beg. Liabl.

Beg. OE=60,000-17,000

Luis Consulting started the year with total assets of $60,000 and total liabilities of $17,000. During the year, the Beg. OE=43,000

business recorded $48,000 in consulting revenues and $36,000 in expenses. Luis made an additional investment of

$8,000 and withdrew cash of $9,000 during the year. The owner's equity at the end of the year was Beg. OE+(Rev.-Exp.)+Invest.-Draws=End OE

43,000+(48,000-36,000)+8,000-9000=

EOE=$54,000

Luis Consulting started the year with total assets of $60,000 and total liabilities of $17,000. During the year, the Net Income=Rev.-Exp.

business recorded $48,000 in consulting revenues and $36,000 in expenses. Luis made an additional investment of NI=48,000-36,000

$8,000 and withdrew cash of $9,000 during the year. The net income reported by Luis Consulting for the year was: NI=12,000

Luis Consulting started the year with total assets of $60,000 and total liabilities of $17,000. During the year, the Change in owner's equity= (Rev.-Exp.)+Invest.-Draws

business recorded $48,000 in consulting revenues and $36,000 in expenses. Luis made an additional investment of COE=(48,000-36,000)+8,000-9,000=

$8,000 and withdrew cash of $9,000 during the year. Owner's equity changed by what amount from the beginning COE=11,000
of the year to the end of the year?