1 . award: 10 out of 10.00

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities. Select the aspect of accounting associated with this activity.

Activities Aspects of accounting

1. Analyzing and interpreting reports. Communicating ./ 2. Presenting financial information. Communicating ./ 3. Maintaining a log of service costs. Recording ./ 4. Measuring the costs of a product. Recording ./ 5. Preparing financial statements. Communicating ./ 6. Establishing revenues generated from a product. Identifying ./ 7. Determining employee tasks behind a service. Identifying ./

award:

2 10 out of • 10.00

··············· potrns ························································· ····················································································· Part A Identify the following users of accounting information as either an internal or an external user.

Accounting information user External /Internal

1. Research and development director Internal ./ 2. Human resources director Internal ./ 3. Labor unions External ./ ~Shareholders External ./ 5. Distribution managers Internal ./ ~Creditors External ./ ~uction supervisors Internal ./ 8. Purchasing manager Internal ./

Part B Identify the following questions as most likely to be asked by an internal or external user.

Questions •• External / Internal

1. What are reasonable payroll benefits and wages? ~ Internal ./ 2. Should we make a frve-year loan to that business? External ./ 3. What are the costs of our product's ingredients? Internal ./ 4. Do income levels justify the current stock price? External ./ 5. Should we spend more to further re search our product? Internal ./ 6. Which firm reports the highest sales and income? External ./ 7. What are the costs of our service to customers? Internal

a·ward:

3 10 out of • 10.00

······················ ·polrns- ··········································································· ······················································································································ Identify the area of accounting that is most involved in each of the following responsibilities:

Responsibilities Area of accounting ./I 1. Internal auditing. Managerial accounting - -

2. External auditing. Financial accounting ./ 3. Cost accounting. Managerial accounting ./ --4. Budgeting. Managerial accounting ./ 5. Investigating violations of tax laws. Tax accounting ./ -6. Planning transactions to minimize taxes. Tax accounting ./ 7. Preparing external financial statements. Financial accounting ./ 8. Reviewing reports for SEC compliance. Financial accounting ./

4. award: 10 out of 10.00

Match each of the numbered descriptions with the term or phrase it best reftects.

Description

1. Principles that determine whether an action is right or wrong. --l---2. Accounting professionals who provide services to many clients.

3. An accounting area that includes planning future transactions to minimize taxes paid.

r 4 An examination of an organization's accounting system and records that adds credibility to financial statements.

~: Amount a business earns after paying all expenses and costs associated with its sales and revenues.

Term or Phrase

Ethics ./

Public accountants ./

Tax accounting ./

Audit ./

Net income ./

award:

5 10 out of • 10.00

··· ··· ··· ··· ··· ··· ··· ····poiotS' ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ······· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· · · Match each of the numbered descriptions with the principle or assumption it best reflects.

Description Principle or Assumption

Usually created by a pronouncement from an authoritative body. Specific accounting principle .,/ -~I--

Financial statements reflect the assumption that the business continues operating. Going-concern assumption .,/

1.

2.

3. Derived from long-use<! and generally accepted accounting practices. General accounting principle .I 4. Every business is accounted for separately from its owner or owners. Business entity assumption .,/

5. Revenue is recorded only when the earnings process is complete. Revenue recognition principle .,/ -+--

Information is based on actual costs incurred in transactions. Cost principle .,/ -~I--

A company records the expenses incurred to generate the revenues reported. Matching principle .,/

6.

7. -

8. A company reports details behind financial statements that would impact users' decisions. Full disclosure principle .,/ --'---- -~--

6. award: 10 out of 10.00

A-G contain separate situations, identify each as being a sole proprietorship, partnership or corporation.

a.

b.

c.

d.

Description

Ownership of Zander Company is divided into 1,000 shares of stock.

Wallingford is owned by Trent Malone, who is personally liable for the company's debts.

Micah Douglas and Nathan Logan own Financial Services, a financial services provider. Neither Doug~as nor Logan has personal responsibility for the debts of Financial Services. Riley and Kay own Speedy Packages, a courier service . Both are personally liable for the debts of the business.

e. IBC Services does not have separate legal existence apart from the one person who owns it. t----l-

f. Physio Products does not pay income taxes and has one owner.

g=-1 AJ pays its own income taxes and has two owners.

Business organization

Corporation ./ Sole proprietorship ./ Corporation ./

Partnership ./ Sole proprietorship ./ Sole proprietorship ./ Corporation ./

7. award: 10 out of 10.00

a. Office Store has assets equal to $1 23,000 and liabilities equal to $47 ,000 at year-end. What is the total equity for Office Store at year-end?

Assets Liabilities + Equity

$ 123,000 = $ 47,000 + $ 76,000./

award:

8 10 out of • 10.00

········· points ·········································· · · b. At the beginning of the year, Addison Company's assets are $300,000 and its equity is $100,000.

During the year, assets increase $80,000 and liabilities increase $50,000. What is the equity at the end of the year?

Assets Liabilities + Equi

Beginning $ 300,000 = $ 200,000~ + $ 100,000

Change 80,000 = 50,000 + 30,000./

Ending $ 380,000./ = $ 250,000./ + $ 130,000~

award:

9 10 out of • 10.00

···· ··· ··· ··· ··· ··· ····points ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ····· c. At the beginning of the year, Quaker Company's liabilities equal $70,000. During the year, assets

increase by $60,000, and at year-end assets eCJiual $190,000. Liabilities decrease $5,000 during the year. What are the beginning and ending amounts of equity?

Assets Liabilities + E u

~Beginning $ 130,000./ = J $ 70,000 + $ 60,000./

~Change 60,000 = I (5,000) + 65,000./

1Ending i$ 190,000 = $ 65,000~ + $ 125,000./

award:

1 0 10 out of • 10.00

················poirns···· Determine the missing amount from each of the separate situations given below.

Assets ~ Liabilities + Equity

(a) J.$ 65,000./ = $ 20,000 + $ 45,000 -rr 100,000 = $ 34,000 + $ 66,000./

(c) $ 154,000 = $ 114,000./ + $ 40,000

11. award: 10 out of 10.00

Select a transaction that affects the accounting equation as follows:

Affect

Decreases an asset and decreases equity. 1----f-

b. lncreases an asset and increases a liability.

c. Decreases a liability and increases a liability. __ ,__ d.

e.

Decreases an asset and decreases a liability.

Increases an asset and decreases an asset. __ ,__ f.

g.

Increases a liability and decreases equity.

Increases an asset and increases equity. __ ,__

Transaction

Business incurs an expense paid in cash

Business purchases equipment on credit

Business signs a note payable to extend the due date on an account payable

Business pays an account payable with cash

Business purchases office supplies for cash

Business incurs an expense that is not yet paid

Owner(s) invests cash in the business -~==

12. award: 10 out of 10.00

Lena Holden began a professional practice on June 1 and plans to prepar.e financial statements at the end of each month. During June, Holden (the owner) completed these transactions:

a. Owner invested $60,000 cash in the company along with equipment that had a S15,000 market value. b. The company paid $1 ,500 cash for rent of office space for the month . c. The company purchased $10,000 of additional equipment on credit (payment due within 30 days). d. The company completed work for a client and immediately collected the $2,500 cash earned. e. The company completed work for a client and sent a bill for $8,000 to be received within 30 days. f. The company purchased additional equipment for $6,000 cash. g. The company paid an assistant $3,000 cash as wages for the month. h. The company collected S5.000 cash as a partial payment for the amount owed by the client in

transaction e. i. The company paid $10,000 cash to settle the liability created in transaction c. j. Owner withdrew $1,000 cash from the company for personal use.

Required: Enter the impact of each transaction on individual items of the accounting equation. (Enter decreases to account balances with a minus sign.)

a. b.

Bal.

c.

Assets

Cash + Accounts Receivable

60,000J + ' $

( 1,500)J +

58,500 +

0 +

+

lb Liabilities +

Accounts II + Payable Equipment

~ ~ o ~

10,000J +

$ 15,00~Ji = =

15,000 t = 10,000J =

II ' $

Holden, Capital

75,0000./1 -_ 1

1

$

Holden, With

drawals

Equity

+

0 +

0 +

Revenue - jl Expenses

o I -0 - ' 1,500J

75.00~ -1--~ -1-- * ---~--t~ ~ I 1 .50~ ~ Bal.

d.

58,500 + -1---+--

2, 500 J I +

25,000 = 0 =

--!----!--- 10,000 _+_~_ 0 +

75,ooo l + o -+ -.---~-o-1---+-1 --1-,50-0 ---;~ 0 - 0 + 2.~ - 0

---~----~

r--1 ---;a ] + 1· Bal.

e.

Bal.

f.

Bal.

g.

Bal.

h.

Bal.

I.

61 ,000 +

0 +

61,000 + --(6,000)J t +

55,000 +--.:­(3,000)J 1 +

52,000 +

5,000J j + -51.000 . _..__L

( 10.000)J~ ----,-----~

Bal. 47,000 +

[ j.

Bal.

(1,000)J +

46,ooo I + 1$

25,000 i = 0 = 8,000J ] _+__,,___ __ ~

8,0000 I ++ 25,000 I =

--+-1- 10,00~ :

1~0~_1 _+ QT+ 6,000./1 =

8,* 31,000 _J_ =

I 10,000 +

0 + 0 = 0 +

8,000 + I 31,000 -1-= 10,000 + I (5,000)./ + 0 I = 0 +

3,000 _J_ _+ _ _,__ 31,000 -1-= 10,000 + 0 + 0 = p O,OOO)J +-I -+-+--

3,00~ I : 31.00H-+ W. 3,ooo I -:;--i $ 31,000 I = $ o ' +

75,oo~ I ~ '-1 ---~--~-_:_~ __ !_:~-~-~J~'--~-1. ___ 1_.5_0~--;I 75,00~ I ~ I -%f: J 10,50~ I+ 1,50~ I

-1- _ I o + + 1 o.5oo01_J -_ I 1.500

- a + IT 3,oooJ

l + ~ : I 10,50~ I ~ ·1 4,~

75,000

0

75,000

0

75.00~ I ~ l'--___ :<---+--10.50~ ++ 4.~ 15.ao~ -j-:- _ 10.50~ I + 4,5~

15,000 I - I$ 10,500 I - $ 4,500 I

award:

13 10 out of • 10.00

········· poims-· The following table shows the effects of five transac tions (a through e) on the assets, liabilities, and equity of Trista's Boutique. Match the given transaction with its probable description.

Assets = Liabilities + Equity

Accounts Office Accounts Trista , Cash + Receivable + Supplies + l and = Payable + Capital + Revenues

$ 21,000 + $ 0 + $ 3,000 + $ 19,000 = $ 0 + $ 43,000 + $ 0 a. - 4,000 + 4,000 b. + 1,000 + 1,000 c. + 1,900 + 1,900 d. - 1,000 - 1,000 e. + 1,900 - 1,900

$ 17 900 + $ 0 + $ 4,000 + $ 23,000 = $ 0 + $ 43,000 + $ 1,900

Transaction Description

a. Purchased land for cash ./ b. Purchased office supplies on credit ./ c. Billed a client for services provided ./ d. Paid the account payable created in transaction b ./ e. Collected cash for the billing in transaction c ./

award:

14 10 out of • 10.00

················points ····························································· · On Oc tober 1, Keisha King organized Real Answers, a new consult ing firm; on October 3, the owner contributed $84,000 cash. On October 31 , the company's records show the following items and amounts.

Cash Accounts receivable Office supplies Land Office equipment Accounts payable Owner investments

$1 1,360 14,000 3,250

46 ,000 18,000

8,500 84,000

Cash with drawals bv owner Consulting fees earned Rent expense Salaries expense Telephone expense Miscellan eous expenses

$ 2,000 14,000 3,550 7,000

760 580

Using the above information prepare an October income statement for the business.

REAL ANSWERS

Income Statement

For Month Ended October .31 ./ Revenues .I

Consulting fees earned ./ $ 14,000./

-=1_ 0

0

Total revenues $ 14,000

Expenses ./ Miscellaneous expenses ./ (580)./

Rent expense ./ (3,550)./

Telephone expense ./ (760)./

Salaries expense ./ (7,000)./

--i 0

0

Total expenses (1 1,890) 1 Net income ./ $ 2, 110./

"Red t -:xt ind c.at-:s no respcns.= Wa$ exoect-:d in a cell or a fc!TT'u!a·based calcu ation 1s incorrect: no pornts deducted.

award:

15 10 out of • 10.00

································potrns-·· On Oc tober 1, Keisha King organized Real Answ ers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company's records show the following items and amounts.

Cash Accounts receivable Office supplies Land Office equipment Accounts payable Owner investments

$1 1,360 14,000

3,250 46,000 18,000 8,500

84,000

Cash withdrawals by owner Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses

$ 2,000 14,000

3,550 7,000

760 580

Using the above information prepare an October statement of owner's equity for Real Answers.

REAL ANSWERS

Statement of Owner's Equity

For Month Ended October 31 ./ King, Capital, Oct. 1 ./ $ 0

Add: Net income ./ 2, 110./

Add: Owner's investment ./ 84,000./

86, 110

Less: Withdrawals by owner ./ (2.000)./

King, Capital, Oct. 31 ./ $ 84, 110./

16. award: 10 out of 10.00

················pi'.1trrnr·· On Oc tober 1, Keisha King organized Real Answ ers, a new consulting firm; on October 3, the owner contributed $84 ,000 cash. On October 31 , the company 's records show the following items and amounts.

Cash Accounts receivable Office supplies Land Office equipment Accounts payable Owner investments

$1 1,360 14,000

3,250 46 ,000 18,000

8,500 84,000

Cash withdrawals by owner Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses

$ 2,000 14,000

3,550 7,000

760 580

Using the above information prepare an October 3 1 balance sheet for Real Answers.

REAL ANSWERS

Balance Sheet

As of October 31

Assets ./ Liabilit ies

Cash ./ $ 11,360./ Accounts payable ./ $

Land ./ 46,000./ T Accounts receivable ./ 14,000./ Tota.I liabilities ./ Office equipment ./ 18,000./ Equity

Office supplies ./ 3,250./ King , Capital ./ T - -

0

Total assets ./ $ 92,610 Total liabilities and equity ./ $

./

./ 8,500./

0

8,500

./ 84,110./

0

92,610

17. award: 10 out of 10.00

·· · · · ····· · poirns-· On Oc tober 1, Keisha King organized Real Answers , a new consulting firm ; on October 3, the owner invested $84,000 of assets. On October 31 , the company's records show the following items and amounts.

Cash Accounts receivab le Office supplies Land Office equipment Accounts payable Owner investments

$1 1,360 14,000

3,250 46,000 18,000 8,500

84,000

Also assume the following:

Cash withdrawals by owner Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses

$ 2,000 14,000

3,550 7,000

760 580

a. The owner's initial investment consists of $38,000 cash and $46,000 in land. b. The company's $18,000 equipment purchase is paid in cash. c. The accounts payable balance of $8,500 consists of the $3,250 office supplies purchase and $5,250

in employee salaries yet to be paid. d . The company's rent, telephone, and miscellaneous expenses are paid in cash. e. No cash has been collec ted on the $14,000 consulting fees earned.

Using the above information prepare an October 31 statement of cash flows for Real Answers. (Cash outflows shou ld be ind icated by a minus s ign.)

REAL ANSWERS

Statement of Cash Flows For Month Ended October 31

Cash flows from operating activities

Cash received from customers

Cash paid for rent

Cash paid for telephone expenses

Cash paid for miscellaneous expenses

Cash paid to employees

Net cash used by operating activities

Cash flows from investing activities

Purchase of office equipment

Net cash used by investing activities

Cash flows from financing activit ies

Investments by owner

Witl1drawals by owner

T $ 0

./ (3,550)./

./ (760)./

./ (580)./

.; ___ (_1.1_50_1.1---+-I _

.;1 ' $ j_".'._

./ ( 18,000)./

./.-~]

./

./ 38,000./

(2.000)./ ~~~~~~~-+

Net cash provided by financing activities ./1

Net increase in cash ./

Cash balance, October 1

Cash balance, October 31

(6,640)

(18.000)

36,000

11,360./

0./ 11,360 I

*Red taxt ind cat.es no resp<0nse \Vas ex?ect.s-d 1n a cell or a fom-ula·based caku ation 1s incorrect: no poin:s d.:d.1ae-:I.

18. award: 10 out of 10.00

Swiss Group reports net income of $40,000 for 2013. At the beginning of 2013, Swiss Group had $200,000 in assets. By the end of 2013, assets had grown to $300,000.

What is Swiss Group's 2013 return on assets?

Choose Numerator:

Net income ----Return on assets

Choose Denominator:

./ I 1 Average total assets <---I

./I = j $ 40,000./ I $ 250,000./ =

Return on assets

Return on assets

16% -

19. award: 10 out of 10.00

· · · · · · · -ii-otrns- ··· Match each description with its section from statement of cash flows.

Description Statement of cash flow

1. Cash paid for advertising Cash flows from operating activity

2. Cash paid for wages Cash flows from operating activity

3. Cash withdrawal by owner Cash flows from financing activity

4. Cash purchase of equipment Cash flows from investing activity

5. Cash paid for rent Cash flows from operating activity

6. Cash paid on an account payable (for :supplies) Cash flows from operating activity

~ investment by owner Cash flows from financing activity

8. Cash received from clients Cash flows from operating activity

./

./

./

./

./

./

./

./