College accounting 14th edition price test bank by testbanklive48

Analyzing B u sin ess Transact ion s

T ru e / F als e Q u est ion s

1. Th e e n t i re p r o ce ss o f a n a l y zi n g , r e co r di n g , a nd r e p o rt i ng b u sin e ss t r a n sa ct i o n s i s b a se d o n t h e f u n d a me nt a l a cco u n t in g e qu a t i on .

Tr u e Fa l se

2. Wh e n u sin g t h e f u n da me n ta l a cco u n t i n g e qu a t io n , a n a cco u n t a n t must ma ke sur e t h a t t o t al a sse t s a r e a l wa y s e q ua l t o t o ta l l i ab i l i ti e s a n d o wn e r 's e q ui t y .

Tr u e Fa l se

3. Asse t s a l wa y s e q u a l d e b t s o f t h e b u sin e ss p l u s t h e f i na nci a l i n t e re st o f t h e o wn e r .

Tr u e Fa l se

4. Wh e n ca sh is p a i d t o a cr e d i t o r , t he f i r m's l i a b il i t ie s d e cr e a se .

Tr u e Fa l se

5. Al Du n n Ba ke r y b o u g h t a n e w o ve n f o r $ 1 ,3 8 0 . Al p a i d $ 3 0 0 a s a ca sh d o wn p a y m e n t a n d wil l p ay t h e b a la n ce i n 3 0 d a y s. To t al a sse t s i n cr e a se d b y $ 1 ,0 8 0 .

Tr u e Fa l se

6. I f t h e o wn e r t a ke s ca sh o u t o f t h e b u sin e ss f o r p e r son a l u se , t h e wit h d r a wa l sho ul d b e r e co r d e d a s a n e xp e n se o f t h e bu sin e ss.

Tr u e Fa l se

7. Wh e n ca sh is co l l e ct e d f r om a c co u n t s r e ce i va b l e , t h e to t a l a mou n t of a sse t s i n cr e a se s.

Tr u e Fa l se

8. A co mpa n y h a s a sse t s o f $ 5 6 ,3 2 0 a n d l ia b il i t ie s o f $ 2 9 ,50 0 . Th e o wn e r 's e q u it y i s $ 8 5 ,8 2 0 .

Tr u e Fa l se

9. Th e e xp e n se s f o r a p e r io d ar e r e p o rt e d o n t he b a l an ce she e t .

Tr u e Fa l se

1 0 . A d o u b l e l i ne d r a wn u n d er t h e f i g u re s i n a mon e y co l u mn sh o ws t h a t t h e co mpu t at i o n i s co mpl e t e .

Tr u e Fa l se

11. A b u sin e ss t r a n sa ct i o n i s a f i n a n ci a l e ve n t th a t a f fe ct s t h e r e so u r ce s o f a b u sin e ss.

Tr u e Fa l se

1 2 . I f t h e re i s a n e xce ss o f e xp e n se s o ve r r e ve n u e s, t h e e xce ss r e p r e se n t s a p r o f it .

Tr u e Fa l se

1 3 . A wit h d r a wa l o f f u n d s b y t he o wn e r f o r p e r so na l u se i s co n sid e r e d a b u sine ss e xp e n se .

Tr u e Fa l se

1 4. Th e sta t e me n t o f o wn e r's e q u i t y i s p r e pa r e d be f o re t h e b a l a n ce she e t so t h a t t he en d i n g ca p i ta l b a l a n ce i s a va i l a bl e .

Tr u e Fa l se

1 5 . I f a sse t s a r e $ 8 ,0 0 0 a nd l i a bil i t i e s a r e $ 2,0 0 0 , o wn er 's e qu i t y i s $ 1 0 ,0 00 .

Tr u e Fa l se

1 6 . Th e a mou n t o f n e t i n co me o r n e t l o ss i s n e e d e d t o co mpl e t e t h e sta te me n t o f o wn e r 's e q u it y .

Tr u e Fa l se

1 7. Wi t h d r a wa l s b y t h e o wn er a r e r e p o rt e d o n t he i n co me s t a t e me n t.

Tr u e Fa l se

1 8 . Th e i n co me sta t e me n t i s a l so kn o wn a s t h e p r o f i t a n d lo ss sta t e me n t .

Tr u e Fa l se

1 9 . Th e n e t i n co me o r n e t l o ss f o r t h e p e ri o d i s sho wn o n b o t h t h e i n co me sta t e me n t an d t h e b a la n ce she e t .

Tr u e Fa l se

F i ll in th e Bl an k Q u est ions

20. Th e p r o p er t y t ha t a b u sin e ss o wn s i s r e f e r r e d t o a s i t s

2 1 . Th e d e b t s o r o b l ig a t io n s o f a b u sin e ss a r e kn o wn a s i t s

22. Th e i n co me sta t e me n t shows r e ve n u e ,

, a n d n e t i n co me o r n e t l o ss f o

raperiod o f t i me .

23. Th e f i n a n cia l i n te r e st o f t h e o wn e r i n a b u sin e ss i s ca l l e d o wn e r 's e q u i t y or

2 4. Th e a cco u n t u se d t o r e co r d a mou n t s t h a t a r e o we d f o r g o o d s o r se r vi ce s p u r ch a se d o n cr e d i t a r e kn o wn a s .

25. Wh e n a b u sin e ss se l l s se r vi c e s f o r ca sh, a sse t s i n cr e a se a n d r e ve n u e .

26. Th e a cco u n t u se d t o r e co r d a mou n t s t h a t wil l b e co l l e cte d f r o m ch a r g e a cco u n t cu sto me r s i n t h e f u t u re a r e r e fe r r ed t o a s

2 7. Th e

i s t h e f i n an ci a l r e po r t t h at sho ws t h e a sse t s, l i a b i l i t ie s, a n d o

wn e r 's e q u i t y o f a b u sin e ss o n a sp e ci f i c d a t e .

28. I f a sse t s a r e $ 1 7, 0 0 0 a nd o wn e r 's e q u it y i s $ 1 0 ,0 0 0, li a bi l it i e s a r e .

29. Wh e n a b u sin e ss p a y s ca sh f o r sa l a r ie s, a sse t s d e cr e a se a n d e xp e n se s .

30. Fu n d s t a ke n f r o m t h e b u sin e ss b y t h e o wn e r f o r p e r so na l u se a r e ca l led

3 1 . Th e sta t e me n t o f

r e p o r t s t h e ch a n g e s t h a t h a ve o ccu r r e d i n t he

o wn e r 's f i n a n cia l i n t er e st d u r in g t h e r e p o rt i n g p er i o d.

32. Wh e n r e ve n u e i s g r e a t er t ha n e xp e n se s, t h e r e sul t i s a n e t

33. Wh e n r e ve n u e a n d e xp en ses a r e e q u a l , t he f i r m i s sa i d t o

3 4. Th e t h r e e -l i n e he a d in g o f a f i n a n cia l sta t e me n t sho ws wh o , wh a t , a nd

Mu lt i pl e C h oi ce Qu esti ons

35. Th e b a l a n ce she et sho ws

A. t h e r e sul t s o f b u sine ss o p e ra t i o n s. B. a l l r e ve n ue s a n d e xp e n se s. C. the a mou n t o f n et i n co me o r l o ss. D. t h e f i na n ci a l p o siti o n o f a bu sin e ss a t a g i ve n t i me .

36. Amou n t s t h a t a b u sin e ss m u st p a y i n t h e f u tu r e a re kn o wn a s

A. a cco u n t s r e ce i va b l e . B. a cco u n t s p a y a b le . C. ca p i t a l . D. e xp e n se s.

3 7. E xa mpl e s o f a sse tsare:

A. ca sh a n d a cco u n t s r e ce i va b l e . B. ca sh a n d r e ve n u e . C. ca sh a n d r e n t e xp e n se . D. i n ve stme n t s b y t h e o wn e r an d r e ve n u e .

38. Gi n g e r Ya l e I ce Co mpa n y r ece i ve s mon e y f r o m a cu sto me r o n a cco u n t . R e co r d i n g t h i s t r a n sa ct i on wil l

A. i n cr e a se Acco u n t s R e ce i va b l e . B. i n cr e a se G. Ya l e , Ca p i t a l . C. d e cr e a se Acco u n t s Pa y a b l e . D. i n cr e a se Ca sh.

39. I f a b u sin e ss i ssu e s a ch e c k f o r $ 1 0 0 t o p u r ch a se o ff i ce sup p l ie s, a n a l y ze t h e e f fe ct o n t h e a cco u n t i n g e q ua t io n .

A. Fi n a n ci a l I nt e r e st wil l in cr e ase B. Pr o p e rt y wil l d e cr e a se C. Fi n a n ci a l I nt e r e st wil l d e cr ease D. To t a l Pr o pe r t y wil l re ma i n th e sa me

40 . I f a b u sin e ss i ssu e d a ch e ck f o r $ 1 ,0 00 t o p a y f o r t wo mon t h s r e n t i n ad va n ce , a n a lyze t h e e f f e ct o n t h e f i r ms' a sse t s, l i a b i li t i e s an d o wn e r 's e q u i ty .

A. Ca sh wil l i n cr e a se B. Acco u n t s Pa y a b l e wil l d e cr ea se C. Pr e p a id R e n t wil l i n cr ea se D. O wn e r 's Ca p i t al wil l i n cr e a se

41 . Th e o wn e r 's i n ve stme n t o r e q u i ty i n a b u sin e ss i s ca l l e d

sh. B. d r a win g . C. ca p i t a l . D. a cco u n t s p a y a b le .

42 . At t h e e n d o f t h e f ir st mo n t h o f o p e r at i o n s f o r Sl o Mo De l i ve r y Se r vi ce , t h e b u sin e ss h a d t h e f o l l o win g a cco u n t s: Acco u n t s R e ce i va b l e , $ 1 ,2 0 0; Pr e p aid I n sur a n ce , $ 5 00 ; Eq u i p men t , $ 3 6 ,2 00 a n d Ca sh, $ 40 ,6 5 0 . O n t h e sa me d a t e , Sl o Mo o we d t h e f o l lowin g cr e d i t o r s: Si mpso n Su p p l y Co mpa n y, $ 1 2 ,0 00 ; All e n O f fi ce E q u i pme n t , $ 9 ,5 0 0 .

Th e t o t a l a sse t s f o r t he Sl o Mo De l i ve r y Se r vi ce a r e

A. $ 42 ,3 5 0 . B. $ 78 ,5 5 0 . C. $ 76 ,8 5 0 . D. $ 41 ,8 5 0 .

43 . At t h e e n d o f t h e f ir st mo n t h o f o p e r at i o n s f o r Sl o Mo De l i ve r y Se r vi ce , t h e b u sin e ss h a d t h e f o l l o win g a cco u n t s: Acco u n t s R e ce i va b l e , $ 1 ,2 0 0; Pr e p aid I n sur a n ce , $ 5 00 ; Eq u i p men t , $ 3 6 ,2 00 a n d Ca sh, $ 40 ,6 5 0 . O n t h e sa me d a t e , Sl o Mo o we d t h e f o l lowin g cr e d i t o r s: Si mpso n Su p p l y Co mpa n y, $ 1 2 ,0 00 ; All e n O f fi ce E q u i

pme n t , $ 9 ,5 0 0 . Th e t o t a l a

moun t o f Li a b i l it ie s i s

A. $ 3 6 ,2 0 0. B. $ 9 ,5 0 0 . C. $ 2 1 ,5 00 . D. $ 40 ,6 50.

44. To t a l a sse t s o f Do u g l a s Fu h r Fu r n i t u r e Co . a re $ 3 6 ,00 0 a n d t h e t ot a l l ia b i li t ie s a r e $ 1 2 ,0 0 0. Wh a t i s t h e a mou n t o f t he o wn e r 's e q u i ty ?

A. $ 3 6 ,0 0 0 B. $ 2 4,0 0 0 C. $ 48 ,0 0 0 D. $ 6 ,0 0 0

45 . I f d u r i ng t h e y ea r t o t al a sse t s i n cr e a se b y $ 75 ,0 0 0 a n d to t a l l ia b i li t i e s d e cr ea se b y $ 1 6 ,0 0 0, b y h o w much d i d o wn e r 's e q u i t y i n cr e a se /d e cr ea se ?

A. $ 9 1 ,0 00 i n cr e a se B. $ 5 9 ,0 0 0 d e cr ea se C. $ 9 1 ,0 00 d e cr e a se D. $ 75 ,0 0 0 i n cr ea se

46 . Wh i ch f i n a n ci a l sta t e me nt i s r e p o r t ed a s o f a sp e ci f i c d a t e ?

A. Ba l a n ce Sh e e t B. St a t e me n t o f O wn e r 's E q u ity C. I n co me St a t e me n t D. St a t e me n t o f Ch a ng e s i n Fi n a n ci a l Po siti o n

47. A n e t l o ss r e sul t s

A. wh e n e xp e n se s a r e g r ea t e r t h a n r e ve nu e . B. wh e n a sse t s a r e g r e a t er t h an l i a b il i t ie s. C. wh e n r e ve n u e i s g r e at e r t h an e xp e n se s. D. wh e n e xp e n se s a r e g r ea t e r t h a n a sse t s.

48 . Th e i n co me sta t e me n t shows

A. t h e f i na n ci a l p o siti o n o f a bu sin e ss o n a sp e ci f i c d a t e . B. r e ve n u e a n d o wne r 's e q u i ty.

C. t h e r e sul t s o f o p er a ti o n s f o r a p e r i o d o f t i me . D. t h e t o t al va l u e o f t h e b u sin ess.

49 . I f t h e i n co me sta t e me n t co ve r e d a six - mon t h p e r io d e nd i n g o n N o ve mbe r 3 0 , 2 0 13, t h e t h i r d li n e o f t h e i n co me sta t e me n t h ea d i n g wo u ld read

A. Mo n t h E n d e d N o ve mbe r 3 0, 2 0 1 3 . B. N o ve mbe r 3 0 ,2013. C. Si x- mon t h Pe r i o d E n d e d N ove mbe r 3 0 , 2 0 1 3 . D. Mo n t h o f N o ve mbe r , 2 0 1 3.

50. Wh e n t h e o wn e r i n ve sts ca s h i n a b u sin e ss,

A. a sse t s a n d r e ve n u e i n cr e a se. B. a sse t s i n cr e a se a n d o wn e r 's e q u i t y d e cr ea se s. C. l i a b il i ti e s d e cr e a se a n d o wne r 's e q u i ty i n cr e a se s. D. a sse t s a n d o wn e r 's e q u i t y incr e a se .

5 1 . Wh e n e q u i p me n t i s p u r ch a se d o n cr e d i t ,

A. a sse t s a n d l i a b i li t ie s i n cr e a se . B. a sse t s i n cr e a se a n d l i a bi l i ti es d e cr e a se . C. a sse t s a n d o wn e r 's e q u i t y incr e a se . D. a sse t s a n d e xp e n se s i n cr e a se .

52. Wh e n e q u i p me n t i s p u r ch a se d f o r ca sh,

A. a sse t s d e cr e a se a n d e xp e n se s i n cr e a se .

B. one a sse t i n cr e a se s a n d a n ot h e r a sse t d e cr e a se s. C. a sse t s a n d o wn e r 's e q u i t y incr e a se . D. a sse t s i n cr e a se a n d l i a bi l i ti es d e cr e a se .

53. I f a b u sin e ss r e ce i ve s $ 5 ,0 0 0 o n a cco u n t f r o m cl i e n t s wh o o we d mon e y f o r se r vi ce s p r e vi o u sly b i l l ed , id e nt i fy t h e e f fe ct o n t h e a cco u n t i ng e q u a ti o n

A. a sse t s d e cr e a se a n d l i a bi l i ti es i n cr e a se . B. l i a b il i ti e s d e cr e a se a n d o wne r 's e q u i ty d e cr e a se s. C. a sse t s r e ma i n t h e sa me a n d o wn e r 's e q u i t y r e ma in s t h e sa me . D. o wn e r 's e q u i ty i n cr e a se s a nd r e ve n u e i n cr e a se s.

5 4. Wh e n t h e o wn e r wit h d ra ws ca sh f o r p e r so n a l u se ,

A. a sse t s d e cr e a se a n d e xp e n se s i n cr e a se . B. a sse t s d e cr e a se a n d o wn e r 's e q u i t y i n cr e a se s. C. a sse t s d e cr e a se a n d o wn e r 's e q u i t y d e cr e a se s. D. o wn e r 's e q u i ty d e cr e a se s a nd r e ve n u e d e cr e a se s.

55. Wh e n t h e o wn e r wr i t e s a co mpa n y ch e ck t o p a y t h e f i r m's e l e ct r i c b i l l,

A. a sse t s a n d o wn e r 's e q u i t y incr e a se . B. a sse t s d e cr e a se a n d e xp e n se s i n cr e a se . C. a sse t s a n d l i a b i li t ie s d e cr e a se . D. e xp e n se s i n cr e a se a n d o wne r 's e q u i ty i n cr e a se s.

56. I d e n ti f y t he a cco u n t b e l o w th a t i s cl a ssi f i e d a s a n a sse t a cco u n t a n d wo u l d a p pe a r o n t h e l e ft sid e o f t h e a cco u n t i ng e q u a ti o n.

A. Acco u n t s R e ce i va b l e . B. O wn e r 's Ca p i t al . C. Acco u n t s Pa y a b l e . D. R e ve n ue.

5 7. Asse t s a n d l i a b i l i ti e s a r e r e po r t e d o n

A. t h e b a la n ce she e t . B. t h e i n co me sta t e me n t . C. t h e sta t e me nt o f o wn e r 's e qu i t y . D. b o t h t h e ba l a n ce she et a n d t h e i n co me sta t e me n t .

58. Th e f i n a n cia l sta t e me n t th a t i s p r e p a r e d f i r st is

A. u p t o t h e a cco u n t a nt . B. t h e i n co me sta t e me n t . C. t h e b a la n ce she e t . D. t h e sta t e me nt o f o wn e r 's e qu i t y .

59. Th e r e n t p ai d f o r f u tu r e mon t h s i s a ( n )

A. a sse t . B. l i a b il i ty . C. e xp e n se . D. r e ve n ue.

60. Th e sta t e me n t o f f in a n ci al p o sit i o n i s a n o th e r t er m f o r wh i ch f i n a n ci a l sta te me n t ?

A. I n co me St a t e me n t

B. St a t e me n t o f O wn e r 's E q u ity C. Ba l a n ce Sh e e t D. Tr i a l Ba l a n ce

6 1 . Wh i ch f i n a n ci a l sta t e me nt i s a r e p r e se n ta t i on o f t h e a cco u n t in g e q u at i on ?

A. I n co me St a t e me n t B. St a t e me n t o f O wn e r 's E q u ity C. Ba l a n ce Sh e e t D. Pr o f i t a nd Lo ss St a t e me n t

62. Th e St a t e me n t o f O wn e r 's Eq u i t y i s ca l cu l a t ed a s f o l l o ws:

A. b e g i nn i n g ca p it a l + n e t i n co me - wit h d r a wa l s + a d d i t i o n a l i n ve stme n t s = e n d i n g ca p i t a l B. b e g i nn i n g ca p it a l + n e t l o ss + wit h d r a wa l s + a d d i t i o na l i n ve stme n t s = e n d i n g ca p i t a l C. b e g i nn i n g ca p it a l + n e t l o ss - wit h d r a wa l s + a d d i t i o n a l in ve stme n t s = e n d i n g ca p i t al D. b e g i nn i n g ca p it a l + n e t i n co me + wit h d r a wa l s + a d d i t io n a l i n ve stme n t s = e n d i n g ca p i t a l

63. An I n co me St a t e me n t i s a l l o f t h e f o ll o win g e xce p t :

A. a f o r ma l r e p o rt o f b u sin e ss o p e r at i o n s. B. a p r o f i t an d l o ss sta t e me n t . C. a sta t e me n t o f r e ve n ue s l e ss wit h d r a wa l s a n d e xp e n se s. D. a sta t e me n t o f i n co me a n d e xp e n se s.

$ 2 ,0 0 0 . By t h e e nd o f t h e mon t h , J a ckso n 's h a d e a r ne d $ 2 0 ,0 0 0 o f R e ve nu e s, $ 1 ,000 o f Ut i l i t i e s E xp e n se s a n d $ 1 ,5 00 o f Sa l a r i e s E xp e n se s. Ca l cu l a te t h e n e t i n co me t o b e r e p o rt e d b y t h e co mpa n y f o r t h i s f i r st mo n th .

A. $ 2 0 ,0 0 0 B. $ 1 9 ,0 00 C. $ 1 7, 5 0 0 D. $ 1 2 ,0 00

65. At t h e e n d o f i t s f i r st ye ar o f o p e r a t io n s, Sh a p i r o's Co n sul t i ng Se r vi ce s r e p o r t e d n e t i n co me o f $ 2 5 ,0 0 0. Th e y a l so h a d a cco u n t b a la n ce s o f : Ca sh, $ 1 8 ,0 0 0 ; O f f i ce Su p p l ie s, $ 2 ,0 0 0 a n d Acco u n t s R e ce i va b l e $ 1 0,0 0 0 . Th e o wn e r 's t o t al i n ve stme n t f o r t h is f i r st y e a r wa s $ 5 ,0 0 0 . Ca l cu l a t e th e e n d i n g b al a n ce t o b e r ep o r te d o n t h e St a t e me n t o f O wn e r 's E q u i ty i n t h e O wn e r's Ca p i t al a cco u n t .

A. $ 3 0 ,0 0 0 B. $ 2 5 ,0 0 0 C. $ 2 0 ,0 0 0 D. $ 5 ,0 0 0

66. I d e n ti f y t he t y p e o f a cco u n ts t h a t wo u l d a p p ea r o n a f i rm's i n co me sta t e me n t

A. a sse t s a n d l i a b i li t ie s. B. r e ve n u e s a n d e xp en se s. C. a sse t s a n d r e ve n u e s. D. l i a b il i ti e s a n d e xp e n se s.

6 7. O wn e r 's e q u i ty i s:

A. t h e a mou n t t a ke n o ut o f a b u sin e ss b y t h e o wn e r f o r pe r so n a l u se . B. the f i na n ci a l i nt e r e st o f th e o wn e r o f a b u sin e ss. C. t h e a mou n t t he o wn e r o wes t h e b u sin e ss. D. t h e r e ve n u e s l e ss t h e e xp e nse s.

68. Gi ve n t h e o p t i o n s b e l o w, ide n t i fy t h e co r r e ct a cco u n t i ng e q u a t io n f o r mula .

A. Asse t s = Li a b i l i t ie s + O wn e r 's E q u i t y B. Li a b i l i ti e s = A sse t s + O wn e r 's E q u i t y C. Asse t s + Li a b i l i t ie s = O wn e r 's E q u i t y D. Asse t s + O wn e r 's E q u i t y = L i a b i li t ie s

69. Th e b a l a n ce she et sho ws e a ch o f t h e f o l l o wing e xce p t t h e :

A. n e t i n co me o f t h e b u sine ss. B. a mou n t a n d t yp e s o f p r o p er t y t h e b u sine ss o wn s. C. o wn e r 's i n t e re st. D. a mou n t o we d cr e d i t or s.

70 . Th e Ba l a n ce Sh e e t h e a di n g i n cl u d e s e a ch o f t h e f ol l o win g e xce p t :

A. f i r m's n a me .

B. f i r m's a d d r e ss. C. t i t l e o f th e r e p or t . D. d a t e o f t he r e p o rt .

71 . Ch o o se t h e o p ti o n b el o w t ha t r e f l e ct s t h e co r r e ct o r de r i n wh i ch t o p r e p a re t h e t h ree f i n a n ci al sta t e me n t s

A. Ba l a n ce Sh e e t ; I n co me St a t e me n t ; St a t e me n t o f O wn er's E q u i t y . B. I n co me St a t e me n t ; St a t e men t o f O wn e r 's E q u i ty ; Ba l a n ce Sh e e t . C. I n co me St a t e me n t ; Ba l a n ce Sh e e t ; St a t e me n t o f O wn e r's E q u i t y . D. St a t e me n t o f O wn e r 's E q u ity ; Ba l a n ce Sh e e t ; I n co me St a t e me n t .

72 . An e xp e n se b y d e f i ni t i on i s not:

A. a n a mou n t a b u sin e ss must p a y i n t h e f ut u r e. B. an o u t f lo w o f ca sh. C. t h e u se o f o t h er a sse t s. D. t h e i n cu r r in g o f a l i ab i l it y .

Sho rt An swer Q u est i on s

73 . O n De ce mbe r 1 , 2 0 1 6 , Ge n e va J o r d a n o p e ne d h e r n e w b u sin e ss wit h t h e f o l lo win g a sse t s a n d l i a b il i ti e s. Co mpl e t e t he a cco u n t in g e q u at i on f o r t h e f irm.

Asse t s $

= Li a b i l i t ie s $

+ O wn e r 's E q u i t y $

74. Du r i n g O ct o b e r , a f ir m h a d t h e f o l lo win g t ra n sa ct i o n s i nvo l vi n g r e ve n u e a n d e xp en se s. Di d t h e f i r m e a r n a n e t i n co me o r i ncu r a n e t l o ss f o r t h e p e r i o d? Wh a t wa s t h e a mou n t ?

Pa i d $ 1 ,2 00 f o r r e nt Pr o vi d e d se r vi ce s f o r $ 2 ,7 5 0 i n ca sh Pa i d $ 2 5 0 f o r te l e ph o ne se r vi ce Pr o vi d e d se r vi ce s f o r $ 1 ,9 0 0 o n cr e d i t Pa i d sa l a r ie s o f $ 1 ,6 75 t o empl o y e e s Pa i d $ 3 5 0 f o r of f i ce cl e a n ing se r vi ce

75 . Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Pe r f o r me d se r vi ce s o n cr e d i t

76 . Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Pa i d ca sh f o r u t i l it i e s

77. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w th e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Se n t a ch e ck t o a cr e d i t o r

78 . Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

I ssu e d ch e cks t o p a y sa l a r i es

79 . Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Pu r ch a se d a co mpu t e r f o r ca sh

80. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s af f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

R e ce i ve d ca sh f r o m cr e d i t c u sto me r s

8 1 . Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Pe r f o r me d se r vi ce s f o r ca sh

82. Th e t r a n sa ct i on s l i ste d b e lo w t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Th e o wn e r ma d e a n a d d it i on a l i n ve stme n t o f ca sh

83. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Pu r ch a se d f u r ni t u re o n cr e di t

8 4. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

H a d a co mpu t e r r e p a ir e d ; pa y me n t i s d u e i n 3 0 d a y s

85. Gu y McK i n l e y sta r t e d t he McK i n l e y Ch ar t e r Se r vi ce a t t he b e g i n ni n g o f Au g u st 201 6 . O n Au g u st 31 , 2 0 1 6 , t he a cco u n t i n g r e co rds o f t h e b u sin e ss sho we d t h e f o l l o wing i n f o r mat i o n. Pr ep a r e a n i n co me sta t e me n t a n d a sta te me n t o f o wn e r 's e q u it y f o r t h e mo n t h a n d a b al a n ce she e t a s o f Au g u st 31 , 2016.

86. O n Se p t e mbe r 1 , Sh a wn Da h l e sta b l i she d Wh i t e wa t er R e n t a l s, a ca n o e an d ka y a k r e n t a l b u sin e ss. Th e f o l l o win g t r a n sa ct io n s o ccu r r e d i n t h e mon t h o f Se p t e mbe r a n d af f e ct e d t he fo l l o wing a cco u n t s:

Tr a n sa ct i o n s

1 . Sh a wn Da h l i n ve ste d $ 45 ,0 0 0 i n ca sh t o o p e n t h e b u si n e ss 2 . Pa i d $ 1 2 ,7 00 i n ca sh f o r t h e p u r ch a se o f ka y a k a n d ca n o e e q ui p me nt 3 . Pa i d $ 1 ,0 50 i n ca sh f o r r e n t e xp e n se 4. Pu r ch a se d a d d i t i on a l ka ya k a n d ca n o e e q u i p me n t f or $ 3 ,8 0 0 o n cr e d i t 5 . R e ce i ve d $ 3 ,9 0 0 i n ca sh f o r ka y a k r e n t a l s 6 . R e n t e d ca n oe s a n d ka y a ks f o r $ 1 ,2 0 0 o n a cco u n t 7. Pu r ch a se d o f f i ce e q u ip me n t f o r $ 1 25 i n ca sh 8 . R e ce i ve d $ 8 0 0 i n ca sh f r om cr e d i t cl i e n t s 9 . Sh a wn Da h l wit h d r e w $ 1 ,5 0 0 i n ca sh f o r p e r so n a l e xp e n se s

Ba se d o n t h e i n f o r ma ti o n sho wn i n t r a n sa ct io n #4 a b o ve , in d i ca t e t h e a cco u n t s a f fe ct e d a n d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y t h e t r an sa ct i o n .

8 7. O n Se p t e mbe r 1 , Sh a wn Da h l e sta b l i she d Wh i t e wa t er R e n t a l s, a ca n o e an d ka y a k r e n t a l b u sin e ss. Th e f o l l o win g t r a n sa ct io n s o ccu r r e d i n t h e mon t h o f Se p t e mbe r a n d af f e ct e d t he fo l l o wing a cco u n t s:

Tr a n sa ct i o n s

1 . Sh a wn Da h l i n ve ste d $ 45 ,0 0 0 i n ca sh t o o p e n t h e b u si n e ss 2 . Pa i d $ 1 2 ,7 00 i n ca sh f o r t h e p u r ch a se o f ka y a k a n d ca n o e e q ui p me n t 3 . Pa i d $ 1 ,0 50 i n ca sh f o r r e n t e xp e n se 4. Pu r ch a se d a d d i t i on a l ka ya k a n d ca n o e e q u i p me n t f or $ 3 ,8 0 0 o n cr e dit 5 . R e ce i ve d $ 3 ,9 0 0 i n ca sh f o r ka y a k r e n t a l s 6 . R e n t e d ca n oe s a n d ka y a ks f o r $ 1 ,2 0 0 o n a cco u n t 7. Pu r ch a se d o f f i ce e q u ip me n t f o r $ 1 25 i n ca sh 8 . R e ce i ve d $ 8 0 0 i n ca sh f r om cr e d i t cl i e n t s 9 . Sh a wn Da h l wit h d r e w $ 1 ,5 0 0 i n ca sh f o r p e r so n a l e xp e n se s

Ba se d o n t h e i n f o r ma ti o n sho wn a b o ve , wh a t i s t h e b a la n ce o f Acco u n t s R e ce i va b l e f o r Wh i t e wa t e r R e n t al s a t t h e e n d o f Se p t embe r ?

88. O n Se p t e mbe r 1 , Sh a wn Da h l e sta b l i she d Wh i t e wa t er R e n t a l s, a ca n o e an d ka y a k r e n t a l b u sin e ss. Th e f o l l o win g t r a n sa ct io n s o ccu r r e d i n t h e mon t h o f Se p t e mbe r a n d af f e ct e d t he fo l l o wing a cco u n t s:

Tr a n sa ct i o n s

Ba se d o n t h e i n f o r ma ti o n ab o ve , wh a t i s t h e f u n d a me nt a l a cco u n t i ng e q u a ti o n a t th e e n d o f Se p t e mbe r f o r Wh i t e wa te r R e n t al s?

89. O n J u n e 1 , Do n n a Ba n hi l e sta b l i shed So l o Se r vi ce s, a vo i ce co n sul t i n g se r vi ce . En t e r t h e f o l lo win g t r a n sa ct i on s f o r J u n e i n t he t a b l e be l o w u sin g + a n d - t o i n d i ca t e i n cr ea se s o r d e cr e a se s:

Tr a n sa ct i o n s

1 . Do n n a Ba n h i l i n ve sted $ 15 ,0 0 0 i n ca sh t o o p e n t he b u sin e ss 2 . Pa i d $ 1 ,5 00 f o r J u ne 's r e nt 3 . Pa i d $ 4,5 0 0 f o r r e nt i n a dva n ce , f o r t h e n e xt t h re e mon t h s ( J u ly - Se p t e mbe r) 4. Pu r ch a se d o f f i ce sup p l i e s f o r $ 8 0 0 o n cr e d i t 5 . Pe r f o r me d vo i ce co n sul t in g se r vi ce s a n d i mme d i a t e l y r e ce i ve d $ 1 ,2 0 0 f ro m cl i e n t s. 6 . Ga ve vo i ce l e sso n s t o ch a r g e a cco u n t cl i e n t s a n d e arn e d $ 9 ,0 00 7. Pa i d $ 1 0 0 ca sh f o r t h e sup p l i e s p u r ch a sed e a r li e r i n th e mon t h 8 . R e ce i ve d $ 1 ,0 0 0 i n ca sh f ro m cr e d i t cl i e n t s b i l l e d ea r l ie r i n t h e mon t h

90. Th e f i g u re b e l o w sho ws t h e t r a n sa ct i on s f o r Sa wy e r Ar c h i t e ct u re Se r vi ce s d u r i n g J u n e . Gr e g Sa wy e r o p e n ed t h i s b u sin e ss o n J un e 1 wit h a ca p i t a l i n ve stmen t o f $ 72 ,0 0 0 ( Tra n sa ct i o n 1) .

Wh a t wa s t h e n e t i n co me o r n e t l o ss f o r Sa wy e r Ar ch i t e ct u r e Se r vi ce s f o r t h e mon t h o f J u n e ?

9 1 . Th e f i g u re b e l o w sho ws t h e t r a n sa ct i on s f o r Sa wy e r Ar c h i t e ct u re Se r vi ce s d u r i n g J u n e . Gr e g Sa wy e r o p e n ed t h i s b u sin e ss o n J un e 1 wit h a ca p i t a l i n ve stmen t o f $ 72 ,0 0 0 ( Tra n sa ct i o n 1) .

Pr e p a re t h e sta t e me nt o f own e r 's e q u i t y fo r Sa wy e r Ar ch i t e ct u r e Se r vi ce s f o r t h e mon t h e n d e d J u n e 3 0 , 2 01 6 .

92. Th e f i g u re b e l o w sho ws t h e t r a n sa ct i on s f o r Sa wy e r Ar c h i t e ct u re Se r vi ce s d u r i n g J u n e . Gr e g Sa wy e r o p e n ed t h i s b u sin e ss o n J un e 1 wit h a ca p i t a l i n ve stmen t o f $ 72 ,0 0 0 ( Tra n sa ct i o n 1) .

Pr e p a re t h e b a la n ce she e t fo r Sa wy e r Ar ch i t e ct u r e Se r vi ce s a s o f J u n e 30,2016.

93. Cu l l e n Be a tt y p l an s t o sta r t a co n sul t i n g b u sine ss â&#x20AC;&#x201D; Cu l l e n Co n sul t in g Se r vi ce s. I n p r e p a ra t i on t o d o t h i s, o n Ap r i l 1 , 2 01 6 , h e i n ve ste d $ 5 0 ,0 00 i n ca sh a n d $ 1 9 ,0 0 0 i n eq u i p me nt , a n d op e n e d a n a cco u n t a t O f f i ce Pl u s b y p ur ch a sin g $ 1 ,5 00 i n o f f i ce supp l i e s wh i ch i s d u e b y t h e e nd ofthe mon t h . He t h e n sig ne d a o ne - y e a r l ea se a g r ee me n t o n a n o f f i ce b u il d i ng f o r $ 6 ,0 00, p a y i n g t he f u l l a mou n t in a d va n ce .

Pr e p a re a Ba l a n ce Sh e e t f o r Cu l l e n Co n sul ti n g Se r vi ce s a s o f Ap r i l 1 , 2 0 1 6 , b ef o r e he co n d u ct s a n y se r vi ce s.

9 4. Cu l l e n Be a tt y p l an s t o sta r t a co n sul t i n g b u sine ss â&#x20AC;&#x201D; Cu l l e n Co n sul t in g Se r vi ce s. I n p r e p a ra t i on t o d o t h i s, o n Ap r i l 1 , 2 01 6 , h e i n ve ste d $ 5 0 ,0 00 i n ca sh a n d $ 1 9 ,0 0 0 i n eq u i p me nt , a n d op e n e d a n a cco u n t a t O f f i ce Pl u s b y p ur ch a sin g $ 1 ,5 00 i n o f f i ce supp l i e s wh i ch i s d u e b y t h e e nd ofthe mon t h . He t h e n sig ne d a o ne - y e a r l ea se a g r ee me n t o n a n o f f i ce b u il d i ng f o r $ 6 ,0 00, p a y i n g t he f u l l a mou n t in a d va n ce .

Cu l l e n wo u ld l i ke a n e xp l a na t i o n o f th e a cco u n t i ng f o r h i s b u sin e ss a ct i o n s a s o f A p r i l 1 , 2 0 16 . E xp l a i n t he t e r ms a n d i n t e ract i o n s b e t we e n t he ca t e g o r ie s o n a Ba l a n ce Sh e e t .

Ch apter 02 An alyzin g Bu sin ess Tran sact ion s Answer K ey

T ru e / F als e Q u est ion s

TR UE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effec ts in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

2. Wh e n u sin g t h e f u n da me n ta l a cco u n t i n g e qu a t io n , a n a cco u n t a n t must ma ke sur e t h a t t o t al a sse t s a r e a l wa y s e q u a l t o to t a l l ia b i li t i e s a n d o wne r 's e q u i t y .

TR UE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity a n d record

th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

3. Asse t s a l wa y s e q u a l d e b t s o f t h e b u sin e ss p l u s t h e f i na nci a l i n t e re st o f t h e o wn e r .

TR UE

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n ts an d Th eir Relations h ips

4. Wh e n ca sh is p a i d t o a cr e d i t o r , t he f i r m's l i a b il i t ie s d e cr e a se .

TR UE

A AC SB: A n alytic

A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02-02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n ts an d Th eir Relations h ips

5. Al Du n n Ba ke r y b o u g h t a n e w o ve n f o r $ 1 ,3 8 0 . Al p a i d $ 3 0 0 a s a ca sh d o wn p a y m e n t a n d wil l p a y t h e b al a n ce i n 3 0 d a y s. To t a l a sse t s i n cr e a se d b y $ 1 ,0 8 0 .

TR UE

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g

A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 2 Medium Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

6. I f t h e o wn e r t a ke s ca sh o u t o f t h e b u sin e ss f o r p e r son a l u se , t h e wit h d r a wa l sho ul d b e r e co r d e d a s a n e xp e n se o f t h e b u siness.

F AL SE

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A IC PA F N : Reportin g A cces s ibility: K

eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

7. Wh e n ca sh is co l l e ct e d f r om a c co u n t s r e ce i va b l e , t h e to t a l a mou n t of a sse t s i n cr e a se s.

F AL SE

th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

8. A co mpa n y h a s a sse t s o f $ 5 6 ,3 2 0 a n d l ia b il i t ie s o f $ 2 9 ,50 0 . Th e o wn e r 's e q u it y i s $ 8 5 ,8 2 0 .

F AL SE

Usin g t h e f u n d a me n ta l a cco u n t i ng e q u a ti o n , o wne r 's e qu i t y wo u l d b e $ 26 ,8 2 0 ( $ 5 6 , 3 2 0 = $ 2 9 ,5 0 0 + $ 2 6 ,8 20)

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Measu rem en t A cces s ibility: K eyboard N avigation Bloom s : A pply Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

9. Th e e xp e n se s f o r a p e r io d ar e r e p o rt e d o n t he b a l an ce she e t .

F AL SE

1 0 . A d o u b l e l i ne d r a wn u n d er t h e f i g u re s i n a mon e y co l u mn sh o ws t h a t t h e co mpu t at i o n i s co mpl e t e .

TR UE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh e et Learn in g Objective: 02 -06 Defin e th e accou n tin g terms n ew to th is chapter. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

11. A b u sin e ss t r a n sa ct i o n i s a f i n a n ci a l e ve n t th a t a f fe ct s t h e r e so u r ce s o f a b u sin e ss.

TR UE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Decis ion

Makin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: Bu s in es s Trans actions an d Even ts

1 2 . I f t h e re i s a n e xce ss o f e xp e n se s o ve r r e ve n u e s, t h e e xce ss r e p r e se n t s a p r o f it .

F AL SE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation

Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

1 3 . A wit h d r a wa l o f f u n d s b y t he o wn e r f o r p e r so na l u se i s co n sid e r e d a b u sine ss e xp e n se .

F AL SE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu at ion an d F in an cial Statem en ts

1 4. Th e sta t e me n t o f o wn e r's e q u i t y i s p r e pa r e d be f o re t h e b a l a n ce she e t so t h a t t he en d i n g ca p i ta l b a l a n ce i s a va i l a bl e .

TR UE

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

1 5 . I f a sse t s a r e $ 8 ,0 0 0 a nd l i a bil i t i e s a r e $ 2,0 0 0 , o wn er 's e qu i t y i s $ 1 0 ,0 00 .

F AL SE

Usin g t h e f u n d a me n ta l a cco u n t i ng e q u a ti o n , o wne r 's e qu i t y wo u l d b e $ 6,0 0 0 ( $ 8,0 00 = $ 2 ,0 0 0 + $ 6 ,0 0 0 )

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

1 6. Th e a mou n t o f n e t i n co me o r n e t l o ss i s n e e d e d t o co mpl e t e t h e sta te me n t o f o wn e r 's e q u it y .

TR UE

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

1 7. Wi t h d r a wa l s b y t h e o wn er a r e r e p o rt e d o n t he i n co me s t a t e me n t.

F AL SE

A AC SB: A n alytic

A IC PA BB: C ritical Th in kin g A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

1 8 . Th e i n co me sta t e me n t i s a l so kn o wn a s t h e p r o f i t a n d lo ss sta t e me n t .

TR UE

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

1 9 . Th e n e t i n co me o r n e t l o ss f o r t h e p e ri o d i s sho wn o n b o t h t h e i n co me sta t e me n t an d t h e b a l a n ce she et .

F AL SE

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

F i ll in th e Bl an k Q u est ions

20. Th e p r o p er t y t ha t a b u sin e ss o wn s i s r e f e r r e d t o a s i t

. a sse t s

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n ts an d Th eir Relations h ips

2 1 . Th e d e b t s o r o b l ig a t io n s o f a b u sin e ss a r e kn o wn a s i

. l i a b i li t i e s

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t Bloom s : Rem em ber Difficulty: 1 E as y

Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n ts an d Th eir Relations h ips

22. Th e i n co me sta t e me n t shows r e ve n u e ,

, a n d n e t i n co me o r n e t l o

ss f o r a p e r i od o f t i me .

e xp e n se s

A AC SB: A n alytic A IC PA BB: I n du s try

A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

23. Th e f i n a n cia l i n te r e st o f t h e o wn e r i n a b u sin e ss i s ca l l e d o wn e r 's e

q u i t y or

. ca p i t a l

A AC SB: A n alytic A IC PA BB: I n du s try AIC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n ts an d Th eir Relations h ips

2 4. Th e a cco u n t u se d t o r e c o r d a mou n t s t h a t a r e o we d f o r g o o d s o r se r vi ce s p u r ch a se d o n cr e d i t a r e kn o wn a s

a c co u n t s p a y a bl e

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

25. Wh e n a b u sin e ss se l l s se r vi c e s f o r ca sh, a sse t s i n cr e a se a n d r e ve

nue

. i n cr e a se s

A AC SB: A n alytic A IC PA BB: I n du s try

A IC PA F N : Reportin g Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu atio n an d F in an cial Statem en ts

26. Th e a cco u n t u se d t o r e co r d a mou n t s t h a t wil l b e co l l e cte d f r o m ch a r g e a cco u n t cu sto me r s i n t h e f u t ur e a r e r ef e r re d t o a s

a c co u n t s r e ce i va b l e

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

2 7. Th e

i s t h e f i n an ci a l r e po r t t h at sho ws t h e a sse t s, l i a b i l i t ie s, a n

d o wn e r 's e q u i ty o f a b u sin e ss o n a sp e ci f i c d a t e .

b a l a n ce she e t

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

28. I f a sse t s a r e $ 1 7, 0 0 0 a nd o wn e r 's e q u it y i s $ 1 0 ,0 0 0, li a bi l it i e s a r e

$ 7, 0 0 0

Asse t s = Li a b i l i t ie s + O wn e r 's E q u i t y ; t h er e f or e , $ 1 7,0 0 0 = $ 7, 0 0 0 + $ 1 0 ,0 0 0 .

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Measu rem en t Bloom s : A pply Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

29. Wh e n a b u sin e ss p a y s ca sh f o r sa l a r ie s, a sse t s d e cr e a se a n d e xp e

n se s

. i n cr e a se

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Measu rem en t Bloom s : A pply

Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

30. Fu n d s t a ke n f r o m t h e b u sin e ss b y t h e o wn e r f o r p e r so na l u se a r e

ca l l e d

. wit h d r a wa l s

A AC SB: A n alytic A IC PA BB: I n du s try

A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

3 1 . Th e sta t e me n t o f

r e p o r t s t h e ch a n g e s t h a t h a ve o ccu r r e d i n t

he o wn e r 's f i n a n cia l i n t er e st d u r in g t h e r e p o rt i n g p er i o d.

o wn e r 's e q u i t y

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

32. Wh e n r e ve n u e i s g r e a t er t ha n e xp e n se s, t h e r e sul t i s a n

. i n co me

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

33. Wh e n r e ve n u e a n d e xp en ses a r e e q u a l , t he f i r m i s sa i d t

. b r e a k e ve n

A AC SB: A n alytic

A IC PA BB: I n du s try A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

3 4. Th e t h r e e -l i n e he a d in g o f a f i n a n cia l sta t e me n t sho ws wh o , wh a t

,and

. wh e n

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

Mu lt i pl e C h oi ce Qu esti ons

35. Th e b a l a n ce she et sho ws

A. t h e r e sul t s o f b u sine ss o p e ra t i o n s. B. a l l r e ve n ue s a n d e xp e n se s. C. t h e a mou n t o f n et i n co me o r l o ss. D. t h e f i na n ci a l p o siti o n o f a bu sin e ss a t a g i ve n t i me .

A AC SB: A n alytic A IC PA BB: I n du s try

A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

36. Amou n t s t h a t a b u sin e ss m u st p a y i n t h e f u tu r e a re kn o wn a s

A. a cco u n t s r e ce i va b l e . B. a cco u n t s p a y a b le . C. ca p i t a l . D. e xp e n se s.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s

: Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

3 7. E xa mpl e s o f a sse t s a r e :

A. ca sh a n d a cco u n t s r e ce i va b l e . B. ca sh a n d r e ve n u e . C. ca sh a n d r e n t e xp e n se . D. i n ve stme n t s b y t h e o wn e r an d r e ve n u e .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation

Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n ts an d Th eir F in an cial Statem en ts

38. Gi n g e r Ya l e I ce Co mpa n y r ece i ve s mon e y f r o m a cu sto me r o n a cco u n t . R e co r d i n g t h i s t r a n sa ct i on wil l

A. i n cr e a se Acco u n t s R e ce i va b l e . B. i n cr e a se G. Ya l e , Ca p i t a l . C. d e cr e a se Acco u n t s Pa y a b l e . D. i n cr e a se Ca sh.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t A cces s ibility: K

eyboard N avigation Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

39. I f a b u sin e ss i ssu e s a ch e c k f o r $ 1 0 0 t o p u r ch a se o ff i ce sup p l ie s, a n a l y ze t h e e f fe ct o n t h e a cco u n t i n g e q ua t io n .

A. Fi n a n ci a l I nt e r e st wil l in cr e ase B. Pr o p e rt y wil l d e cr e a se C. Fi n a n ci a l I nt e r e st wil l d e cr ease D. To t a l Pr o pe r t y wil l re ma i n th e sa me

A AC SB: A n alytic A IC PA BB: I n du s try

A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: P roperty an d F in an cial In teres t

40 . I f a b u sin e ss i ssu e d a ch e ck f o r $ 1 ,0 00 t o p a y f o r t wo mon t h s r e n t i n ad va n ce , a n a lyze t h e e f f e ct o n t h e f i r ms ' a sse t s, l i a b i li t ies a n d o wn e r 's e q u i t y.

A. Ca sh wil l i n cr e a se B. Acco u n t s Pa y a b l e wil l d e cr ea se C. Pr e p a id R e n t wil l i n cr ea se D. O wn e r 's Ca p i t al wil l i n cr e a se

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 1 E as y

Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

41 . Th e o wn e r 's i n ve stme n t o r e q u i ty i n a b u sin e ss i s ca l l e d

A. ca sh. B. d r a win g . C. ca p i tal. D. a cco u n t s p a y a b le .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

40 ,6 5 0 . O n t he sa me d a t e , Sl o Mo o we d t h e f o l l o win g cr e d i t or s: Si mpso n Su p p l y Co mpa n y , $ 1 2,0 0 0 ; All en O ff i ce E q u i p me n t , $ 9,5 0 0 .

Th e t o t a l a sse t s f o r t he Sl o Mo De l i ve r y Se r vi ce a r e

A. $ 42 ,3 0 . ,5 B. 5 $ 78 0 . ,8 C. 5 $ 76 0 . ,8 D. 5 $ 41 50. Asse t s = A cco u n t s R e ce i va b l e , $ 1 ,2 00 + Pr e p a i d I n sur ance , $ 5 0 0 + E q u i p me n t $ 3 6 ,20 0 + Ca sh, $ 40 ,6 5 0 = $ 78 ,5 5 0 .

A AC SB: A n alytic

A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Measu rem en t A cces s ibility: K eyboard N avigation Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

43 . At t h e e n d o f t h e f ir st mo n t h o f o p e r at i o n s f o r Sl o Mo De l i ve r y Se r vi ce , t h e b u sin e ss h a d t h e f o l l o win g a cco u n t s: Acco u n t s R e ce i va b l e , $ 1 ,2 0 0; Pr e p aid I n sur a n ce , $ 5 00 ; Eq u i p men t , $ 3 6 ,2 00 a n d Ca sh, $ 40 ,6 5 0 . O n t he sa me d a t e , Sl o Mo o we d t h e f o l l o win g cr e d i t or s: Si mpso n Su p p l y Co mpa n y , $ 1 2,0 0 0 ; All en O ff i ce E q u i p me n t , $ 9,5 0 0 .

Th e t o t a l a moun t o f Li a b i l it ie s i s

A. $ 3 6 ,2 0. ,5 0 B. 0 $9 C. 0 $ .2 1 ,5 . ,6 D. 00 $ 40 50. Li a b i l i ti e s = Si mpso n Su p p l y Co mpa n y , $ 1 2 ,0 00 + Al l e n O f f i ce E q u i p me nt , $ 9 ,5 00 = $ 2 1 ,5 00 .

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA BB: I n du s try A IC PA F N : Measu rem en t A cces s ibility: K eyboard N avigation Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

A. $ 3 6 ,0 0 4,0 B. 0 $2 C. 0 $0 48 ,0 0 ,0 0 D. 0 $6 0 Asse t s = Li a b i l i t ie s + O wn e r s' E q u i t y : $ 3 6 ,0 0 0 = $ 1 2 ,0 0 0 + $ 2 4,0 0 0

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effec ts in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

A. $ 9 1 ,0 00 i n cr e a se B. $ 5 9 ,0 0 0 d e cr ea se C. $ 9 1 ,0 00 d e cr e a se D. $ 75 ,0 0 0 i n cr ea se

$ 75 ,0 0 0 = ( $ 1 6 ,0 0 0) + $ 9 1 ,0 0 0

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g

A IC PA BB: I n du s try A IC PA F N : Measu rem en t A cces s ibility: K eyboard N avigation Bloom s : Evalu ate Difficulty: 3 Hard Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

46 . Wh i ch f i n a n ci a l sta t e me nt i s r e p o r t ed a s o f a sp e ci f i c d a t e ?

A. Ba l a n ce Sh e e t B. St a t e me n t o f O wn e r 's E q u ity C. I n co me St a t e me n t D. St a t e me n t o f Ch a ng e s i n Fi n a n ci a l Po siti o n

Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

47. A n e t l o ss r e sul t s

A AC SB: A n alytic A IC PA BB: I n du s try

A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: Th e Accoun tin g E qu ation and F in an cial Statem en ts

48 . Th e i n co me sta t e me n t shows

A. t h e f i na n ci a l p o siti o n o f a bu sin e ss o n a sp e ci f i c d a t e . B. r e ve n u e a n d o wne r 's e q u i ty. C. t h e r e sul t s o f o p er a ti o n s f o r a p e r i o d o f t i me . D. t h e t o t al va l u e o f t h e b u sin ess.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s :

Rem em ber Difficulty: 2 Medium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

49 . I f t h e i n co me sta t e me n t co ve r e d a six - mon t h p e r io d e nd i n g o n N o ve mbe r 3 0 , 2 0 13, t h e t h i r d l i n e o f t he i n co me sta t e me nt h e a d i ng wo u l d r e ad

A. Mo n t h E n d e d N o ve mbe r 3 0, 2 0 1 3 . B. N o ve mbe r 3 0 , 2013. C. Si x- mon t h Pe r i o d E n d e d N ove mbe r 3 0 , 2 0 1 3 . D. Mo n t h o f N o ve mbe r , 2 0 1 3.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g

A cces s ibility: K eyboard N avigation Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

50. Wh e n t h e o wn e r i n ve sts ca s h i n a b u sin e ss,

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm .

Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

5 1 . Wh e n e q u i p me n t i s p u r ch a se d o n cr e d i t ,

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation

Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

52. Wh e n e q u i p me n t i s p u r ch a se d f o r ca sh,

A. a sse t s d e cr e a se a n d e xp e n se s i n cr e a se . B. o n e a sse t i n cr e a se s a n d a n ot h e r a sse t d e cr e a se s. C. a sse t s a n d o wn e r 's e q u i t y incr e a se . D. a sse t s i n cr e a se a n d l i a bi l i ti es d e cr e a se .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un

ders

Difficulty:

tan

edium Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

Ca sh is i n cr e a se d b y $ 5 ,0 0 0 b u t Acco u n t s R e ce i va b l e i s r e d u ce d b y $ 5 ,00 0 so t h e r e i s n o ch a n g e i n t o ta l a sse t s.

A AC SB: A n alytic

A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A cces s ibility: K eyboard N avigation Bloom s : An alyze Difficulty: 2 M edium Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effe cts in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

5 4. Wh e n t h e o wn e r wit h d ra ws ca sh f o r p e r so n a l u se ,

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d

Difficulty: 2 M edium Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

55. Wh e n t h e o wn e r wr i t e s a co mpa n y ch e ck t o p a y t h e f i r m's e l e ct r i c b i l l ,

A AC SB: A n alytic

A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ atio n f orm Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

56. I d e n ti f y t he a cco u n t b e l o w th a t i s cl a ssi f i e d a s a n a sse t a cco u n t a n d wo u l d a p pe a r o n t h e l e ft sid e o f t h e a cco u n t i ng e q u at i o n .

A. Acco u n t s R e ce i va b l e . B. O wn e r 's Ca p i t al . C. Acco u n t s Pa y a b l e . D. R e ve n ue.

A AC SB: A n alytic A IC PA BB: I

n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

5 7. Asse t s a n d l i a b i l i ti e s a r e r e po r t e d o n

A. t h e b a la n ce she e t . B. t h e i n co me sta t e me n t . C. the sta t e me nt o f o wn e r 's e qu i t y . D. b o t h t h e ba l a n ce she et a n d t h e i n co me sta t e me n t .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n ts an d Th eir Relations h ips

58. Th e f i n a n cia l sta t e me n t th a t i s p r e p a r e d f i r st is

A. u p t o t h e a cco u n t a nt . B. t h e i n co

me sta t e me n t . C. t h e b a la n ce she e t . D. t h e sta t e me nt o f o wn e r 's e qu i t y .

59. Th e r e n t p ai d f o r f u tu r e mon t h s i s a ( n )

A. a sse t . B. l i a b il i ty . C. e xp e n se . D. r e ve n u e .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n ts an d Th eir Relations h ips

60. Th e sta t e me n t o f f in a n ci al p o sit i o n i s a n o th e r t er m f o r wh i ch f i n a n ci a l sta te me n t ?

A. I n co me St a t e me n t B. St a t e me n t o f O wn e r 's E q u ity

C. Ba l a n ce Sh e e t D. Tr i a l Ba l a n ce

6 1 . Wh i ch f i n a n ci a l sta t e me nt i s a r e p r e se n ta t i on o f t h e a cco u n t in g e q u at i on ?

A. I n co me St a t e me n t B. St a t e me n t o f O wn e r 's E q u ity C. Ba l a n ce Sh e e t D. Pr o f i t a nd Lo ss St a t e me n t

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

62. Th e St a t e me n t o f O wn e r 's Eq u i t y i s ca l cu l a t ed a s f o l l o ws:

A. b e g i nn i n g ca p it a l + n e t i n co me - wit h d r a wa l s + a d d i t i o n a l i n ve stme n t s = e n d i n g ca p i t a l

B. b e g i nn i n g ca p it a l + n e t l o ss + wit h d r a wa l s + a d d i t i o na l i n ve stme n t s = e n d i n g ca p i t a l C. b e g i nn i n g ca p it a l + n e t l o ss - wit h d r a wa l s + a d d i t i o n a l in ve stme n t s = e n d i n g ca p i t al D. b e g i nn i n g ca p it a l + n e t i n co me + wit h d r a wa l s + a d d i t io n a l i n ve stme n t s = e n d i n g ca p i t a l

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

63. An I n co me St a t e me n t i s a l l o f t h e f o ll o win g e xce p t :

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un

ders

Difficulty:

tan

edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

6 4. At t h e e n d o f t h e f ir st mo n t h o f o p e r at i o n s f o r J a ckso n 's Ca t e r i n g Se r vi ce , t h e b u sin e ss h a d t h e f o l l o win g a cco u n t s: Ca sh, $ 19 ,0 0 0 ; Pr ep a i d R en t , $ 5 0 0; Eq u i p me n t , $ 5,0 0 0 a nd Acco u n t s Pa y a b le $ 2 ,0 0 0. By t h e e n d o f t h e mon t h , J a ckso n 's h a d e a r n e d $ 2 0,0 0 0 o f R e ve n ues, $ 1 ,0 0 0 o f Ut i l i t i e s E xp e n se s a n d $ 1 ,5 00 o f Sa l a r i e s E xp e n se s. Ca l cu l a t e th e n e t i n co me t o b e re p o r te d b y t h e co mpa n y f o r t h i s f i r st mo n t h .

A. $ 2 0 ,0 B. 0 $ 10 9 ,0 C. 00 $ 1 7, 5 D. 0 $0 1 2 ,0 00 R e ve n u e s $ 2 0 ,0 00 - Ut i l i t i e s E xp e n se $ 1 ,0 0 0 - Sa l a r i e s Exp e n se $ 1 ,5 0 0 = N e t I n co me $ 1 7, 5 0 0

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t

A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

65. At t h e e n d o f i t s f i r st ye ar o f o p e r a t io n s, Sh a p i r o's Co n sul t i ng Se r vi ce s r e p o r t e d n e t i n co me o f $ 2 5 ,0 0 0. Th e y a l so h a d a cco u n t b a la n ce s o f : Ca sh, $ 1 8 ,0 0 0 ; O f f i ce Su p p l ie s, $ 2 ,0 0 0 a n d Acco u n t s R e ce i va b l e $ 1 0 ,0 00 . Th e o wn e r 's t o t al i n ve stme n t f o r t hi s f i r st y e a r wa s $ 5 ,0 0 0 . Ca l cu l a t e th e e n d i n g b a l an ce t o b e r e p o rt e d o n t he St a t e me n t o f O wn e r 's E q u i ty i n t h e O wn e r 's Ca p i t al a cco u n t .

A. $ 3 0 ,0 B. 0 $ 20 5 ,0 C. 0 $ 20 0 ,0 0 ,0 0 D. 0 $5 0 I n ve stme n t s $ 5 ,0 0 0 + N e t I n co me $ 2 5 ,0 0 0 = $ 3 0 ,0 0 0

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

66. I d e n ti f y t he t y p e o f a cco u n ts t h a t wo u l d a p p ea r o n a f i rm's i n co me sta t e me n t

A. a sse t s a n d l i a b i li t ie s. B. r e ve n u e s a n d e xp en se s. C. a sse t s a n d r e ve n u e s. D. l i a b il i ti e s a n d e xp e n se s.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

6 7. O wn e r 's e q u i ty i s:

A. the a mou n t t a ke n o ut o f a b u sin e ss b y t h e o wn e r f o r pe r so n a l u se . B. t h e f i na n ci a l i nt e r e st o f th e o wn e r o f a b u sin e ss. C. t h e a mou n t t he o wn e r o wes t h e b u sin e ss. D. t h e r e ve n u e s l e ss t h e e xp e nse s.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Measu rem en t A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Rem em ber Difficulty: 2 M edium Learn in g Objective: 02 -06 Defin e th e accou n tin g terms n ew to th is chapter. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

68. Gi ve n t h e o p t i o n s b e l o w, ide n t i fy t h e co r r e ct a cco u n t i ng e q u a t io n f o r mula .

69. Th e b a l a n ce she et sho ws e a ch o f t h e f o l l o wing e xce p t t h e :

A. n e t i n co me o f t h e b u sine ss. B. a mou n t a n d t yp e s o f p r o p er t y t h e b u sine ss o wn s. C. o wn e r 's i n t e re st. D. a mou n t o we d cr e d i t or s.

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

70 . Th e Ba l a n ce Sh e e t h e a di n g i n cl u d e s e a ch o f t h e f ol l o win g e xce p t :

A. f i r m's n a me . B. f i r m's a d d r e ss. C. t i t l e o f th e r e p or t . D. d a t e o f t he r e p o rt .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Decis ion Makin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

71 . Ch o o se t h e o p ti o n b el o w t ha t r e f l e ct s t h e co r r e ct o r de r i n wh i ch t o p r e p a re t h e t h ree f i n a n ci al sta t e me n t s

A. Ba l a n ce Sh e e t ; I n co me St a t e me n t ; St a t e me n t o f O wn er's E q u i t y . B. I n co me St a t e me n t ; St a t e men t o f O wn e r 's E q u i ty ; Ba l a n ce Sh e e t . C. I n co

me St a t e me n t ; Ba l a n ce Sh e e t ; St a t e me n t o f O wn e r's E q u i t y . D. St a t e me n t o f O wn e r 's E q u ity ; Ba l a n ce Sh e e t ; I n co me St a t e me n t .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

72 . An e xp e n se b y d e f i ni t i on i s not:

A. an a mou n t a b u sin e ss must p a y i n t h e f ut u r e. B. a n o u t f lo w o f ca sh. C. t h e u se o f o t h er a sse t s. D. t h e i n cu r r in g o f a l i ab i l it y .

A AC SB: A n alytic A IC PA BB: I n du s try A IC PA F N : Reportin g A cces s ibility: K eyboard N avigation Bloom s : Un ders tan d Difficulty: 1 E as y Learn in g Objective: 02 -06 Defin e th e accou n tin g terms n ew to th is chapter. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

Sho rt An swer Q u est i on s

Asse t s $

= Li a b i l i t ie s $

+ O wn e r 's E q u i t y $

Asse t s $ 3 7, 40 0 = Li a b i l i t ie s $ 1 6 ,6 00 + O wn e r 's E q u i t y $ 2 0 ,8 0 0

A AC SB: A n alytic

A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

N e t i n co me : $ 1 ,1 75

Fe e d b a ck: $ 2 ,7 5 0 + 1 ,9 0 0 - $ 1 ,2 0 0 - $250 - $ 1 ,6 75 - $ 3 50 = $ 1 ,1 75 N e t I n co me

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

Pe r f o r me d se r vi ce s o n cr e d i t

p l u s Acco u n t s R e ce i va b l e ; p l u s R e ve n u e

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Reportin g Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

Pa i d ca sh f o r u t i l it i e s

p l u s E xp e n se s; min u s Ca sh

77. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Se n t a ch e ck t o a cr e d i t o r

min u s Ac co u n t s Pa y a b l e ; min u s Ca sh

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Reportin g Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

I ssu e d ch e cks t o p a y sa l a r i es

p l u s E xp e n se s; min u s Ca sh

Pu r ch a se d a co mpu t e r f o r ca sh

p l u s E q u i p me n t; mi n u s Ca sh

80. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

R e ce i ve d ca sh f r o m cr e d i t c u sto me r s

p l u s Ca sh; min u s Ac co u n t s R e ce i va b l e

Pe r f o r me d se r vi ce s f o r ca sh

p l u s Ca sh; p l u s R e ve n u e

82. Th e t r a n sa ct i on s l i ste d b e low t o o k p l a ce a t t h e Mi t ch e l l Ad ve r t i sin g Ag e n cy . Th e se t r a n sa ct i on s a f f e ct e d th e f o l lo win g a cco u n t s. I n d i ca te t h e a cco u n t s a f f e ct e d an d u se p l u s a n d min u s t o sho w t h e ch a n g e s ca u se d b y e a ch t r a n sa ct i o n.

Th e o wn e r ma d e a n a d d it i on a l i n ve stme n t o f ca sh

p l u s Ca sh; p l u s K . Mi t ch e l l , Ca p i t al

Pu r ch a se d f u r ni t u re o n cr e di t

p l u s Fu r n i t u re ; p l u s Acco u n t s Pa y a b l e

H a d a co mpu t e r r e p a ir e d ; pa y me n t i s d u e i n 3 0 d a y s

p l u s E xp e n se s; p l u s Acco u n t s Pa y a b l e

A AC SB: A n alytic A IC PA BB: C ri tical Th in kin g A IC PA F N : Reportin g Bloom s : An alyze Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

85. Gu y McK i n l e y sta r t e d t he Mc K i n l e y Ch ar t e r Se r vi ce a t t he b e g i n ni n g o f Au g u st 201 6 . O n Au g u st 3 1 , 2 0 1 6 , th e a cco u n t i ng r e co r d s o f t h e b u sin e ss sho we d t h e f o l l o win g i n fo r ma t i on . Pr e p a r e a n i n co me sta t e me n t a n d a stat e me n t o f o wn e r 's e q ui t y f or t h e mon t h a n d a b a la n ce she e t a s o f Au g u s t 3 1,2016.

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Reportin g Bloom s : C reate Difficulty: 3 Hard Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

86. O n Se p t e mbe r 1 , Sh a wn Da h l e sta b l i she d Wh i t e wa t er R e n t a l s, a ca n o e an d ka y a k r e n t a l b u sin e ss. Th e f o l l o win g t r ansa ct i o n s o ccu r r e d i n t h e mon t h o f Se p t e mbe r a nd a f f e ct e d t h e fo l l o win g a cco u n t s:

Tr a n sa ct i o n s

1 . Sh a wn Da h l i n ve ste d $ 45 ,0 0 0 i n ca sh t o o p e n t h e b u si n e ss 2 . Pa i d $ 1 2 ,7 00 i n ca sh f o r t h e p u r ch a se o f ka y a k a n d ca n o e e q ui p me n t 3 . Pa i d $ 1 ,0 50 i n ca sh f o r r e n t e xp e n se 4. Pu r ch a se d a d d i t i on a l ka ya k a n d ca n o e e q u i p me n t f or $ 3 ,8 0 0 o n cr e d i t 5 . R e ce i ve d $ 3 ,9 0 0 i n ca sh f o r ka y a k r e n t a l s 6 . R e n t e d ca n oe s a n d ka y a ks f o r $ 1 ,2 0 0 o n a cco u n t 7. Pu r ch a se d o f f i ce e q u ip me n t f o r $ 1 25 i n ca sh 8 . R e ce i ve d $ 8 0 0 i n ca sh f r om cr e d i t cl i e n t s 9 . Sh a wn Da h l wit h d r e w $ 1 ,5 0 0 i n ca sh f o r p e r so n a l e xp e n se s

p l u s Ca n o e a n d Ka y a k E q u ip me n t ; p l u s Acco u n t s Pa y a b l e

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Reportin g Bloom s : A pply Difficulty: 1 E as y Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip bet w een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

8 7. O n Se p t e mbe r 1 , Sh a wn Da h l e sta b l i she d Wh i t e wa t er R e n t a l s, a ca n o e an d ka y a k r e n t a l b u sin e ss. Th e f o l l o win g t r ansa ct i o n s o ccu r r e d i n t h e mon t h o f Se p t e mbe r a nd a f f e ct e d t h e f o l l o win g a cco u n t s:

Tr a n sa ct i o n s

1 . Sh a wn Da h l i n ve ste d $ 45 ,0 0 0 i n ca sh t o o p e n t h e b u si n e ss 2 . Pa i d $ 1 2 ,7 00 i n ca sh f o r t h e p u r ch a se o f ka y a k a n d ca n o e e q ui p me n t 3 . Pa i d $ 1 ,0 50 i n ca sh f o r r e n t e xp e n se 4. Pu r ch a se d a d d i t i on a l ka ya k a n d ca n o e e q u i p me n t f or $ 3 ,8 0 0 o n cr e d i t 5 . R e ce i ve d $ 3 ,9 0 0 i n ca sh f o r ka y a k r e n t a l s 6 . R e n t e d ca n oe s a n d ka y a ks f o r $ 1 ,2 0 0 o n a cco u n t 7. Pu r ch a se d o f f i ce e q u ip me n t f o r $ 1 25 i n ca sh 8 . R e ce i ve d $ 8 0 0 i n ca sh f r om cr e d i t cl i e n t s 9 . Sh a wn Da h l wit h d r e w $ 1 ,5 0 0 i n ca sh f o r p e r so n a l e xp e n se s

Ba se d o n t h e i n f o r ma ti o n sho wn a b o ve , wh a t i s t h e b a la n ce o f Acco u n t s R e ce i va b l e f o r Wh i t e wa t e r R e nt a l s a t t h e en d o f Se p t e mbe r ?

Th e b a l a n ce o f Acco u n t s R e ce i va b l e a t Se p t e mbe r 3 0 i s $ 40 0 .

Fe e d b a ck: Be g i n n i n g Acco u n t s R e ce i va b l e , $ 0 + sa l e s o n a cco u n t , $ 1 ,2 0 0 - co l l e ct i on s o n a cco u n t , $ 8 0 0 = E n d i n g Acc o u n t s R e ce i va b l e, $ 40 0 .

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g

Bloom s : A pply Difficulty: 1 E as y Learn in g Ob jective: 02-03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

88. O n Se p t e mbe r 1 , Sh a wn Da h l e st a b l i she d Wh i t e wa t er R e n t a l s, a ca n o e an d ka y a k r e n t a l b u sin e ss. Th e f o l l o win g t r ansa ct i o n s o ccu r r e d i n t h e mon t h o f Se p t e mbe r a nd a f f e ct e d t h e f o l l o win g a cco u n t s:

Tr a n sa ct i o n s

1 . Sh a wn Da h l i n ve ste d $ 45 ,0 0 0 i n ca sh t o o p e n t h e b u si n e ss 2 . Pa i d $ 1 2 ,7 00 i n ca sh f o r t h e p u r ch a se o f ka y a k a n d ca n o e e q ui p me n t 3 . Pa i d $ 1 ,0 50 i n ca sh f o r r e n t e xp e n se 4. Pu r ch a se d a d d i t i on a l ka ya k a n d ca n o e e q u i p me n t f or $ 3 ,8 0 0 o n cr e d i t 5 . R e ce i ve d $ 3 ,9 0 0 i n ca sh f o r ka y a k r e n t a l s 6 . R e n t e d ca n oe s a n d ka y a ks f o r $ 1 ,2 0 0 o n a cco u n t 7. Pu r ch a se d o f f i ce e q u ip me n t f o r $ 1 25 i n ca sh 8 . R e ce i ve d $ 8 0 0 i n ca sh f r om cr e d i t cl i e n t s

9 . Sh a wn Da h l wit h d r e w $ 1 ,5 0 0 i n ca sh f o r p e r so n a l e xp e n se s

Ba se d o n t h e i n f o r ma ti o n ab o ve , wh a t i s t h e f u n d a me nt a l a cco u n t i ng e q u a ti o n a t th e e n d o f Se p t e mbe r f o r Wh i t e wa te r R e n t al s?

Asse t s $ 5 1 ,3 5 0 = Li a b i l i t ie s $ 3 , 8 0 0 + O wn e r 's E q u i t y $ 47, 5 5 0

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g

A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : An alyze Difficulty: 3 Hard Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

89. O n J u n e 1 , Do n n a Ba n hi l e sta b l i shed So l o Se r vi ce s, a vo i ce co n sul t i n g se r vi ce . En t e r t h e f o l l o win g t r a n sa ct io n s f o r J un e i n t h e t a bl e b e lo w u sin g + a n d - t o i n d i ca t e i n cr e a ses o r d e cr e a se s:

Tr a n sa ct i o n s

1 . Do n n a Ba n h i l i n ve sted $ 15 ,0 0 0 i n ca sh t o o p e n t he b u sin e ss 2 . Pa i d $ 1 ,5 00 f o r J u ne 's r e nt 3 . Pa i d $ 4,5 0 0 f o r r e nt i n a dva n ce , f o r t h e n e xt t h re e mon t h s ( J u ly Se p t e mbe r) 4. Pu r ch a se d o f f i ce sup p l i e s f o r $ 8 0 0 o n cr e d i t 5 . Pe r f o r me d vo i ce co n sul t in g se r vi ce s a n d i mme d i a t e l y r e ce i ve d $ 1 ,2 0 0 f ro m cl i e n t s. 6 . Ga ve vo i ce l e sso n s t o ch a r g e a cco u n t cl i e n t s a n d e arn e d $ 9 ,0 00 7. Pa i d $ 1 0 0 ca sh f o r t h e sup p l i e s p u r ch a sed e a r li e r i n th e mon t h 8 . R e ce i ve d $ 1 ,0 0 0 i n ca sh f ro m cr e d i t cl i e n t s b i l l e d ea r l ie r i n t h e mon t h

A AC SB: A n alytic

A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -01 Record in equ ation f orm th e f in an cial effects of a bu s in es s tran s action . Learn in g Objective: 02 -03 A n alyz e th e effects of bu s in ess trans actions on a firm 's ass ets ; liabilities ; an d ow n er's equ ity an d record th es e effects in accoun tin g equ ation f orm . Topic: Bu s in es s Trans actions an d Even ts

90. Th e f i g u re b e l o w sho ws t h e t r a n sa ct i on s f o r Sa wy e r Ar c h i t e ct u re Se r vi ce s d u r i n g J u n e . Gr e g Sa wy e r o p e n e d t hi s b u sin e ss o n J u n e 1 wit h a ca p i t a l i nve stme n t o f $ 72 ,0 0 0 ( Tr a n sa ct i o n 1 ) .

Wh a t wa s t h e n e t i n co me o r n e t l o ss f o r Sa wy e r Ar ch i t e ct u r e Se r vi ce s f o r t h e mon t h o f J u n e ?

N e t i n co me wa s $ 1 ,7 0 0 . 2 -92 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

Fe e d b a ck: R e ve n u e , $ 5 ,2 0 0 - E xp e n se s, $ 3 ,5 0 0 = N e t I n co me , $ 1 ,7 0 0.

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : A pply Difficulty: 1 E as y Learn in g Objective: 02 -04 P repare an incom e s tatem en t. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

2 -93 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

9 1 . Th e f i g u re b e l o w sho ws t h e t r a n sa ct i on s f o r Sa wy e r Ar c h i t e ct u re Se r vi ce s d u r i n g J u n e . Gr e g Sa wy e r o p e n e d t hi s b u sin e ss o n J u n e 1 wit h a ca p i t a l i nve stme n t o f $ 72 ,0 0 0 ( Tr a n sa ct i o n 1 ) .

Pr e p a re t h e sta t e me nt o f own e r 's e q u i t y fo r Sa wy e r Ar ch i t e ct u r e Se r vi ce s f o r t h e mon t h ended J u n e 3 0 , 2 01 6 .

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N :

2 -94 C op yri gh t Â© 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

Measu rem en t A IC PA F N : Reportin g Bloom s : C reate Difficulty: 2 M edium Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet. Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

2 -95 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

92. Th e f i g u re b e l o w sho ws t h e t r a n sa ct i on s f o r Sa wy e r Ar c h i t e ct u re Se r vi ce s d u r i n g J u n e . Gr e g Sa wy e r o p e n e d t hi s b u sin e ss o n J u n e 1 wit h a ca p i t a l i nve stme n t o f $ 72 ,0 0 0 ( Tr a n sa ct i o n 1 ) .

Pr e p a re t h e b a la n ce she e t fo r Sa wy e r Ar ch i t e ct u r e Se r vi ce s a s o f J u n e30,2016.

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA

2 -96 C op yri gh t Â© 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

F N : Reportin g Bloom s : A pply Difficulty: 2 M edium Learn in g Objective: 02 -05 P repare a s tatem en t of own er's equ ity an d a balan ce sh eet Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

2 -97 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

93. Cu l l e n Be a tt y p l an s t o sta r t a co n sul t i n g b u sine ss —Cu l l e n Co n sul t in g Se r vi ce s. I n p r e p a ra t i on t o d o t h i s, o n Ap r i l 1 , 2 01 6 , h e in ve ste d $ 5 0 ,0 0 0 in ca sh a n d $ 1 9 ,0 0 0 i n e qu i p me nt , a nd o p e n e d an a cco u n t a t O f f i ce Pl u s b y p ur ch a sin g $ 1 ,5 00 i n o f f i ce supp l i e s wh i ch i s d u e b y t h e e nd o f t h e mon t h . He t h e n sig ne d a o ne - y e a r l ea se a g r ee me n t o n a n o f f i ce b u il d i ng f o r $ 6 ,0 00, p a y i n g t he f u l l a mou n t in a d va n ce .

Pr e p a re a Ba l a n ce Sh e e t f o r Cu l l e n Co n sul ti n g Se r vi ce s a s o f Ap r i l 1 , 2 0 1 6 , b ef o r e he co n d u ct s a n y se r vi ce s.

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Measu rem en t A IC PA F N : Reportin g Bloom s : C reate 2 -98 C op yri gh t © 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

Difficulty: 2 M edium Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

2 -99 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

9 4. Cu l l e n Be a tt y p l an s t o sta r t a co n sul t i n g b u sine ss â&#x20AC;&#x201D;Cu l l e n Co n sul t in g Se r vi ce s. I n p r e p a ra t i on t o d o t h i s, o n Ap r i l 1 , 2 01 6 , h e in ve ste d $ 5 0 ,0 0 0 in ca sh a n d $ 1 9 ,0 0 0 i n e qu i p me nt , a nd o p e n e d an a cco u n t a t O f f i ce Pl u s b y p ur ch a sin g $ 1 ,5 00 i n o f f i ce supp l i e s wh i ch i s d u e b y t h e e nd o f t h e mon t h . He t h e n sig ne d a o ne - y e a r l ea se a g r ee me n t o n a n o f f i ce b u il d i ng f o r $ 6 ,0 00, p a y i n g t he f u l l a mou n t in a d va n ce .

An swe r s wil l va r y . I t e ms t h a t sho u l d b e i n cl u d e d ar e :

Th e Ba l a n ce Sh e e t i s a f o r ma t r e p o rt o f a b u sin e ss's f i n an ci a l co n d i t io n -- o n a ce r t a i n d a te -- r e p o r t s a sse t s, l i a bi l i ti e s, an d o wn e r 's e q u i ty o f a b u sin e ss -- r e p o r t s p r op e r ty o wn e d by a b u sin e ss, o b l i g at i o n s ( d eb t s) o f a b u sin e ss -- r e p o r t s t h e fi n a n cia l i n te r est (p r o p r ie t o r ship , n e t wo r th) o f t h e o wn e r -- t o t a l a sse t s e q u al s t h e t o ta l l i a bi l i ti e s p l u s t o t al o wn e r 's e q u i t y

2100 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .

A AC SB: A n alytic A IC PA BB: C ritical Th in kin g A IC PA F N : Decis ion Makin g A IC PA F N : Reportin g Bloom s : C reate Difficulty: 2 M edium Learn in g Objective: 02 -02 Defin e; iden tify; an d un ders tan d th e relation sh ip betw een as s et; liability; an d own er's equ ity accoun ts . Topic: A ccou n tin g E qu ation an d F in an cial Statem en ts

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2101 C op yri gh t ÂŠ 201 5 Mc Gra w-Hi ll Ed u ca t i on . All ri gh t s reserv ed . No rep rod uc t i on or di st ri but i on wi t h out t h e p ri or wri t t en c on sent of M c Gra w-Hi l l Ed u ca ti on .