Transactions during the first year of operations are provided below.
The owner, Sharon McCoy, contributed $10,000 cash in exchange for capital.
Paid $1,100 cash for equipment to be used for plumbing repairs.
Borrowed $12,000 from a local bank and deposited the money in the checking account.
Paid $300 rent for the year.
Purchased $200 of office supplies by cash.
Completed a plumbing repair project for a local lawyer and received $3,200 cash.
Calculate the amount of total liabilities at the end of the first year.
Spring Company has assets and equity that amount to $260,000 and $70,000, respectively. Liabilities total __________.$70,000$190,000$260,000$330,000
The equity of Alliance Company is $100,000 and the total liabilities are $10,000. The total assets are __________.$200,000$20,000$90,000$110,000
GAAP refers to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to __________.Globally Accepted Accounting PoliciesGovernment Approved Accounting PrinciplesGenerally Accredited Accounting PoliciesGenerally Accepted Accounting Principles
The earnings of a sole proprietorship are __________.combined with the personal income of the proprietornot combined with the proprietor’s personal incomesubject to double taxationhandled similarly to that of a corporation
The Public Company Accounting Oversight Board (PCAOB) was created __________.by the Sarbanes-Oxley Act (SOX)to perform audits of public companiesto make restitution to investors who were defrauded by the issuance of fraudulent financial reportsto require auditors to take responsibility for the accuracy and completeness of financial reports from firms they audit
Dynamic Production Services started the year with total assets of $130,000 and total liabilities of $50,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $100,000 and $60,000, respectively. During the year, there were no new capital contributions, and the owner withdrew $45,000. Calculate Dynamic’s net income for the year.$40,000$100,000$60,000$130,000
Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)?Securities and Exchange Commission (SEC)Public Company Accounting Oversight Board (PCAOB)Financial Accounting Standards Board (FASB)American Institute of Certified Public Accountants (AICPA)
The Sarbanes-Oxley Act (SOX) __________.requires independent accountants to take responsibility for the accuracy and completeness of the financial reportscreated the SECensures that financial scandals will no longer occurrequires companies to take responsibility for the accuracy and completeness of their financial reports
Which of the following statements is TRUE of a sole proprietorship?A sole proprietorship joins two or more individuals as co-owners.The sole proprietor is personally liable for the liabilities of the business.A sole proprietorship is taxed separately from the owner.A sole proprietorship has to pay business income taxes.
Which of the following organizations is responsible for the creation and governance of accounting standards in the United States?Financial Accounting Standards BoardInstitute of Management AccountantsAmerican Institute of Certified Public AccountantsSecurities and Exchange Commission
Precision Camera Services started the year with total assets of $120,000 and total liabilities of $40,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $140,000 and $50,000, respectively. During the year, there were no new capital contributions, and the owner withdrew $45,000. What is the amount of owner’s equity at the end of the year?$50,000$140,000$125,000$45,000
Which of the following is the correct accounting equation?Assets + Liabilities = EquityAssets = Liabilities + EquityAssets + Revenues = EquityAssets + Revenues = Liabilities + Expenses
Managerial accounting provides information to __________.internal decision makersoutside investors and lenderscreditorstaxing authorities
Which of the follow statements regarding the primary objective of financial reporting is correct?The primary objective of financial reporting is to provide information useful for the acquisition of long-term assets.Information that is faithfully represented is complete, neutral, and free from error.Relevant information ensures that users of the information will make the correct decisions.To be useful, information must follow the Generally Accepted Accounting Principles, which are created and governed by the Securities and Exchange Commission.
Maxwell Plumbing Services earned $500 by completing a job for Smith Company. The $500 earned by Maxwell Plumbing Services is its __________.revenueexpensegaindebt
Nick’s Landscaping Services incurred $500 as a repair expense and promised to pay the repair company within 30 days. Which of the following accounts will increase as a result of this transaction?Accounts ReceivableCashAccounts PayableNick, Capital
Mulberry Company collected $7,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry?assets increase by $7,000; liabilities decrease by $7,000assets increase by $7,000; assets decrease by $7,000assets increase by $7,000; liabilities increase by $7,000assets increase by $7,000; equity increases by $7,000
__________ are professional accountants who serve the general public, not one particular company.Certified public accountantsFinancial managersInternal auditorsControllers
Green Lawns Company earned $500 for landscaping services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this transaction?Accounts PayableSuppliesCashAccounts Receivable