Learnsmart Accounting Ch1 PDF

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Learnsmart Accounting Ch1 1. Which statement represents the accounting equation? What a business owns will always equal what it owes to creditors and owners 2. Sally Smith decided to start a sea shell business. Her initial investment in the business consisted of 10,000 in cash. Record this transaction in the accounting equation of the new business by: Increasing Cash; increasing S. Smith, Capital 3. To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to _____ and a decrease to ___. Supplies, Cash 4. Pete Jackson purchased office equipment costing 3000 for his business and paid immediately. Record this transaction in the accounting equation by: Decreasing cash; increasing equipment 5. On 6/25, supplies costing 1000 were purchased, but only 400 of this amount was paid on 6/25. The remainder of the bill went on account. To record this transaction on 6/25: Supplies would be increased by __; Cash would be decreased by ___ and Accounts Payable would be increased by ___. 1000; 400; 600 6. When recording transactions into the accounting equation, which are the following are correct? After recording the transaction the total assets will always equal total liabilities plus owner’s equity, at least two accounts will be affected when recording a transaction, and the accounting equation will always remain in balance. 7. The definition of expenses includes which of the following statements? Expenses decrease equity; expenses are the costs necessary to earn revenue 8. Owner withdrawals cause an ___ in owner’s equity and are recorded directly in the owner’s ____ account. Decrease; withdrawal 9. Given the following lists of accounts, choose the one that contains only assets Cash, building, supplies, accounts receivable 10. Given the list of accounts below, identify which of them would appear on a balance sheet. Equipment, supplies, cash, accounts payable, I.M. Greasy Capital 11. Jackson’s Programming paid its June rent of 500 cash. Demonstrate how to use the accounting equation to record the transaction by completing the following sentence. Jackson would decrease ___ and increase ____ in the accounting equation. Cash, expenses 12. From the following statements, identify the correct definition of a liability. A liability is an amount owed to a creditor 13. Owner investments cause an ___ in owner equity and are entered directly in the Owner’s ___ account. Increase, capital 14. Which of the statements below defines an asset?

An amount owned, resources with future benefits, resources controlled by the business 15. The correct definition of revenues is Revenues ___ _____ and are the assets or monies earned from a company’s earnings activities. Increase, equity 16. Which of the following statements is correct regarding revenues? Revenues cause equity to increase 17. During September, Sally’s hair salon purchased 900 of supplies on account. In October, Sally’s wants to make a payment of 200 on this bill. Record the October transaction into Sally’s account equation. Decreasing accounts payable of 200, and decreasing cash of 200 18. When supplies are purchased on credit it means that: The accounts payable account will be increased, a liability has been incurred, and the business will pay for the supplies at a later time 19. Melton’s Door Company pays rent on the building facilities of 5000 on May 1. Show how to record this transaction in the accounting equation. Rent expense will be increased 20. Describe the order in which a company prepares financial statements Income statement, statement of owner’s equity, balance sheet, statement of cash flows 21. Given the statements below, choose the most accurate definition of owner investments Cash or other assets an owner puts into the business 22. The expanded accounting equation is defined as: Assets= Liabilities + Owners capital + Revenues – Expenses – Owners withdrawals. 23. Given the following lists of accounts, choose the one that contains only liabilities Taxes payable, accounts payable, wages owed 24. ABC Co. performs 200 of services for a customer but does not get paid right away. Demonstrate how ABC Co. would record this transaction in the accounting equation by completing the following sentence. ABC Co. would increase the Accounts __ account and increase the ___ account in the accounting equation. Receivable, Revenue 25. Which list of accounts below identifies only accounts that would appear on a balance sheet. J Brown Capital, equipment, accounts payable 26. Bob’s Bakery is making a partial payment of 70 for baking supplies it purchased in a previous month. Record this transaction in the accounting equation of Bob’s Bakery by decreasing the ___ account and decreasing the ___ account. Accounts payable, cash 27. An owner withdraws 60 cash for personal use. You would record this transaction in the accounting equation by decreasing the ___ account and __ the Withdrawals account.

Cash, increasing 28. Which of the following statements best represents the reason for the accounting equation? The total of everything owned by a business must always equal the total of what the business owes to creditors and owners 29. A customer of Landen Consulting Company makes a 400 payment of cash on a bill for services provided last month. Record this transaction into the accounting equation of Landen Consulting by: Increasing cash of 400, decreasing accounts receivable by 400 30. How would you characterize a company’s Accounts Receivable account? It is an asset account 31. The four major types of transactions that affect equity in a business are __, __, owner’s withdrawals, and owner’s investments. Revenues, expenses 32. Investing activities? These activities are the acquiring and disposing of assets that an organization uses in its business 33. Financing activities? These activities provide the monies needed to pay for resources such as land and buildings. 34. Operating activities? These activities are the every day activities that occur in running a business, selling a product or providing a service 35. Russell’s Consulting Services provided 1000 of services to the local college and immediately collected 700 but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell’s Consulting Service by: Increasing both cash and accounts receivable and increasing revenues 36. Which statements below define equity? Claims of the owners on the assets of the business, equity is equal to assets minus liabilities, and it is the accumulated revenues and owners investments minus the accumulated expenses and withdrawals since the company began. 37. Given the statements below, choose the most accurate definition of owner withdrawals. Assets an owner takes from the business for personal use 38. Which of the following statements represents how expenses affect equity? Higher expenses result in lower total equity, and if expenses increase then total equity decreases. 39. Select the account that would be decreased if the owner of Hillary’s Hair Salon decides to withdraw 40 for personal use. Cash 40. Net income is calculated using the following formula: ___ - ___ = Net income. Revenues- Expenses 41. Define what the income statement reports by completing the following sentence: The income statement describes a company’s ___ and ____ along

with the resulting net income or loss over a period of time due to earnings related activities. Revenues, expenses 42. From the following statements, identify the correct definition of equity Equity refers to the claims of the business’s owners on the assets of a business 43. Identify which of the following statements are correct as to why accounting is important. Accounting info summarizes or conveys info about an organization’s business activities, accounting info identifies records and communicates info about a business, and managers creditors and investors and owners need reliable financial info in order to make decisions. 44. Buying and selling of long-term assets such as land and equipment would be included in the __ activities section of the Statement of Cash Flows. Investing 45. Balance sheet? Reports the balance of assets, liabilities, and owner’s equity at a point in time 46. Income statement? Reports the revenues and expenses incurred by a business for a period of time 47. Statement of Owner’s Equity? Reports the changes in equity during a period of time 48. Statement of Cash Flows? Identifies the cash inflows and outflows over a period of time 49. The 3 factors that must exist for a person to commit fraud include __, __, and __. Opportunity, pressure, rationalization 50. Which statements below define why accounting information is useful? It is essential to help make business decisions, it records summarizes and reports business transactions, and it is helpful in comparing the performance of one company against a competitor 51. Private accounting? This area of accounting is where employees work for businesses 52. Public accounting? This area of accounting includes offering tax advice services and auditing services 53. Both public and private accounting? Accounting specialists in this area of accounting are highly regarded 54. Jackson’s Catering Services provided cookies worth 3000 to the local college. The college paid immediately. Record this transaction in Jackson’s accounting equation by: Increasing cash; increasing revenues 55. The area of accounting that serves the needs of internal users is referred to as ___ accounting. Managerial 56. Creditor? Loans money or other resources to a business...