Q&A Hero

Q: The idea that a business will continue to operate until it can sell its assets to pay its creditors underlies the going-concern assumption.

Q: Accounting is an ______________________ that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

Q: Objectivity means that financial information is supported by independent unbiased evidence.

Q: __________________________ is the recording of transactions or events, and is just one part of accounting.

Q: The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

Q: The records of Skymaster Airplane Rentals show the following information as of December 31, 2009.Skymaster withdrew $52,000 during 2009 for personal expenses.Using the above information, prepare a balance sheet at December 31, 2009.

Q: Understanding generally accepted accounting principles is not necessary to use and interpret financial statements.

Q: Unlimited liability is an advantage of a sole proprietorship.

Q: A sole proprietorship is a business owned by one or more persons.

Q: FastForward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

Q: General accounting principles arise from long-used accounting practice.

Q: Data for Madison Realty are as follows:The owner, Mary Madison, withdrew a total of $30,000 for personal use during 2009. From the above data, prepare Madison Realty's Statement of Owner's Equity for the year ended December 31, 2009.

Q: Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice.

Q: The following information is available for the Skate and Boards Rental.Using the above information prepare an Income Statement, Statement of Owner's Equity, and Statement of Cash Flows for the Skate and Boards Rental for 2008. Also prepare its Balance Sheet as of December 31, 2009.

Q: As a general rule, revenues should not be recognized in the accounting records until it is received in cash.

Q: The business entity principle means that a business is accounted for separately from other business entities, including its owner or owners.

Q: On November 1 of the current year, Lois Bell began Lois Bell, Interior Design with an initial investment of $50,000 cash. On November 30 her records showed the following (alphabetically arranged) items and amounts:From the information given, prepare a November 30 balance sheet.

Q: Generally accepted accounting principles are the basic assumptions, concepts, and guidelines for preparing financial statements.

Q: The business entity principle means that a business will continue operating for an indefinite period of time.

Q: The Financial Accounting Standards Board is the private group that sets both broad and specific accounting principles.

Q: Ann Maslow's consulting practice had equity of $172,500 at December 31, 2008. Net income for 2009 amounted to $56,400. Ann's withdrawals during 2009 were $48,000, and Ann made no investments in the business during 2009. Prepare the statement of owner's equity for 2009.

Q: The balance sheet shows whether or not the firm had net income or loss over a period of time.

Q: Prepare a December 31 balance sheet in proper form for Surety Insurance from the following items and amounts:

Q: Accounting information is communicated to various parties through financial statements.

Q: Prepare a November 30 balance sheet in proper form for Green Bay Delivery Service from the following alphabetical list of the accounts at November 30:

Q: A sole proprietorship is one or more individuals selling products or services for profit.

Q: Presented below is selected financial information for Stanley's Bike Shop. Using the appropriate information, prepare the income statement for 2009.

Q: In the partnership form of business, the owners are called stockholders.

Q: Della's Donuts had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate the net increase or decrease in cash.

Q: Owners of a corporation are called shareholders or stockholders.

Q: Cool Tours had beginning equity of $72,000; net income of $25,000, and withdrawals by owners of $9,000. Calculate the ending equity.

Q: A partnership is a business owned by two or more people.

Q: Della's Donuts has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Q: The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

Q: ParFour's total liabilities are $130,000 and its equity is $340,000. Calculate the company's total assets.

Q: Good ethics are good business.

Q: Identify the risk and the return in each of the following examples. a. Investing $500 in a CD at 4.5% interest. b. Placing a $100 bet on an NBA game. c. Investing $10,000 in Microsoft stock. d. Borrowing $20,000 in student loans.

Q: The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether is has adopted a code of ethics for its senior financial officers and the contents of that code.

Q: Quick Computer Service had net income for the year of $30,000. Its assets at the beginning of the year were $400,000. At the end of the year assets were worth $450,000. Calculate its return on assets.

Q: Identifying the proper ethical path is easy.

Q: Flash reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets. By the end of the year, assets had increased to $300,000. Calculate the return on assets.

Q: Opportunities in accounting include auditing, consulting, market research, and tax planning.

Q: The accountant of Magic Video Games prepared a balance sheet immediately after each transaction was recorded. During September, the first month of operation, the following balance sheets were prepared:Required: Describe the nature of each of these five transactions for the month of September.

Q: Internal users include lenders, shareholders, brokers and managers.

Q: A company paid its landlord $15,000 cash for this month's rent. Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below.

Q: Regulators often have legal authority over certain activities of organizations.

Q: The following schedule reflects shows the first month's transactions of the Bill Blue Real Estate Company:Provide descriptions for each transaction.

Q: External users include lenders, shareholders, customers, and regulators.

Q: Sara Bloom has prepared the following analysis of September transactions for her business, Blooming Florist. Unfortunately, she has lost some information. Determine the missing amounts (a) through (c) below.

Q: External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Q: For each of the following transactions, identify the effects as reflected in the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively. Part A has been completed as an example.

Q: The primary objective of financial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

Q: Halley Burton began a Web Consulting practice and completed these transactions during September of the current year:Show the effects of the above transactions on the accounting equation of Halley Burton, Consultant. Use the following format for your answers. The first item is shown as an example.Increase = I Decrease = D No effect = N

Q: Internal operating activities include research and development, distribution, and human resources.

Q: If Madiera Company paid $42,000 of its accounts payable in cash, what would be the effect of this transaction on assets, liabilities, and equity?

Q: Managerial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

Q: If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period, did the assets of the company increase or decrease? By what amount?

Q: An accounting information system communicates data to help businesses make better decisions.

Q: If the liabilities of a business increased $86,000 during a period of time and equity in the business decreased $23,000 during the same period, would the assets of the business have increased or decreased? By what amount?

Q: Bookkeeping is the recording of transactions and events and is only part of accounting.

Q: A company paid its employees $90,000 in cash for two weeks' wages. Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below.

Q: Bookkeeping is the same as accounting.

Q: A company performed testing services for a client. The client paid the company $3,000 in cash. Enter the appropriate amounts that reflect this transaction into the company's accounting equation format shown below.

Q: Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable formation about an organization's business activities.

Q: A company acquired $7,000 of supplies and testing equipment on credit. Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below.

Q: A company spent $52,000 in cash for this period's advertising activities. Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below.

Q: On May 1, Chuck Taylor formed Flash, a shoe consulting business. In order to start the business he invested $750,000 in cash. Enter the appropriate amounts reflecting the transaction into the accounting equation format shown below.

Q: The accounts of Garfield Company with the increases or decreases that occurred during the past year are as follows: Except for net income, an investment of $3,000 by the owner, and a withdrawal of $11,000 by the owner, no other items affected the owner's capital account. Using the balance sheet equation, compute net income for the past year.

Q: At the beginning of the year, a company had $120,000 worth of liabilities. During the year, assets increased by $160,000 and at year-end they equaled $360,000. Liabilities decreased $20,000 during the year. Calculate the beginning and ending values of equity.

Q: A company has assets of $500,000 and equity of $350,000. What is the amount of liabilities?

Q: A Company has liabilities of $475,000 and $925,000 of equity. What is the amount of its assets?

Q: Lorton's Web Services has assets of $265,000 and liabilities of $130,000. Calculate the amount of equity.

Q: You are reviewing the accounting records of Cathy's Antiques, owned by Cathy Miller. You have uncovered the following situations. Compose a memo to Ms. Miller. Cite the appropriate accounting principle and suggest an action for each separate item.1) In August, a check for $500 was written to Wee Day Care Center. This amount represents child care for her son Brandon.2) Cathy plans a Going Out of Business Sale for May, since she will be closing her business for a month-long vacation in June. She plans to reopen July 1 and will continue operating Cathy's Antiques indefinitely.3) Cathy received a shipment of pine furniture from Quebec, Canada. The invoice was stated in Canadian dollars.4) Joseph Clark paid $1,500 for a dining table. The amount was recorded as revenue. The table will be delivered to Mr. Clark in six weeks.

Q: Prior to purchasing a tract of land, Flash had the land appraised at $300,000. The management of Flash purchased the land for $275,000. At what amount should the land be recorded on Flash books? What accounting principle supports your answer?

Q: A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

Q: The characteristics below apply to at least one of the forms of business organization.a. Is a separate legal entity.b. Is allowed to be owned by one person only.c. Owner or owners are personally liable for debts of the business.d. Is a taxable entity.e. Is a business entity.f. May have a contract specifying the division of profits among the owners.g. Has an unlimited lifeUse the following format to indicate (with a "yes" or "no") whether or not a characteristic applies to each type of business organization.

Q: Identify and describe the four basic financial statements:

Q: Describe the three types of activities reported on the statement of cash flows.

Q: Discuss the relation between risk and return.

Q: Shawn Nelson, owner of LoveSac, made a decision to open a retail store in a local mall. He signed a three-month lease. His goal was to sell one Sac per day and this would cover his rent and allow him and his cousin to receive a $10 hourly wage. Identify the risk and return for Shawn.