ACC 100 Chapter Notes - Chapter 1-4: Cash Flow Statement, Retained Earnings, Promissory Note

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burgundyclam121

25 Sep 2012

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Economic entity concept: the assumption that a single ,identifiable unit must be accounted for in all situations. Corporation: a form of entity organized under the laws of a particular province or the federal governments. Non-business entity: organization operated for some purpose other than to earn profit. Creditor: someone to whom a company or person has a debt. Asset: a future economic benefit to an organization. Liability: an obligation of the business. ex :accounts payable ,accrued liabilities, salaries & wages. Revenue: inflows of assets resulting from the sales of products and services. Expense: outflows of assets resulting from the sale of goods and services. Accounting: the process of identifying, measuring, and communicating economic information to various users. Owner"s equity: the owners claims on the assets of an entity. Shareholder"s equity: the owners equity in a corporation. Retained earnings: part of owner"s equity that represents the income earned less dividends paid over the life of an entity.

Related Questions

1. Creditors' claims on the assets of a company are called: (Points : 2)

2. The primary objective of financial accounting is: (Points : 2)

To serve the decision-making needs of internal users

To provide financial statements to help external users analyze and interpret an organization's activities

To monitor and control company activitiesTo provide information on both the costs and benefits of managing products and services

To know what, when and how muchto produce

3. Assets created by selling goods and services on credit are: (Points : 2)

4. The debt ratio is used: (Points : 2)

To measure the amount of equity relative to the expenses

To reflect the risk associated with a company's debts

Only by banks when a business applies for a loan

To determine how much debt a firm should pay off

5. Net Income: (Points : 2)

Decreases equity

Represents the amount of assets owners put into a business

Equals assets minus liabilities

Is the excess of revenues over expenses

Represents the owners' claims against assets

6. Internal users of accounting information include: (Points : 2)

Shareholders

Customers

Creditors

Government regulators

Line Supervisor

7. Risk is: (Points : 2)

Net income divided by average total assets

The reward for investment

The uncertainty about the expected return that will be earned from an investment

Unrelated to expected return

8. An example of an operating activity is: (Points : 2)

Paying wages

Purchasing office equipment

Borrowing money from a bank

Selling stock

Paying off a loan

9. Which accounting assumption assumes that all accounting information is reported monthly or yearly? (Points : 2)

Business entity assumption

Monetary unit assumption

Value assumption

Cost assumption

Time period assumption

10. Distributions of assets by a business to its stockholders are called: (Points : 2)

Problem 18-15 (a) (LO. 4)

Quentin, Tara and Tito form a business entity with each contributing the following.

	Adjusted Basis	Fair Market Value
Quentin: Cash	$220,000	$220,000
Tara: Land	$55,000	90,000
Tito: Services		60,000

Their ownership percentages will be as follows.

Quentin	40%
Tara	40%
Tito	20%

Taraâs land has a $30,000 mortgage that is assumed by the entity. Tito is an attorney who receives her ownership interest in exchange for legal services. Determine the recognized gain to the owners, the basis for their ownership interests, and the entityâs basis for its assets if the entity is organized as:

If an amount is zero, enter "0".

a. Entity: Partnership.

Recognized Gain	Partners' Basis
Quentin	$	$
Tara	$	$
Tito	$	$

Asset	Partnership's Basis
Cash	$
Land	$
Organizational Costs	$

b. Entity: C corporation.

C corporation
	Recognized Gain	Shareholders' Basis
Quentin	$	$
Tara	$	$
Tito	$	$

Asset	C Corporation's Basis
Cash	$
Land	$
Organizational Costs	$

c. Entity: S corporation.

S corporation
	Recognized Gain	Shareholders' Basis
Quentin	$	$
Tara	$	$
Tito	$	$

Asset	S Corporation's Basis
Cash	$
Land	$
Organizational Costs	$

harlequinwater-buffalo16

1. If beginning capital was $70,000, ending capital is $48,000, andthe owner's withdrawals were $21,000, the amount of net income ornet loss was (Points: 3)
net income of $42,000
net income of $17,000
net loss of $22,000
net loss of $1,000

2. If total assets decreased by $88,000 during a period of time andowner's equity increased by $65,000 during the same period, thenthe amount and direction (increase or decrease) of the period'schange in total liabilities is (Points: 3)
$23,000 increase
$88,000 decrease
$153,000 increase
$153,000 decrease

3. A business paid $7,000 to a creditor in payment of an amountowed. The effect of the transaction on the accounting equation wasto (Points: 3)
increase one asset, decrease another asset
decrease an asset, decrease a liability
increase an asset, increase a liability
increase an asset, increase owner's equity

4. The business entity concept means that (Points: 3)
the owner is part of the business entity
an entity is organized according to state or federal statutes
an entity is organized according to the rules set by the FASB
the entity is an individual economic unit for which data arerecorded, analyzed, and reported

5. The assets and liabilities of the company are $175,000 and$40,000, respectively. Owner's equity should equal (Points:3)
$215,000
$135,000
$175,000
$40,000

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ACC 100 Chapter Notes - Chapter 1-4: Cash Flow Statement, Retained Earnings, Promissory Note

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