Class Exercises – Chapter 1

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 2 (287 words) Published: May 8, 2013

Question 1

Match the following external users of financial accounting information with the type of decision that user will make with the information.

c.Regulatory Agency
dInternal Revenue Service

_______(1)Is the company operating within prescribed guidelines?

_______(2)Is the company complying with tax laws?

_______(3)Is the company able to pay its debts?

_______(4)Is the company a good investment?

Question 2

Match the following terms and definitions.

a.Accounts receivablec.Accounts payable
b.Creditord.Note payable

_______(1)Amounts due from customers
_______(2)Amounts owed to suppliers for goods and services purchased
_______(3)Amounts owed to bank
_______(4)Party to whom money is owed

Question 3

Classify each of these items as an asset (A), liability (L), or stockholders' equity (SE).

_____1.Accounts receivable
_____2.Accounts payable
_____3.Retained Earnings
_____4.Office supplies
_____5.Utilities expense
_____7.Note payable

Question 4

Use the accounting equation to answer the following questions. 1.West Wind Sails Co. has total assets of $120,000 and total liabilities of $35,000. What is stockholders' equity? 2.Mercy Family Center has total assets of $225,000 and stockholders' equity of $105,000. What are total liabilities? 3.Cucina Med Restaurant has total liabilities of $40,000 and stockholders' equity of $95,000. What are total assets?

Question 5

Identify the impact on the accounting equation of each of the following transactions. 1.Purchase office supplies on account.
2.Paid secretary weekly salary.
3.Purchased office furniture for cash.
4.Received monthly utility bill to be paid at later time.
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