Accounting and Financial Management
Agenda for Class 2 June 9, 2006
Review of chapter 1 and questions
Practice quiz questions:
The Melville Company sold land for $60,000 in cash. The land was originally purchased for $40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that purchase. After the sale, The Melville Company paid off the loan to First National Bank. What is the effect of the sale and the payoff of the loan on the accounting equation?
assets increase $20,000; liabilities decrease $15,000; owner's equity increases $5,000 b.
assets increase $5,000; liabilities decrease $15,000; owner's equity increases $20,000 c.
assets increase $60,000; liabilities decrease $15,000; owner's equity increases $20,000 d.
assets increase $20,000; liabilities decrease $15,000; owner's equity increases $35,000
The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the owner had withdrawn $50,000 for personal use and had made an additional investment of $35,000 in the business.
Beginning of year
End of year
The amount of net income for the year was
If beginning capital was $65,000, ending capital is $43,000, and the owner's withdrawals were $16,000, the amount of net income or net loss was a.
net income of $37,000
net income of $8,000
net loss of $22,000
net loss of $6,000
If total liabilities decreased by $25,000 during a period of time and owner's equity increased by $30,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a.
Please join StudyMode to read the full document