Question 1

Prepare a December 31 balance sheet in proper form for Smokey River Supplies, Inc. from the following list of the accounts: $\begin{array}{llcc}
  \text {  Cash...............................} &\$10,000\
\
 \text {Accounts receivable.........  } &8,000\
 \text { Supplies.......................... } &12,000\
 \text { Equipment...................... } &35,000\
 \text {Land................................  } &18,000\
 \text { Accounts payable............ } &13,000\
 \text {Notes payable...................  } &41,000\
 \text { Stockholders' equity......... } &29,000\
\end{array}$

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Question 2

From the information given below, prepare a November income statement, a November statement of retained earnings, and a November 30 balance sheet. On November 1 of the current year, Victoria Garza began Garza Décor, Inc. with an initial investment of $50,000 cash. On November 30, her records showed the following (alphabetically arranged) items and amounts. $\begin{array}{c}
\begin{array}{lll}
 \text {Accounts payable....................}&\$12,000\
 \text {Accounts receivable.............}&19,000\
 \text {Cash...............................}&21,200\
 \text {Fees earned.................}&34,000\
 \text {Notes pavable..............}&4,250\ 
\end{array}
\begin{array}{lr}
\text { Office furnishings ........ } & \$ 40,000 \
\text { Dividends ..... } & 6,000 \
\text { Rent expense .......... } & 9,600 \
\text { Salaries expense ....... } & 4,200 \
\text { Telephone expense ..... } &250
\end{array}
\end{array}$

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Question 3

Jet Styling, Inc. has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows. $\begin{array}{llcc}
\text { a. } &  \text {Beginning cash balance.........................  } &\$3,200\
\text { b. } & \text {Cash investment by owner....................  } &15,000\
\text { c. } & \text {Cash payment toward long-term loan  } &1,000\
\text {  d.} & \text {Cash payment of rent...........................  } &1,800\
\text { e. } & \text { Purchased equipment for cash............ } &7,500\
\text { f. } & \text {Purchased store supplies for cash..........  } &1,500\
 \text { g. } & \text { Cash collected from customers............. } &7,750\
 \text {h.  } &\text {  Cash dividend to stockholder...............} &2,000\
 \text {i.  } &\text {Cash payment of wages.........................  } &4,000\
\end{array}$

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Question 4

The following schedule reflects shows the first month's transactions of the Green Construction Company Inc. :  Provide descriptions for each transaction.

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Question 5

A ____________________ is a business that is owned by only one person.

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Question 6

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. a. 
$\begin{array}{llcc}
  \text { L. Chester inv ested $ \$ 100,000 $ in a } &\
 \text { corporation } &\underline{\quad+\mathrm{ A} \quad}& \text {  \underline{\quad +  \text { E }  \quad}}  
\end{array}$

b.
$\begin{array}{llcc}
  \text { Land was purchased for $ \$ 50,000 $. } &\
 \text { A down payment of $ \$ 15,000 $ cash } &\
 \text {  was made and a note was signed } &\
 \text { for the balance.  } &\underline{\quad\quad\quad\quad}&\underline{\quad\quad\quad\quad}\
\end{array}$

c.
$\begin{array}{llcc}
  \text {Services were rendered to   } &\
 \text { customers for cash } &\quad\quad\quad\underline{\quad\quad\quad\quad}&\underline{\quad\quad\quad\quad}
\end{array}$

d.
$\begin{array}{llcc}
  \text { A building was purchased for } &\
 \text {  cash.} &\quad\underline{\quad\quad\quad\quad}&\underline{\quad\quad\quad\quad}\
\end{array}$

e.$\begin{array}{llcc}
  \text {Supplies were purchased for cash.  } &\underline{\quad\quad\quad\quad}&\underline{\quad\quad\quad\quad}\
\end{array}$

f.$\begin{array}{llcc}
  \text { Paid the office secretary's salary.  } &  \underline{\quad\quad\quad\quad}&\underline{\quad\quad\quad\quad}\
\end{array}$

g.
$\begin{array}{llcc}
  \text { The amount owed on the land } &\
 \text {from Part (b) was paid  } &\underline{\quad\quad\quad\quad}&\underline{\quad\quad\quad\quad}\
\end{array}$

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Question 7

Prepare a April 30 balance sheet in proper form for Two Rivers Vending Service, Inc. from the following alphabetical list of the accounts at April 30: $\begin{array}{llcc}
  \text {Accounts receivable.................  } &\$10,000\
 \text { Accounts payable.................. } &18,000\
\
 \text {Building...................................  } &28,000\
 \text { Cash....................................... } &10,000\
 \text {Notes payable..........................  } &47,000\
 \text {Office equipment.....................  } &12,000\
 \text {Stockholders' equity...............  } &?\
 \text { Trucks.................................... } &55,000\
\end{array}$

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Question 8

Prepare a December 31 balance sheet in proper form for Cane Property Management, Inc. using the following accounts and amounts: $\begin{array}{llcc}
  \text {  Commissions earned..................} &\$40,000\
 \text {Accounts payable......................  } &3,500\
 \text { Accounts receivable................. } &5,000\
 \text {Stockholders' equity.................  } &104,500\
 \text {Office equipment.....................  } &10,000\
 \text {  Advertising expense...............} &3,200\
  \text { Cash...................................... } &7,500\
 \text { Land...................................... } &35,000\
 \text { Note payable.......................... } &50,000\
 \text {Office supplies.........................  } &1,500\
 \text { Salaries expense...................... } &12,000\
 \text { Salaries payable...................... } &1,000\
 \text { Building.................................. } &100,000\
\end{array}$

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Question 9

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?

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Question 10

The assumption that requires that a business be accounted for separately from its owners is the __________________ assumption.

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Question 11

Identify the risk and the return in each of the following examples.
a. Investing $500 in a certificate of deposit 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.

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Question 12

______________ users of accounting information are not directly involved in running the organization.

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Question 13

Creditors' claims on assets that reflect company obligations to provide assets, products, or services to others are called ____________________.

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Question 14

The ______________ assumption assumes business will continue operating indefinitely instead of being closed or sold.

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Question 15

The accounting equation is ______________________________.

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Question 16

_________________ is net income divided by average total assets.

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Question 17

A disadvantage of a sole proprietorship is the fact that the owner has ______________.

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Question 18

A common characteristic of __________ is their ability to yield expected future benefits to a business.

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Question 19

Risk is the _________________ about the return an investor expects to earn.

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Question 20

Resources such as cash removed from the business by the business owner for personal use are called ____________.

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Quiz 1: Accounting in Business

The following schedule reflects shows the first month's transactions of the Green Construction Company Inc. : Provide descriptions for each transaction.