134
260)
Data for Kennedy Realty are as follows:
Total assets at January 1
$100,000
Total liabilities at January 1
35,000
Total revenues for the year
79,000
Total expenses for the year
47,000
The owner, Finn Kennedy, withdrew a total of $30,000 for personal use during the year. Using the
above data, prepare Kennedy Realty’s Statement of Owner’s Equity for the year ended December
31.
261)
Jet Styling has the following beginning cash balance and cash transactions for the month of
January. Using this information prepare a statement of cash flows.
a.
Beginning cash balance……………..
$ 3,200
b.
Cash investment by owner…………..
15,000
c.
Cash payment toward long-term loan
1,000
d.
Cash payment of rent………………..
1,800
e.
Purchased equipment for cash……..
7,500
f.
Purchased store supplies for cash…
1,500
g.
Cash collected from customers…….
7,750
h.
Cash withdrawal by owner…………..
2,000
i.
Cash payment of wages……………. 135
4,000
i. Cash payment of wages……………. 4,000
Ending cash balance………………………………..
262)
The records of Roadmaster Auto Rentals show the following information as of December 31. The
owner, Rob Fletcher withdrew $52,000 during the year for personal expenses. Prepare a December
income statement, a December statement of owner’s equity, and a December 30 balance sheet.
Accounts payable
$36,000
Wages expense
$75,000
Insurance expense
2,000
Advertising expense
22,000
Accounts receivable
24,000
Cash
11,000
R Fletcher, Capital,
January 1
150,000
Office Furniture
15,000
Airplanes
150,000
Maintenance expense
39,000
Notes payable
47,000
Revenues
217,000
Hangar
60,000
138
263)
Verity Siding Company, owned by S. Verity, began operations in May and completed the following
transactions during that first month of operations. Show the effects of the transactions on the
accounts of the accounting equation by recording increases and decreases in the appropriate
columns in the table below. Do not determine new account balances after each transaction.
Determine the final total for each account and verify that the equation is in balance.
SHORT ANSWER QUESTIONS
264)
________ is an information and measurement system that identifies, records and communicates
relevant, reliable and comparable information about an organization’s economic activities.
265)
A ________ is a business that is owned by only one person.
266)
________ users of accounting information are not directly involved in running the organization.
267)
________ is the area of accounting aimed at serving external users by providing them with
general-purpose financial statements.
268)
Congress passed the ________ to help curb financial abuses at companies that issue their stock to
the public.
269)
________ are beliefs that separate right from wrong and are considered accepted standards of good
and bad behavior.
270)
The assumption that requires that a business be accounted for separately from its owners is the
________ assumption.
271)
The ________ principle requires that financial information is supported by independent, unbiased
evidence.
272)
The ________ assumption assumes that a business will continue operating indefinitely instead of
being closed or sold.
273)
The ________ assumption states that transactions and events are expressed in money units.
274)
In accounting, the rule that requires that assets, services, and liabilities be recorded initially at the
cash or cash-equivalent value of what was given up or of the item received is called the ________.
275)
A disadvantage of a sole proprietorship is the fact that the owner has ________.
276)
There are at least three types of partnerships that limit the partners’ liability. They are 1)________,
2) ________, and 3)________.
277)
There are three major types of business activities. ________ activities are the means organizations
use to pay for resources such as land, building, and equipment to carry out plans.
278)
There are three major types of business activities. ________ activities involve the acquisition and
disposal of resources that an organization uses to acquire and sell its products or services.
279)
There are three major types of business activities. ________ activities involve using resources to
research, develop, purchase, produce, distribute, and market products and services and receiving
amounts from selling products and services.
280)
Resources such as cash removed from the business by the business owner for personal use are
called ________.
281)
________ are the increases in equity from a company’s sales of products and services to customers.
282)
A common characteristic of ________ is their ability to yield expected future benefits to a
business.
283)
Creditors’ claims on assets that reflect company obligations to provide assets, products, or services
to others are called ________.
284)
The owner’s claim on assets, also known as net assets, is called ________.
285)
The accounting equation is ________.
286)
The term ________ refers to a liability that promises a future outflow of resources.
287)
Using the accounting equation, equity is equal to ________.
288)
________, which is one part of accounting, is the recording of transactions and events, either
289)
________ is net income divided by average total assets.
290)
Risk is the ________ about the return an investor expects to earn.
291)
________ explains changes in the owner’s claim on the business’s assets from net income or loss,
owner investments, and owner withdrawals over a period of time.
292)
The ________ describes a company’s revenues and expenses along with the resulting net income or
net loss over a period of time due to earnings activities.