1. Danny purchases a computer for his business at a cost of $4,000. His friend later tells him that he actually got a bargain, and that his computer is worth $6,000 in the market. At what price should Danny state his computer in his company’s balance sheet? What principle should Danny adhere to in this case?2. Describe what conservatism is. 3. Which of the following is not a transaction?a. John pays his supplier for inventory bought.b. James purchases goods for his business by taking a note from the bank.c. Investors in Wal-mart sold their stock to other investors.d. John took $800 from his business and lent it to an employee4. For the following transactions, list the changes in Assets, Liabilities or Stockholder’s equity.a. Jane bought inventory worth $6,000 by issuing a 5 year long term note payable to her supplier.b. Edward sold $90,000 supplies to a customer on credit.c. Purchased land for $500,000 with $100,000 down payment and the rest was paid with a signed note due in less than a year.d. Paid dividends of $5,000 in cash.e. Received $50,000 cash for issuing stock.f. Bought equipment worth $20,000 where ¼ of it will be paid in cash, and the remainder of it would be paid off later as there was a 5month grace period.5. List the advantages and disadvantages of a corporation compared to a sole proprietorship or
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