Chapter 1 Study Cards
7 Cards in this Set
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Which statement below best describes the accounting equation?
A) The change in retained earnings equals net income less dividends.
B) Equality of revenue and expense transactions over time.
correct.
C) Resources of the company equal creditors' and owners' claims to those resources.…
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C) Resources of the company equal creditors' and owners' claims to those resources.
*Assets = Liabilities + Stockholders' Equity.
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Emmitt had the following final balances after the first year of operations: assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the amount of Emmitt's liabilities?
A) $55,000
B) $30,000
C) $13,000
D) $7,000
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B) $30,000
*Assets ($55,000) = Liabilities + Stockholders' Equity ($25,000)
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Stimpleton Company engages in the following cash payments:
Purchases Equipment $2000
Pay Rent $500
Repay Loan to the Bank $5000
Pay workers salaries $1000
What is the total amount of cash paid for operating activities?
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$1,500
*$500 + $1,000 = $1,500.
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The owners interest in a corporation is called:
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Stockholders Equity
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Eagle Corp. operates Magnetic Resonance Imaging (MRI) clinics throughout the Northeast. At the end of the current period, the company reports the following amounts: Assets = $43,000; Liabilities = $23,500; Dividends = $2,300; Revenues = $12,600; Expenses = $8,300.
Calculate net income
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Net income: 4,300
*Revenues − Expenses= Net Income
$ 12,600 − $ 8,300= $ 4,300
Stockholders Equity: 19,500
* Assets = Liabilities + Stockholders'Equity
$ 43,000 = $ 23,500 + $ X
$ 43,000 − $ 23,500 = $ 19,500
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Below are the account balances for Cowboy Law Firm at the end of December.
Accounts Balances
Cash $ 3,800
Salaries expense 1,400
Accounts payable 1,800
Retained earnings 4,700
Utilities expense 1,200
Supplies 12,2…
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Cowboy Law Firm Income Statement
Service revenue $7,700
Expenses:
Salaries expense $1,400
Utilities expense 1,200
Total expenses 2,600
Net income $5,100
*Service Revenue - Total Expenses = Net Income
$7,700…
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At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $8,100. During the year, Buffalo reports net income of $8,400 and pays dividends of $3,100. In addition, Buffalo issues additional common stock for $7,900
Prepare…
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Buffalo Drilling Statement of Stockholders Equity
Common Stoc Retained Total S.E.
Earnings
Beginning balance $10,000 $8,100 $18,100
Issuance of common stock…
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Chapter 1 Study Cards