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Exam 2: Analyzing Business Transactions

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Question 1

Multiple Choice

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The Statement of Owner's Equity is calculated as follows:

A) beginning capital + net income - withdrawals + additional investments = ending capital
B) beginning capital + net loss + withdrawals + additional investments = ending capital
C) beginning capital + net loss - withdrawals + additional investments = ending capital
D) beginning capital + net income + withdrawals + additional investments = ending capital

E) All of the above
F) C) and D)

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A

Question 2

Multiple Choice

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An expense by definition is not:

A) an amount a business must pay in the future.
B) an outflow of cash.
C) the use of other assets.
D) the incurring of a liability.

E) B) and D)
F) None of the above

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Question 3

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The financial interest of the owner in a business is called owner's equity or ___________________.

Al Dunn Bakery bought a new oven for $1,380.Al paid $300 as a cash down payment and will pay the balance in 30 days.Total assets increased by $1,080.

The three-line heading of a financial statement shows who,what,and ___________________.

A net loss results

If the owner takes cash out of the business for personal use,the withdrawal should be recorded as an expense of the business.

The balance sheet shows

At the end of its first year of operations,Shapiro's Consulting Services reported net income of $25,000.They also had account balances of: Cash,$18,000;Office Supplies,$2,000 and Accounts Receivable $10,000.The owner's total investment for this first year was $5,000.Calculate the ending balance to be reported on the Statement of Owner's Equity in the Owner's Capital account.

The transactions listed below took place at the Mitchell Advertising Agency.These transactions affected the following accounts.Indicate the accounts affected and use plus and minus to show the changes caused by each transaction. Performed services on credit

The transactions listed below took place at the Mitchell Advertising Agency.These transactions affected the following accounts.Indicate the accounts affected and use plus and minus to show the changes caused by each transaction. Sent a check to a creditor

On September 1,Shawn Dahl established Whitewater Rentals,a canoe and kayak rental business.The following transactions occurred in the month of September and affected the following accounts: Transactions 1.Shawn Dahl invested $45,000 in cash to open the business 2.Paid $12,700 in cash for the purchase of kayak and canoe equipment 3.Paid $1,050 in cash for rent expense 4.Purchased additional kayak and canoe equipment for $3,800 on credit 5.Received $3,900 in cash for kayak rentals 6.Rented canoes and kayaks for $1,200 on account 7.Purchased office equipment for $125 in cash 8.Received $800 in cash from credit clients 9.Shawn Dahl withdrew $1,500 in cash for personal expenses Based on the information shown in transaction #4 above,indicate the accounts affected and use plus and minus to show the changes caused by the transaction.

Given the options below,identify the correct accounting equation formula.

When the owner withdraws cash for personal use,

The rent paid for future months is a(n)

If during the year total assets increase by $75,000 and total liabilities decrease by $16,000,by how much did owner's equity increase/decrease?

If assets are $8,000 and liabilities are $2,000,owner's equity is $10,000.

The transactions listed below took place at the Mitchell Advertising Agency.These transactions affected the following accounts.Indicate the accounts affected and use plus and minus to show the changes caused by each transaction. Received cash from credit customers

On September 1,Shawn Dahl established Whitewater Rentals,a canoe and kayak rental business.The following transactions occurred in the month of September and affected the following accounts: Transactions 1.Shawn Dahl invested $45,000 in cash to open the business 2.Paid $12,700 in cash for the purchase of kayak and canoe equipment 3.Paid $1,050 in cash for rent expense 4.Purchased additional kayak and canoe equipment for $3,800 on credit 5.Received $3,900 in cash for kayak rentals 6.Rented canoes and kayaks for $1,200 on account 7.Purchased office equipment for $125 in cash 8.Received $800 in cash from credit clients 9.Shawn Dahl withdrew $1,500 in cash for personal expenses Based on the information above,what is the fundamental accounting equation at the end of September for Whitewater Rentals?

Assets and liabilities are reported on