Question 1

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $$\begin{array} { l r l } 
\text { Fees earned } & \$ 165,000 & \text { Cash } \
\text { Accounts receivable } & 14,000 & \text { Selling expenses } \
\text { Equipment } & 64,000 & \text { Common stock } \
\text { Accounts payable } & 12,000 & \text { Interest income } \
\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \
\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \
\text { Notes payable } & 20,000 & \text { Rent expense }
\end{array}$$
-Daniels Company made the following selected transactions during May:
1. Received cash from sale of stock, $55,000
2. Paid creditors on account, $7,000
3. Billed customers for services on account, $2,565
4. Received cash from customers on account, $8,450
5. Paid dividends to stockholders, $2,500
"6. Received the utility bill, $160, to be paid next month
Indicate the effect of each transaction on the accounting equation by:
a) Account type - A)assets, L)liabilities, SE)stockholders' equity, R)revenue, and E)expense
b) Name of account
c) The amount by of the transaction
d) The direction of change increase or decrease) in the account affected Note: Each transaction has two entries. $\begin{array}{|l|l|l|l|l|l|l|l|l|}
\hline\text { Entry }&&&&&\text { Entry }\
\hline& \begin{array}{l}
\text { Account } \
\text { Type a) }
\end{array} & \begin{array}{l}
\text { Name of } \
\text { Account } \
\text { b) }
\end{array} & \begin{array}{l}
\text { Amount } \
\text { c) }
\end{array} & \begin{array}{l}
\text { Increase or } \
\text { Decrease } \
\text { d) }
\end{array} & \begin{array}{l}
\text { Account } \
\text { Type a) }
\end{array} & \begin{array}{l}
\text { Name of } \
\text { Account b) }
\end{array} & \begin{array}{l}
\text { Amount } \
\text { c) }
\end{array} & \begin{array}{l}
\text { Increase or } \
\text { Decrease } \
\text { d) }
\end{array} \
\hline 1 & & & & & & & & \
\hline 2 & & & & & & & & \
\hline 3 & & & & & & & & \
\hline 4 & & & & & & & & \
\hline 5 & & & & & & & & \
\hline 6 & & & & & & & &  \
\hline
\end{array}$ "

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Question 2

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $$\begin{array} { l r l } 
\text { Fees earned } & \$ 165,000 & \text { Cash } \
\text { Accounts receivable } & 14,000 & \text { Selling expenses } \
\text { Equipment } & 64,000 & \text { Common stock } \
\text { Accounts payable } & 12,000 & \text { Interest income } \
\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \
\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \
\text { Notes payable } & 20,000 & \text { Rent expense }
\end{array}$$
-Determine the total liabilities at the end of the current year for Scott Industries.

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Question 3

Determine the missing amount for each of the following: $$\begin{array} { c c c } 
\text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \
\text { a) } & \$ 38,000 & \$ 45,000 \
\$ 30,000 & \text { b) } & \$ 22,000 \
\$ 53,000 & \$ 32,000 & \text { c) }
\end{array}$$

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Question 4

Determine the missing amount "X" for each of the following: $\begin{array}{|lc|l|l|}
\hline & \text { Assets } & \text { Liabilities } &{\text { Stockholders' Equity }} \
\hline \text { a) } & \$ 78,500 & \$ 37,600 & X \
\hline \text { b) } & \mathrm{X} & \$ 53,280 & \$ 145,000 \
\hline \text { c) } & \$ 49,500 & \mathrm{X} & \$ 34,000\\hline
\end{array}$

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Question 5

a) A vacant lot acquired for $83,000 cash is sold for $127,000 in cash. What is the effect of the sale on the total amount of the seller's 1) assets, 2) liabilities, and 3) stockholders' equity?
b) Assume that the seller owes $52,000 on a loan for the land. After receiving the $127,000 cash in a), the seller pays the $52,000 owed. What is the effect of the payment on the total amount of the seller's 1) assets,
2) liabilities, and 3) stockholders' equity?

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Question 6

Ramierez Company received its first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

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Question 7

Krammer Company has liabilities equal to one fourth of the total assets. Krammer's stockholders' equity is $45,000. Using the accounting equation, what is the amount of liabilities for Krammer?

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Question 8

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $$\begin{array} { l r l } 
\text { Fees earned } & \$ 165,000 & \text { Cash } \
\text { Accounts receivable } & 14,000 & \text { Selling expenses } \
\text { Equipment } & 64,000 & \text { Common stock } \
\text { Accounts payable } & 12,000 & \text { Interest income } \
\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \
\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \
\text { Notes payable } & 20,000 & \text { Rent expense }
\end{array}$$
-Shiny Kar Company had the following transactions. For each transaction, show the effect on the accounting equation by putting the amount and direction plus, minus, or NC for no change) in each box of the table below. $\begin{array}{|l|l|l|l|l|}
\hline&&\text { Assets } & \text { Liabilities } & \text { Stockholder's equity} \
\hline \text { a) } & \text { Shiny K ar withdrew } \$ 500 \text { cash for food } \
\hline \text { b) } & \begin{array}{l}
\text { Shiny K ar Company sold } 2 \text { cars for a total of } \
\$ 55,000 \text { on account }
\end{array} \
\hline \text { c) } & \begin{array}{l}
\text { The cost of the cars sold in b) above was } \
\$ 40,000
\end{array} \
\hline \text { d) } & \begin{array}{l}
\text { Shiny Kar received } \$ 35,000 \text { payment for } \
\text { a car previ ously sold on account }
\end{array} \
\hline \text { e) } & \text { Shiny Kar paid } \$ 450 \text { for advertising } \
\hline \text { f) } & \begin{array}{l}
\text { Shiny K ar purchased } \$ 150 \text { of cleaning } \
\text { supplies on account }
\end{array} \
\hline
\end{array}$

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Question 9

On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of stockholders' equity as of July 1 of the current year?

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Question 10

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $$\begin{array} { l r l } 
\text { Fees earned } & \$ 165,000 & \text { Cash } \
\text { Accounts receivable } & 14,000 & \text { Selling expenses } \
\text { Equipment } & 64,000 & \text { Common stock } \
\text { Accounts payable } & 12,000 & \text { Interest income } \
\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \
\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \
\text { Notes payable } & 20,000 & \text { Rent expense }
\end{array}$$
-Collins Landscape Company purchased various landscaping supplies on account to be used for landscape designs for its customers. How will this business transaction affect the accounting equation?

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Question 11

Identify each of the following as an 1) increase to stockholders' equity, or a 2) decrease to stockholders' equity.
a) Fees earned
b) Wages expense
c) Dividends
d) Lawn care revenue
e) Investment
f) Supplies expense

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Question 12

At December 31 of the current year, Martin Consultants has assets of $430,000 and liabilities of $205,000. Using the accounting equation and considering each case independently, determine the following:
a) Stockholders' equity, as of December 31.
b) Stockholders' equity, as of December 31 of the next year, assuming that assets increased by $12,000 and liabilities increased by $15,000.
c) Stockholders' equity, as of December 31 of the next year, assuming that assets decreased by $8,000 and liabilities increased by $14,000.

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Question 13

At the end of its accounting period, December 31, of Year 1, Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts.
a) Hsu's liabilities as of December 31, of Year 1.
b) Hsu's liabilities as of December 31, of Year 2, assuming that assets increased by $56,000 and shareholders' equity decreased by $32,000.
c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000, liabilities were $450,000, and there were no additional investments or dividends.

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Question 14

There are four transactions that affect stockholders' equity.
a) What are the two types of transactions that increase stockholders' equity?
b) What are the two types of transactions that decrease stockholders' equity?

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Question 15

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31: $$\begin{array} { l r l } 
\text { Fees earned } & \$ 165,000 & \text { Cash } \
\text { Accounts receivable } & 14,000 & \text { Selling expenses } \
\text { Equipment } & 64,000 & \text { Common stock } \
\text { Accounts payable } & 12,000 & \text { Interest income } \
\text { Salaries \& wages expense } & 40,000 & \text { Frepaid rent } \
\text { Income taxes payable } & 5,000 & \text { Income taxes expense } \
\text { Notes payable } & 20,000 & \text { Rent expense }
\end{array}$$
-Determine the total assets at the end of the current year for Scott Industries.

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Question 16

Indicate how the following transactions affect the accounting equation.
a) The purchase of supplies on account
b) The purchase of supplies for cash
c) Payment of cash dividends to stockholders
d) Revenues received in cash
e) Sale made on account

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Question 17

Simpson Auto Body Repair purchased $20,000 of machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly installments.
a) How will the purchase affect the accounting equation?
b) How will the payment of the first monthly installment affect the accounting equation ignore interest)?

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Question 18

Indicate whether each of the following accounts represents an asset, liability, or stockholders' equity:
a) Accounts Payable
b) Wages Expense
c) Common Stock
d) Accounts Receivable
e) Dividends
f) Land

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Question 19

Use the accounting equation to answer each of the independent questions below.
a) At the beginning of the year, Norton Company's assets were $75,000 and its stockholders' equity was $38,000. During the year, assets increased by $18,000 and liabilities increased by $4,000. What was the stockholders' equity at the end of the year?
b) At the beginning of the year, Turpin Industries had liabilities of $44,000 and stockholders' equity of $66,000. If assets increased by $10,000 and liabilities decreased by $5,000, what was the stockholders' equity at the end of the year?

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Question 20

The Austin Land Company sold land for $85,000 in cash. The land was originally purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank. After the sale, The Austin Land Company paid off the loan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

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Quiz 1: Introduction to Accounting and Business

Determine the missing amount for each of the following: $\begin{array} { c c c } \text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \\\text { a) } & \$ 38,000 & \$ 45,000 \\\$ 30,000 & \text { b) } & \$ 22,000 \\\$ 53,000 & \$ 32,000 & \text { c) }\end{array}$

Ramierez Company received its first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

Krammer Company has liabilities equal to one fourth of the total assets. Krammer's stockholders' equity is $45,000. Using the accounting equation, what is the amount of liabilities for Krammer?

On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of stockholders' equity as of July 1 of the current year?

Identify each of the following as an 1) increase to stockholders' equity, or a 2) decrease to stockholders' equity. a) Fees earned b) Wages expense c) Dividends d) Lawn care revenue e) Investment f) Supplies expense

There are four transactions that affect stockholders' equity. a) What are the two types of transactions that increase stockholders' equity? b) What are the two types of transactions that decrease stockholders' equity?

Indicate how the following transactions affect the accounting equation. a) The purchase of supplies on account b) The purchase of supplies for cash c) Payment of cash dividends to stockholders d) Revenues received in cash e) Sale made on account

Indicate whether each of the following accounts represents an asset, liability, or stockholders' equity: a) Accounts Payable b) Wages Expense c) Common Stock d) Accounts Receivable e) Dividends f) Land