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The MBR Company began operations on January 1,2012,and on that date,$15,000 of common stock was issued for cash.In addition,MBR borrowed $10,000 from the bank.The company provided services to its customers during 2012 and received $18,000 cash.During the year,it paid $20,000 cash for land,$5,000 for salaries,and $3,000 for cash dividends to the owners. Required: a)Draw an accounting equation and record the effects of each transaction under the appropriate heading.(Use specific accounting titles below the major headlines) b)Prepare an income statement and a balance sheet for the 2012 accounting period.

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An asset source transaction


A) increases one asset and decreases another.
B) increases an asset and increases a liability or equity.
C) increases an asset and decreases a liability or equity.
D) decreases an asset and increases a liability.

E) B) and C)
F) A) and D)

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The broad categories of information reported on a business's financial statements are referred to as


A) accounts.
B) elements of the financial statements.
C) components.
D) assets.

E) A) and D)
F) A) and C)

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Which of the following is NOT an asset use transaction?


A) paying cash dividends
B) paying cash to purchase land
C) paying off the principal on a loan
D) paying salaries to employees

E) A) and B)
F) B) and C)

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The accounting equation may be written,


A) Revenues - Expenses = Net Income
B) Assets = Liabilities
C) Liabilities = Equity
D) Assets = Claims

E) B) and C)
F) A) and D)

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Which financial statement provides information about how a business obtained and spent cash during an accounting period?

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Statement ...

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Gomez Corporation paid its monthly utility bill of $850. Gomez Corporation paid its monthly utility bill of $850.

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(D)(N)(D)(...

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List the three categories of cash receipts and cash payments that are reported on the statement of cash flows.

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Operating activities...

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An asset use transaction


A) increases one asset and decreases another.
B) decreases an asset and decreases a liability or equity.
C) increases an asset and decreases a liability or equity.
D) increases an asset and increases a liability or equity.

E) A) and B)
F) B) and C)

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The Financial Accounting Standards Board is the primary authority for establishing accounting standards for businesses in the United States.

A) True
B) False

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An asset exchange transaction does not affect the total amount of assets of an entity.

A) True
B) False

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The difference between asset increases and asset decreases from operating a business is called income or earnings.

A) True
B) False

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Hale Company issued a note payable to purchase a truck. Hale Company issued a note payable to purchase a truck.

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(I)(I)(N)(...

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Wayne Company purchased equipment for $45,000 cash.As a result of this event,Wayne had a


A) $45,000 cash outflow from financing activities.
B) $45,000 cash inflow from financing activities.
C) $45,000 cash outflow from investing activities.
D) $45,000 cash outflow from operating activities.

E) A) and B)
F) B) and C)

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Who are the stakeholders for a business?

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The parties that are intereste...

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Parrot Company paid a $300 cash dividend.Which of the following choices accurately reflects how this event would affect the company's financial statements? Parrot Company paid a $300 cash dividend.Which of the following choices accurately reflects how this event would affect the company's financial statements? A) Choice A B) Choice B C) Choice C D) Choice D


A) Choice A
B) Choice B
C) Choice C
D) Choice D

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

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What does the acronym "GAAP" stand for? Name the group that has the primary responsibility for establishing US GAAP.

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GAAP stands for Generally Acce...

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Investors and creditors use accounting information to identify the businesses they wish to provide resources to.

A) True
B) False

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Liabilities are shown on the


A) income statement.
B) statement of changes in stockholders' equity.
C) statement of cash flows.
D) balance sheet.

E) B) and C)
F) A) and D)

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The account,"Land," is a subclassification of the "Liabilities" element of the financial statements.

A) True
B) False

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