TEST BANK
Corporate Financial Accounting
Carl S. Warren and Jeff Jones
ST
16th Edition
UV
IA
?_
AP
PR
OV
ED
? ?
, TABLE OF CONTENTS
Corporate Financial Accounting (16th Edition)
Carl S. Warren and Jeff Jones
ST
Chapter 1 Introduction to Accounting and Business
Chapter 2 Analyzing Transactions
UV
Chapter 3 The Adjusting Process
Chapter 4 The Accounting Cycle
Chapter 5 Accounting for Retail Businesses
IA
Chapter 6 Inventories
Chapter 7 Internal Control and Cash
?_
Chapter 8 Receivables
Chapter 9 Long-term Assets: Fixed and Intangible
AP
Chapter 10 Liabilities: Current, Installment Notes, and Contingencies
Chapter 11 Liabilities: Bonds Payable
PR
Chapter 12 Corporations: Organization, Stock Transactions, and Dividends
Chapter 13 Statement of Cash Flows
Chapter 14 Financial Statement Analysis
OV
ED
??
, CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
1. Some users of accounting information include managers, employees, investors, creditors,
ST
customers, and the government.
2. The role of accounting is to provide information for managers to use in operating the business.
In addition, accounting provides information to others to use in assessing the economic
UV
performance and condition of the business.
3. The corporate form allows the company to obtain large amounts of resources by issuing stock.
For this reason, most companies that require large investments in property, plant, and equipment
are organized as corporations.
4. No. The business entity assumption limits the recording of economic data to transactions directly
IA
affecting the activities of the business. The payment of the interest of $4,500 is a personal
transaction of Josh Reilly and should not be recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is consistent
?_
with the cost principle.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be recognized
in the accounting records.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and stockholders’
AP
equity would increase by $1,225,000.
7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount owed to a creditor for goods or services purchased. Therefore, an account
receivable in the records of the seller is an account payable in the records of the purchaser.
PR
8. (b) The business realized net income of $91,000 ($679,000 – $588,000).
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
10. (a) Net income or net loss
(b) Common stock and retained earnings at the end of the period
OV
(c) Cash at the end of the period
ED
??
1-1
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 Introduction to Accounting and Business
BASIC EXERCISES
BE 1–1
$320,000. Under the cost principle, the land should be recorded at the cost to Tin
Roofing.
ST
BE 1–2
a. A = L + SE
$690,000 = $375,000 + SE
UV
SE = $315,000
b. A = L + SE
$690,000 + $80,000 = $375,000 + $51,500 + SE
$770,000 = $426,500 + SE
IA
SE = $343,500
BE 1–3
?_
(2) Expense (Advertising Expense) increases by $3,500;
Asset (Cash) decreases by $3,500.
(3) Asset (Supplies) increases by $2,500;
AP
Liability (Accounts Payable) increases by $2,500.
(4) Asset (Accounts Receivable) increases by $18,750;
Revenue (Delivery Service Fees) increases by $18,750.
(5) Asset (Cash) increases by $14,150;
PR
Asset (Accounts Receivable) decreases by $14,150.
BE 1–4
OV
A-One Travel Service
Income Statement
For the Year Ended August 31, 20Y6
Fees earned $1,150,000
Expenses:
ED
Wages expense $640,000
Office expense 150,000
Miscellaneous expense 45,000
Total expenses (835,000)
??
Net income $ 315,000
1-2
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Corporate Financial Accounting
Carl S. Warren and Jeff Jones
ST
16th Edition
UV
IA
?_
AP
PR
OV
ED
? ?
, TABLE OF CONTENTS
Corporate Financial Accounting (16th Edition)
Carl S. Warren and Jeff Jones
ST
Chapter 1 Introduction to Accounting and Business
Chapter 2 Analyzing Transactions
UV
Chapter 3 The Adjusting Process
Chapter 4 The Accounting Cycle
Chapter 5 Accounting for Retail Businesses
IA
Chapter 6 Inventories
Chapter 7 Internal Control and Cash
?_
Chapter 8 Receivables
Chapter 9 Long-term Assets: Fixed and Intangible
AP
Chapter 10 Liabilities: Current, Installment Notes, and Contingencies
Chapter 11 Liabilities: Bonds Payable
PR
Chapter 12 Corporations: Organization, Stock Transactions, and Dividends
Chapter 13 Statement of Cash Flows
Chapter 14 Financial Statement Analysis
OV
ED
??
, CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
1. Some users of accounting information include managers, employees, investors, creditors,
ST
customers, and the government.
2. The role of accounting is to provide information for managers to use in operating the business.
In addition, accounting provides information to others to use in assessing the economic
UV
performance and condition of the business.
3. The corporate form allows the company to obtain large amounts of resources by issuing stock.
For this reason, most companies that require large investments in property, plant, and equipment
are organized as corporations.
4. No. The business entity assumption limits the recording of economic data to transactions directly
IA
affecting the activities of the business. The payment of the interest of $4,500 is a personal
transaction of Josh Reilly and should not be recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is consistent
?_
with the cost principle.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be recognized
in the accounting records.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and stockholders’
AP
equity would increase by $1,225,000.
7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount owed to a creditor for goods or services purchased. Therefore, an account
receivable in the records of the seller is an account payable in the records of the purchaser.
PR
8. (b) The business realized net income of $91,000 ($679,000 – $588,000).
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
10. (a) Net income or net loss
(b) Common stock and retained earnings at the end of the period
OV
(c) Cash at the end of the period
ED
??
1-1
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 Introduction to Accounting and Business
BASIC EXERCISES
BE 1–1
$320,000. Under the cost principle, the land should be recorded at the cost to Tin
Roofing.
ST
BE 1–2
a. A = L + SE
$690,000 = $375,000 + SE
UV
SE = $315,000
b. A = L + SE
$690,000 + $80,000 = $375,000 + $51,500 + SE
$770,000 = $426,500 + SE
IA
SE = $343,500
BE 1–3
?_
(2) Expense (Advertising Expense) increases by $3,500;
Asset (Cash) decreases by $3,500.
(3) Asset (Supplies) increases by $2,500;
AP
Liability (Accounts Payable) increases by $2,500.
(4) Asset (Accounts Receivable) increases by $18,750;
Revenue (Delivery Service Fees) increases by $18,750.
(5) Asset (Cash) increases by $14,150;
PR
Asset (Accounts Receivable) decreases by $14,150.
BE 1–4
OV
A-One Travel Service
Income Statement
For the Year Ended August 31, 20Y6
Fees earned $1,150,000
Expenses:
ED
Wages expense $640,000
Office expense 150,000
Miscellaneous expense 45,000
Total expenses (835,000)
??
Net income $ 315,000
1-2
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
