In the swirling mists of twilight, echoes of forgotten whispers danced
with the reluctant shadows that clung hesitantly to the fading light.
Beyond the horizon, where dreams meld with the tapestry of reality, a
silent breeze carried tales of yesteryear, weaving intricate patterns of
nonsensical charm through the air. Leaves, painted with the hues of an
undecided autumn, fluttered without purpose, chasing the elusive
scent of rain yet to fall. Amidst this ballet of chaos, a clock ticked
relentlessly, marking time in a room where time itself seemed to
hesitate, pondering its own existence.
The sky, a canvas of brooding thoughts, shifted colors with the whims
of a temperamental artist, casting spells of indigo and hints of weary
lavender across its vast expanse. Somewhere in the distance, a door
creaked open, releasing whispers of a tune that no one could
remember starting, and yet, it lingered as if it had always been part of
the wind. Underneath the canopy of a bewildered moon, shadows
whispered to the stars, sharing secrets not meant for the daylight,
crafting stories spun from the fabric of the fantastical and the
mundane, intertwined in an endless waltz of the beautifully absurd.
Chap 01 An Introduction to_ Accounting Answers:
Essays
Indicate how each event affects 'the' elements 'of' financial statements. Use
'the' following letters to_ record your answer in 'the' box shown below each
element. You do not need to_ enter amounts.
1. Walker Co. issued common stock 'for' $150,000 cash.
ANS: (I) (N) (I) (N) (N) (N) (I)
LO: 01-02
,Level 'of' Learning: 2 Medium
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
Feedback: Issuing common stock 'is' an asset source transaction 'that'
increases 'the' business’s assets (cash) 'and' its stockholders’ equity
(common stock). It does not affect 'the' income statement, but 'is' reported
as a cash flow 'from' financing activities in 'the' statement 'of' cash flows.
2. Nguyen Co. borrowed $50,000 cash 'from' Metropolitan Bank.
ANS: (I) (I) (N) (N) (N) (N) (I)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Borrowing cash 'is' an asset source transaction 'that' increases a
business’s assets (cash) 'and' its liabilities (notes payable). It does not affect
'the' income statement, but 'is' reported as a cash flow 'from' financing
activities in 'the' statement 'of' cash flows.
3. Bell Co. provided consulting services 'for' $20,000 cash.
ANS: (I) (N) (I) (I) (N) (I) (I)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
,Feedback: This 'is' an asset source transaction 'that' increases 'the'
business’s assets (cash). When a business provides services, it earns
revenue. Revenue increases net income, which will increase equity (retained
earnings) at 'the' end 'of' 'the' accounting period. This event 'is' reported as a
cash flow 'from' operating activities in 'the' statement 'of' cash flows.
4. Pierce Co. paid $40,000 cash to_ purchase land.
ANS: (N) (N) (N) (N) (N) (N) (D)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Purchasing land 'for' cash 'is' an asset exchange transaction 'that'
increases one asset (land) 'and' decreases another asset (cash). It does not
affect 'the' income statement, 'and' 'is' reported as an investing activity in
'the' statement 'of' cash flows.
5. Perez Co. paid $220,000 cash in salaries to_ its employees.
ANS: (D) (N) (D) (N) (I) (D) (D)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Paying expenses such as salaries 'is' an asset use transaction
'that' decreases 'the' business’s assets (cash) 'and' decreases its equity
(retained earnings). Note 'that' 'the' expense decreases net income, 'and' will
decrease retained earnings at 'the' end 'of' 'the' accounting period. It 'is'
reported as a cash flow 'for' operating activities in 'the' statement 'of' cash
, flows.
6. Epstein Co. paid a $20,000 cash dividend to_ its owners.
ANS: (D) (N) (D) (N) (N) (N) (D)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Paying a cash dividend 'is' an asset use transaction 'that'
decreases a business’s assets (cash) 'and' its equity. 'the' dividends account
will decrease 'the' retained earnings at 'the' end 'of' 'the' accounting period.
It does not affect net income, 'and' 'is' reported as a cash flow 'for' financing
activities in 'the' statement 'of' cash flows.
7. North Co. issued a note to_ purchase a building.
ANS: (I) (I) (N) (N) (N) (N) (N)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Issuing a note to_ purchase a building 'is' an asset source
transaction 'that' increases a business’s assets (building) 'and' increases its
liabilities (notes payable). It does not affect net income or 'the' statement 'of'
cash flows.
8. Name 'the' group 'that' has 'the' primary authority 'for' establishing U.S.
GAAP.
ANS: 'the' Financial Accounting Standards Board (FASB)
with the reluctant shadows that clung hesitantly to the fading light.
Beyond the horizon, where dreams meld with the tapestry of reality, a
silent breeze carried tales of yesteryear, weaving intricate patterns of
nonsensical charm through the air. Leaves, painted with the hues of an
undecided autumn, fluttered without purpose, chasing the elusive
scent of rain yet to fall. Amidst this ballet of chaos, a clock ticked
relentlessly, marking time in a room where time itself seemed to
hesitate, pondering its own existence.
The sky, a canvas of brooding thoughts, shifted colors with the whims
of a temperamental artist, casting spells of indigo and hints of weary
lavender across its vast expanse. Somewhere in the distance, a door
creaked open, releasing whispers of a tune that no one could
remember starting, and yet, it lingered as if it had always been part of
the wind. Underneath the canopy of a bewildered moon, shadows
whispered to the stars, sharing secrets not meant for the daylight,
crafting stories spun from the fabric of the fantastical and the
mundane, intertwined in an endless waltz of the beautifully absurd.
Chap 01 An Introduction to_ Accounting Answers:
Essays
Indicate how each event affects 'the' elements 'of' financial statements. Use
'the' following letters to_ record your answer in 'the' box shown below each
element. You do not need to_ enter amounts.
1. Walker Co. issued common stock 'for' $150,000 cash.
ANS: (I) (N) (I) (N) (N) (N) (I)
LO: 01-02
,Level 'of' Learning: 2 Medium
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
Feedback: Issuing common stock 'is' an asset source transaction 'that'
increases 'the' business’s assets (cash) 'and' its stockholders’ equity
(common stock). It does not affect 'the' income statement, but 'is' reported
as a cash flow 'from' financing activities in 'the' statement 'of' cash flows.
2. Nguyen Co. borrowed $50,000 cash 'from' Metropolitan Bank.
ANS: (I) (I) (N) (N) (N) (N) (I)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Borrowing cash 'is' an asset source transaction 'that' increases a
business’s assets (cash) 'and' its liabilities (notes payable). It does not affect
'the' income statement, but 'is' reported as a cash flow 'from' financing
activities in 'the' statement 'of' cash flows.
3. Bell Co. provided consulting services 'for' $20,000 cash.
ANS: (I) (N) (I) (I) (N) (I) (I)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
,Feedback: This 'is' an asset source transaction 'that' increases 'the'
business’s assets (cash). When a business provides services, it earns
revenue. Revenue increases net income, which will increase equity (retained
earnings) at 'the' end 'of' 'the' accounting period. This event 'is' reported as a
cash flow 'from' operating activities in 'the' statement 'of' cash flows.
4. Pierce Co. paid $40,000 cash to_ purchase land.
ANS: (N) (N) (N) (N) (N) (N) (D)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Purchasing land 'for' cash 'is' an asset exchange transaction 'that'
increases one asset (land) 'and' decreases another asset (cash). It does not
affect 'the' income statement, 'and' 'is' reported as an investing activity in
'the' statement 'of' cash flows.
5. Perez Co. paid $220,000 cash in salaries to_ its employees.
ANS: (D) (N) (D) (N) (I) (D) (D)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Paying expenses such as salaries 'is' an asset use transaction
'that' decreases 'the' business’s assets (cash) 'and' decreases its equity
(retained earnings). Note 'that' 'the' expense decreases net income, 'and' will
decrease retained earnings at 'the' end 'of' 'the' accounting period. It 'is'
reported as a cash flow 'for' operating activities in 'the' statement 'of' cash
, flows.
6. Epstein Co. paid a $20,000 cash dividend to_ its owners.
ANS: (D) (N) (D) (N) (N) (N) (D)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Paying a cash dividend 'is' an asset use transaction 'that'
decreases a business’s assets (cash) 'and' its equity. 'the' dividends account
will decrease 'the' retained earnings at 'the' end 'of' 'the' accounting period.
It does not affect net income, 'and' 'is' reported as a cash flow 'for' financing
activities in 'the' statement 'of' cash flows.
7. North Co. issued a note to_ purchase a building.
ANS: (I) (I) (N) (N) (N) (N) (N)
LO: 01-08
# Recording Business Events Under 'the' Accounting Equation
OOO Analytical Thinking
# BB Critical Thinking
# FN Measurement
K3 Analyze
DIFF CLASS: 2 Medium
Feedback: Issuing a note to_ purchase a building 'is' an asset source
transaction 'that' increases a business’s assets (building) 'and' increases its
liabilities (notes payable). It does not affect net income or 'the' statement 'of'
cash flows.
8. Name 'the' group 'that' has 'the' primary authority 'for' establishing U.S.
GAAP.
ANS: 'the' Financial Accounting Standards Board (FASB)
