Review Problems for Exam 1

# Review Problems for Exam 1 - EXAM 1 REVIEW PROBLEMS Chapter...

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EXAM 1 REVIEW PROBLEMS Chapter 1, Introduction to Financial Statements 1. For the items listed below, fill in the appropriate code letter to indicate whether the item is an asset (A), liability (L), or stockholders’ equity (SE) item. ______ 1. Rent Expense ______ 6. Cash ______ 2. Office Equipment ______ 7. Accounts Receivable ______ 3. Accounts Payable ______ 8. Retained Earnings ______ 4. Common Stock ______ 9. Service Revenue ______ 5. Insurance Expense ______10. Notes Payable 2. Use the following information to calculate for the year ended December 31, 2007 (a) net income (net loss), (b) ending retained earnings, and (c) total assets. Supplies \$ 500 Revenues \$16,000 Operating expenses 10,000 Cash 15,000 Accounts payable 11,000 Dividends 4,000 Accounts receivable 4,000 Notes payable 1,000 Common stock 8,000 Equipment 7,500 Retained earnings (beg.) 5,000 3. a. If total assets increased \$225,000 during the year, and total liabilities decreased \$100,000, then total stockholders’ equity must change by what amount and direction during the same period? b. During the year, total liabilities increased \$215,000 and stockholders’ equity decreased \$130,000, then total assets must change by what amount and direction during the same period c. If total assets decreased \$60,000 and stockholders’ equity increased \$170,000 during the year, then total liabilities must change by what amount and direction during the same period?

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Chapter 2, A Further Look at Financial Statements 4. The following lettered items represent a classification scheme for a balance sheet, and the numbered items represent data found on balance sheets. In the blank next to each account, write the letter indicating to which category it belongs. A. Current assets B. Investments C. Property, plant, and equipment D. Intangible assets E. Current liabilities F. Long-term liabilities G. Stockholders’ equity H. Not on the balance sheet ____ 1. Accumulated Depreciation _____ 9. Inventory _____ 2. Common Stock _____ 10. Patents _____ 3. Interest Expense _____ 11. Building _____ 4. Salary Payable _____ 12. Mortgage Payable _____ 5. Retained Earnings _____ 13. Land _____ 6. Accounts Receivable _____ 14. Prepaid Insurance _____ 7. Trademark _____ 15. Service Revenue _____ 8. Dividends _____ 16. Unearned Revenue 5. The following items are taken from the financial statements of Maxon Company for 2007: Accounts Payable \$18,500 Accounts Receivable 4,000 Accumulated Depreciation 4,800 Bonds Payable 18,000 Cash 24,000 Common Stock 25,000 Supplies Expense 13,000 Depreciation Expense 4,800 Dividends 5,300 Unearned Service Revenue 1,000 Equipment 48,000 Interest Expense
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Review Problems for Exam 1 - EXAM 1 REVIEW PROBLEMS Chapter...

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