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acctg-exam's question - University College of the Cayman...

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University College of the Cayman Islands ACC121 Introduction to Accounting Assignment #1 Due Date: Monday June 5, 2006 Weight: 20% 1. Smith Company purchased $105,000 of computer equipment from Brown Company. Smith Company paid for the equipment using cash that had been obtained from the initial investment by Connie Smith. The transaction involving the computer equipment should be recorded on the accounting records of which of the following entities? a. Smith Company and Connie Smith's personal records b. Brown Company and Connie Smith's personal records c. Only on Brown Company d. Smith Company and Brown Company 2. The Reynolds Company estimated that the value of its land had increased from $10,000 to $16,000 and therefore wrote up the land account to $16,000. Which accounting concept(s) was violated? 3. Equipment with an estimated market value of $45,000 is offered for sale at $65,000. The equipment is acquired for $10,000 in cash and a note payable of $40,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is: 4. The accounting equation may be expressed as: 5. Revenues are reported when: a. a contract is signed b. cash is received from the customer c. work is begun on the job d. work is completed on the job 1
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6. Expenses are recorded when: 7. If total liabilities decreased by $25,000 during a period of time and owners equity increased by $30,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is: 8. If total assets decreased by $47,000 during a period of time and owners equity increased by $24,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is: 9. How does paying dividends with cash affect the business accounting equation? a. decrease assets; decrease owners’ equity b. decrease assets; increase owners’ equity c. increase assets; decrease liabilities d. There is no effect on the assets, liabilities, or owners’ equity.
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