FA_Mid_1_Review_Answer_Key - Financial Accounting I-online...

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Financial Accounting I-online Midterm I Review Questions Chapters 1-3 Dr. Seyedin SOLUTIONS 1. Presently the dominant body in the development of accounting principles is the: Financial Accounting Standards Board (FASB) 2. Name three different transactions that affect owner's equity, e.g., owner’s withdrawals: Revenues, expenses, and owner's investments 3. Is signing a contract for future services considered to be a transaction? No 4. Is rendering services considered to be a transaction? Yes 5. An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a: corporation 6. On which financial statement are liabilities reported: On the balance sheet 7. The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the owner had withdrawn $10,000 for personal use and had made an additional investment of $35,000 in the business. Assets Liabilities Beginning of year. .. $300,000 $190,000 End of year. ........ 495,000 220,000 The amount of net income for the year was: Assets – Liabilities = Owner’s capital at the beginning 300,000 – 190,000 = 110,000 The same formula is true for the end of the year, thus the owner’s capital at the end is $275,000. Now we can determine net income (loss) as follows: Beginning owner’s capital + additional investment – owner’s withdrawals
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This note was uploaded on 08/11/2010 for the course ACCT 1A taught by Professor Seyedin during the Spring '10 term at Foothill College.

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FA_Mid_1_Review_Answer_Key - Financial Accounting I-online...

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