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Problem Sets Term Paper

¶ … SEC that is responsible for the policing the accounting and ethics of publicly held companies is: Public Company Accounting Oversight Board.

The financial statement that summarizes the assets, liabilities, and stockholders' equity of an entity at a specific point in time is the:

Balance Sheet

At December 31, 2002, Robinson's Home Improvement has $100,000 of assets, $40,000 of liabilities, and $60,000 of stockholders' equity. On January 15, 2003, Robinson's purchased $30,000 of assets by incurring a liability. Robinson's total assets, liabilities, and stockholder's equity at January 15, 2003 (after the purchase) are, respectively, ____, ____, and,

$130,000; $70,000; and, $60,000

4. Gadsden Lawn and Mowing Service began operations on January 1, 2002. At the company's inception, Bob Morgan contributed $100,000 of cash and equipment. During the year, Gadsden earned $200,000 of revenue, incurred $100,000 of expenses, and incurred no liabilities. Total owner's equity at December 31, 2002 is:

a. $200,000

5. Which of the following is not a correct expression of the accounting equation?

A) Assets = Liabilities -- Owners' Equity

6. Which of the following statements about property, plant, and equipment and depreciation is true?

a. Accounting requires that the cost of a depreciable asset be recorded as an expense over time periods benefited by that asset.

7. On April 1, 2002, the Pacific Landscaping Company purchased a new lawnmower for $25,000. The lawnmower has an estimated life of four years and a $5,000 salvage value. Pacific Landscaping uses the straight-line method of depreciation. Total depreciation expense for the year ended December 31, 2002, is:

a. $5,000

8. On January 1, 2002, Strauss Department Store purchased five sweaters from Charter Manufacturers for $20 each. On April 1, 2002, Ms. Landers purchased those sweaters...

Strauss should recognize a:
a. $100 increase in revenue for the sale of the sweaters to Ms. Landers.

9. The requirement for publicly owned companies to issue quarterly and annual financial statements was mandated by the:

a. Financial Accounting Standards Board

10. The belief that an entity will continue to operate, unless there is evidence to the contrary, is the:

a. Going concern assumption

11. Quick Co. showed an account payable to Lars Co. For $15,000. Quick's accountant misread the amount owed and wrote a check to Lars for $18,000. If Quick immediately prepares a balance sheet, Quick will show an:

a. Debit-balanced Account Payable to Lars Co.

12. The effect of an adjustment on the financial statements is usually to:

a. Increase the accuracy of both the balance sheet and income statement

13. Georgia Tent Company's total liabilities on August 31, 2002 was $200,000. On September 1, 2002, Georgia Tent Company purchased $100,000 of supplies on account from Camper World. On September 25, 2002, Georgia Tent purchased and additional $25,000 on account from Rural Vendors. Georgia Tent paid $50,000 in outstanding liabilities in September. What were Georgia Tent's total liabilities at September 30, 2002?

a. $300,000

14. On May 1, 2002, Pepper Corporation paid a $24,000 premium for insurance coverage spanning May 1, 2002, through April 30, 2003. Which one of the following statements is false?

a. Pepper should recognize $24,000 of insurance expense in 2002.

15. On January 1, 2002, Red Airways brought a plane costing of $1,000,000. The plane has an estimated salvage value of $100,000 and an estimated useful like of 30 years. Red Airways uses the straight-line method of depreciation. The plane was estimated to have a fair market value of $950,000 at the end of 2002. How much depreciation expense should…

Sources used in this document:
Works Cited

Meyer, Philip, E., M.Ac., D.B.A. Accounting and Bookkeeping. Microsoft Encarta Encyclopedia Standard 2004. CD-ROM. Microsoft Corporation: 1993-2003.

Miller, Merton, H. Microsoft Encarta Encyclopedia Standard 2004. CD-ROM. Microsoft Corporation: 1993-2003.

'Accounting and Bookkeeping." 1993-2005. MSN Encarta. 28 Aug. 2005 .

'TeachMeFinance.com." TeachMeFinance.com 2005. TeachMeFinance.com 28 Aug. 2005 .
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