ACG 2021 Chapter 1 Study Exercise

Q1. Identify the following users as either External users or Internal users.

Q2. Identify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation

Q3. Identify each of the following as an accounting Principle, Assumption, or Constraint.

Q4. Complete the following table with either a yes or no regarding the attributes of a proprietorship, partnership, corporation, and limited liability company (LLC).

Q5. Identify the accounting principle or assumption that best explains each situation.

• If $51,000 cash is paid to buy land, the land is reported on the buyer’s balance sheet at $51,000.
• Cruz Consulting performs services for a client. Cruz records revenue this period even though the client is not billed until next period.
• Mike Derr owns both Sailing Passions and Dockside Digs. In preparing financial statements for Dockside Digs, Mike makes sure that the expense transactions of Sailing Passions are kept separate from Dockside Digs’s transactions and financial statements.

Q6. a. Total assets of Charter Company equal $720,000 and its equity is $430,000. What is the amount of its liabilities?

b. Total assets of Martin Marine equal $520,000 and its liabilities and equity amounts are equal to each other. What is the amount of its liabilities? What is the amount of its equity?

Q7. a. Use the accounting equation to compute the missing financial statement amounts.

b. Use the expanded accounting equation to compute the missing financial statement amounts.

Q8. Determine whether each of the following transactions increases or decreases equity.

Q9. Indicate in which financial statement each item would most likely appear, by selecting income statement, balance sheet, or statement of cash flows from the drop down provided.

Q10. Identify each of the following items as revenues, expenses, or withdrawals from the drop down provided.

Q11. Classify each of the following items as assets, liabilities, or equity from the drop down provided.

Q12. On December 31, Hawkin’s records show the following accounts.

Cash	$ 6,500
Accounts Receivable	1,300
Supplies	2,500
Equipment	15,400
Accounts Payable	6,700
Common stock	11,600
Retained earnings, December 1	4,700
Dividends	2,400
Services Revenue	16,700
Wages Expense	8,000
Rent Expense	2,200
Utilities Expense	1,400

Use the above information to prepare a December income statement for Hawkin

Q13. On December 31, Hawkin’s records show the following accounts.

Cash	$ 6,500
Accounts Receivable	1,300
Supplies	2,500
Equipment	15,400
Accounts Payable	6,700
Common stock	11,600
Retained earnings, December 1	4,700
Dividends	2,400
Services Revenue	16,700
Wages Expense	8,000
Rent Expense	2,200
Utilities Expense	1,400

Use the above information to prepare a statement of retained earnings for Hawkin for the month ended December 31. Hint: Net income is $5,100.

Q14. On December 31, Hawkin’s records show the following accounts.

Cash	$ 6,500
Accounts Receivable	1,300
Supplies	2,500
Equipment	15,400
Accounts Payable	6,700
Common stock	11,600
Retained earnings, December 1	4,700
Dividends	2,400
Services Revenue	16,700
Wages Expense	8,000
Rent Expense	2,200
Utilities Expense	1,400

Use the above information to prepare a December balance sheet for Hawkin. Hint: Retained Earnings on December 31 equals $7,400.

Q15. Use the following information to prepare a statement of cash flows for Studio One for the month ended December 31. The cash balance at the start of December 1 was $2,200. (Amounts to be deducted should be indicated by a minus sign.

Cash dividends to shareholders	$ 3,200
Cash received from customers	27,100
Cash investments from shareholders	12,800
Cash paid for equipment	4,200
Cash paid for truck	23,200
Cash paid for expenditures	7,200

Q16. Identify the following cash flows as reported under either operating activities, investing activities, or financing activities.