TEST 1A (Concluded)

9th Edition

Financial and
Managerial Accounting
Warren/Reeve

Chapter Test 1A

PROBLEMSANALYSIS OF TRANSACTIONS
INSTRUCTIONS: Indicate the effect of each of the following transactions for the current month on assets, liabilities, and
owners equity by inserting + for increase and for decrease in the appropriate columns at the right.
Answers
A
0.

Received cash from owner as original investment .....................................

1.

Received cash for services provided (sold) ...............................................

OE

For
Scoring

0. ____
1. ____

TEST 1A (Concluded)

2.

Purchased equipment for cash ..................................................................

2. ____

3.

Paid utilities for month ................................................................................

3. ____

4.

Paid creditors on account ...........................................................................

4. ____

5.

Received cash for service sold to cash customers ....................................

5. ____

6.

Purchased land by signing a nine-month, non-interest-bearing

note payable ...............................................................................................

6. ____

7.

Charged customers for service sold on account .......................................

7. ____

8.

Paid miscellaneous expenses ....................................................................

8. ____

9.

Paid first installment due on the non-interest-bearing note payable ..........

9. ____

10.

Purchased office supplies on account .......................................................

10. ____

11.

Paid cash to owner on withdrawal ..............................................................

11. ____

12.

Recorded cost of supplies used during the month ....................................

12. ____

FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY

TEST 1A (Concluded)

INSTRUCTIONS: Answer the following questions or complete the statements by writing the appropriate words or
amounts in the Answers column.

Answers

For
Scoring

partnership

0. ____

0.

A business entity owned by two or more individuals is referred to as a ....

1.

A business that changes basic inputs into products is referred to as a ....

1. ____

2.

The least common form of business entity is a .........................................

2. ____

3.

If revenues exceed expenses, the difference is called ..............................

3. ____

4.

The resources owned by a business are called .........................................

4. ____
continued

TEST 1A (Concluded)

Answers

For
Scoring

5.

The owner of equity in a partnership is called (n).......................................

5. ____

6.

The authoritative body that currently has primary responsibility for

the development of GAAP is ......................................................................

6. ____

7.

The excess of expenses over revenues is referred to as ..........................

7. ____

8.

Amounts owed by a business to others are referred to as ........................

8. ____

TEST 1A (Concluded)

9.

Resources consumed or services used in the process of earning

revenue are called ......................................................................................

10.

Land was offered for sale at $75,000. If you paid $65,000 for the land,
the amount that you would record for the purchase of the land in the
accounting records is .................................................................................

11.

Insurance premiums paid in advance are considered to be assets and are

called ..........................................................................................................

12.

Assets are financed by two sources:(1) owners equity and (2) ................

13.

The liabilities that result from purchases on account are referred to as ....

TB1-

9. ____

10. ____
11. ____
12. ____
13. ____
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TEST 1A (Concluded)

14.

15.

If operations for an accounting period resulted in fees for cash of

$15,000 and fees on account for $40,000, the amount of revenue
for the period was .......................................................................................

If operations for an accounting period resulted in fees for cash of

$19,000, fees on account of $7,000, and expenses paid in cash
of $50,000, did the business incur a net income or a net loss for
the period? .................................................................................................

16.

What was the amount of net income or net loss indicated in Question 15?

17.

A statement detailing the change in cash during a period of time is a ......

14. ____

15. ____
$

16. ____
17. ____

TEST 1A (Concluded)

18.

Principles that guide the conduct of businesses are referred to as ...........

18. ____

19.

In the accounting equation, liabilities plus owners equity equals ..............

19. ____

20.

The form of the balance sheet with the liability and owners equity
sections presented next to the assets section is called .............................

20. ____

21.

If liabilities are $75,000 and owners equity is $35,000, the amount of

the assets is ...............................................................................................

21. ____

22.

If assets are $190,000 and owners equity is $50,000, the amount

of the liabilities is ........................................................................................

22. ____

23.

If total assets increased by $30,000 and liabilities increased by $20,000

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TEST 1A (Concluded)

during the period, the amount and direction (increase or decrease) of

the periods change in owners equity was .................................................
24.

The owners equity at the beginning of the period was $45,000; at the end
of the period, assets were $140,000 and liabilities were $71,000. If the
owner made no additional investments or withdrawals during the period,
did the business incur a net income or a net loss for the period? .............

23. ____

24. ____

25.

What was the amount of net income or net loss indicated in Question 24?

25. ____

26.

If assets are $110,000 and owners equity is $37,000, the amount

of liabilities is ..............................................................................................

26. ____

TEST 1A (Concluded)

NOTE: No credit is given for a partially correct answer.

ACHIEVEMENT TEST SOLUTIONSCHAPTER 1

TEST 1A
Problems
A

OE

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56

TEST 1A (Concluded)

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

+
+,

+
+
+

+
+
+

TEST 1A (Concluded)

11.
12.

Fill-in-the-Blank
1.
2.
3.
4.

manufacturing business
partnership
net income
assets

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TEST 1A (Concluded)

5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

partner
Financial Accounting Standards Board (FASB)
net loss
liabilities
expenses
$65,000
prepaid expenses
liabilities
accounts payable
$55,000

TEST 1A (Concluded)

15.
16.
17.
18.
19.
20.
21.
22.
23.
24.

net loss
$24,000
cash flows statement
ethics
assets
account form
$110,000
$140,000
$10,000 increase
net income

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TEST 1A (Concluded)

25. $24,000
26. $73,000

TEST 1A (Concluded)

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62