Question

1. Use the Dynamic Exhibit to answer the following questions.

1. When fees earned is $7,500 net income is $_____

2. When fees earned is $12,500 cash at November 30 is $____

3. When the amount paid for land is $36,000 and the amount paid for expenses is $10,000, the balance in total assets after transaction (b) is $___

4.When the amount paid for land is $36,000 and the amount paid for expenses is $18,000, the balance in total assets after transaction (b) is $___

5.When the amount paid for land is $50,000 and the amount paid for expenses is $18,000, the balance in total assets after transaction (b) is $___

6. When the amount paid for land is $50,000 and the amount paid for expenses is $10,000, the balance on the right side of the accounting equation after transaction (b) is $____

Answer 1

1). Financial reports are used by the investors and other stakeholders of an organization to assess the state of financial affairs and performance of an organization in which they have interests. Other stakeholders include management, employees, workers, Creditors, Government authorities and others. They are generally interested to know the state of affairs of an organization and its financial position thus, refers to the financial reports to evaluate the financial performance and position of the organization.

When fees earned in $7,500 then net income is also $7,500 as no expenditures have been incurred in earning the income according to the information provided here. Thus, net income is $7500.

2). Financial reports are used by the investors and other stakeholders of an organization to assess the state of financial affairs and performance of an organization in which they have interests. Other stakeholders include management, employees, workers, Creditors, Government authorities and others. They are generally interested to know the state of affairs of an organization and its financial position thus, refers to the financial reports to evaluate the financial performance and position of the organization.

When fees earned in $12,500 then net income is also $12,500 as no expenditures have been incurred in earning the income according to the information provided here. Thus, net income is $12,500.