Question

1. Match the following definitions w the following definitions with terms 1 through 8. Place the letter that identifies the best definition in the blank space next to the term. (8 points) Going-concern principle 2 Owner withdrawal Revenues Statement of changes in equity. Net assets Cost principle Objectivity principle Assets 1. Assets an owner takes from the company for personal use 2. A principle that requires the information in financial statements to be supported by independent unbiased evidence 3. A principle that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold. 4. The accounting principle that requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange 5. A financial statement that reports the changes in equity over the reporting period; including increases such as owner investment and net profit and for decreases such as owner withdrawals or net loss 6. Resources owned or controlled by a company that are expected to yield future benefits 17. Another term for equity 8. Gross increase in equity from a company's earnings activities 2. From the information given below, prepare a November income statement, a November statement of changes in equity, and a November 30 statement of financial position. On November 1 of the current year, Lois Bell began Lois Bell, Interior Design with an initial investment of $50,000 cash. On November 30 her records showed the following (alphabetically arranged) items and amounts. (12 points) Accounts payable........ Accounts receivable Cash.............. Fees earned................ Notes payable..... $12,000 Office furnishings.......... 23.000 Owner's withdrawals 17,200 Rent expense....... 30,000 Salaries expense......... 4,250 Telephone expense........ $40,000 6,000 3,600 6,200 250

Answer 1

1) Going Concern Principle - 3) A principle that requires financial statements to reflect the assumption that business will continue instead of being closed and sold.

2) Owner Withdrawal – 1) Assets an owner takes from the company for personal use.

3) Revenues – Gross increase in equity from a company’s earnings activities

4) Statement of changes in equity – 5) A financial statement that reports the changes in equity over the reporting period; including increases such as owner investment and net profit and for decreases such as owner withdrawals or net loss.

5) Net assets – Another term for equity

6) Cost Principle – The accounting principle that requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange.

7) Objectivity Principle – 2) A principle that requires the information in the financial statements to be supported by independent unbiased evidence.

8) Assets – resources owned and controlled by a company that are expected to yield future benefits.