Chapter 1 Sample Problems

Chapter 1 Sample Problems

6. Which of the following requires accounting information to be complete, neutral, and free from material error?

7. At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning service, had total assets of 3,630 and equity of 2,280. How much were Global Cleaning Service’s liabilities? Assets Liabilities Equity 3,630 ? 2,280 3,630 1,350 2,280

8. Consider the overall effects on Global Cleaning Service from selling and performing services on account of 6,400 and paying expenses totaling 2,500. What is Global Cleaning Service’s net income or net loss? 6,400 - 2,500 3,900

9. Assume that Global Cleaning Services performed cleaning services for a department store on account for 180. How would this transaction affect Global Cleaning Service’s accounting equation? Assets Liabilities Equity A/R 180 Sales 180

13. Cosmo Thompson started a new business, Thompson Gymnastics, and completed the following transactions during December : Analyze the effects of the transactions on the accounting equation of Thompson Gymnastics. Analyze the events chronologically, one transaction at a time. Beginning with the transaction on the 2nd, calculate the balance in each account after analyzing the effect of the transaction on the accounting equation. (Complete only the necessary answer boxes for your transaction lines. [Do not enter any zeros for your transaction lines.] Carry down all balances to the "Bal.“ line, including zero balance accounts, entering a "0“ for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations used: A/P Accounts Payable; A/R Accounts Receivable; Adv. Advertising; Com. Common; Contr. Contributed; Div. Dividends; Exp. Expense; Liab. Liabilities; Off. Sup. Office Supplies; Sal. Salaries; Serv. Rev. Service Revenue; Util. Utility.)