Q2 - 2.
a. Asset – Item acquired as the result of a financial transaction that is thought to have potential future value.
b. Current Asset – Asset that is expected to be utilized in one year or less.
c. Liabilities – Item acquired as the result of a financial transaction that will require the use of an asset in the future.
d. Current liability – Liability that will come due in one year or less.
e. Contributed capital – Capital that is paid to the business in return for an ownership stake.
f. Retained earnings – Profit from the end of the year that is reinvested into the business.
E2 – 2
1.
a. Property and equipment, notes payable
b. Cash, Property and equipment
c. No effect.
d. Cash, Contributed capital
e. Cash, Buildings
f. Cash, Intangibles
g. Cash, Retained earnings
h. Cash, Investments
i. Cash, land
j. Cash, intangibles, notes payable
k. No effect
l. Cash, notes payable
m. Cash, notes payable
2. Truck: $21,000. Land: $50,000. Unit of measurement assumption (U.S. Dollars)
I. Separate entity
E2 – 10
1.
I. Initial stockholder investment.
II. $4,000 case payment on a $25,000 truck. The remainder was financed.
III. $4,000 loan was made by the company to another party.
IV. Company made $6,000 worth of investments.
V. Company sold $2,000 worth of investments.
VI. A stockholder gave $4,000 worth of computer equipment in exchange for stock ownership.
2.
Assets:
Cash: 38,000
Short term investments: 4,000
Short term notes receivable: 4,000
Equipment: 29,000
Total Assets: 75,000
Liabilities:
Long-term note payable: 21,000
Total Liabilities: 21,000
Stockholder’s Equity:
Contributed capital: 54,000
Total Equity: 75,000