Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 1, Problem 5SC
Assume that Wave Rider sold skateboards to a department store for $28,000 cash. How would this transaction affect Wave Rider's
- a. Increase both assets and
stockholders' equity by $28,000 - b. Will not affect the accounting equation because the effects cancel out
- c. Increase both assets and liabilities by $28,000
- d. Increase both liabilities and stockholders' equity by $28,000
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Evaluate each of the following transactions in terms of their effect on assets, liabilities, and equity.
1. Receive payment of $12,000 owed by a customer2. Purchase equipment for $45,000 in cash3. Issue $85,000 in stock4. Borrow $67,000 from a bank
What is the net change in Total Liabilities & Equity?
Please don't provide answer in image format thank you
Choose A, B, C or D and explain your solution
2. Assume that Fossil sold watches to a department store on account for $48,000. How would this transaction affect Fossil’s accounting equation?
a. Increase both assets and liabilities by $48,000
b. Increase both assets and stockholders’ equity by $48,000
c. Increase both liabilities and stockholders’ equity by $48,000
d. No effect on the accounting equation because the effects cancel out
Brunswick borrows $50,000 cash from Third National Bank. How does this transaction affect the accounting equation for Brunswick? a. Assets increase by $50,000; liabilities increase by $50,000; no effect on equity. b. Assets increase by $50,000; no effect on liabilities; equity increases by $50,000. c. Assets increase by $50,000; liabilities decrease by $50,000; no effect on equity. d. No effect on assets; liabilities increase by $50,000; equity increases by $50,000. e. No effect on assets; liabilities increase by $50,000; equity decreases by $50,000.
Chapter 1 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 1 - The text states that accounting is the "language...Ch. 1 - Would you describe accounting as primarily a...Ch. 1 - Prob. 3DQCh. 1 - What are some reasons why accounting has adopted...Ch. 1 - What are some of the uses of financial statements?Ch. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - How is the accounting equation affected by each of...Ch. 1 - In what order should the financial statements be...Ch. 1 - Which financial statement would be most useful to...
Ch. 1 - Prob. 1SCCh. 1 - Prob. 2SCCh. 1 - Which accounting principle specifically states...Ch. 1 - Wave Rider is famous for custom skateboards. At...Ch. 1 - Assume that Wave Rider sold skateboards to a...Ch. 1 - Assume that Wave Rider sold skateboards to another...Ch. 1 - Assume that Wave Rider paid expenses totaling...Ch. 1 - Consider the overall effects of the transactions...Ch. 1 - The balance sheet reports a. a businesss financial...Ch. 1 - The income statement reports a. a business's...Ch. 1 - Prob. 11SCCh. 1 - Prob. 12SCCh. 1 - Accounting principles (Learning Objective 4) 5-10...Ch. 1 - Accounting principles (Learning Objective 4) 5-10...Ch. 1 - Prob. 3SECh. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Prob. 5SECh. 1 - Prob. 6SECh. 1 - Prob. 7SECh. 1 - Entering transactions in the accounting equation...Ch. 1 - Prob. 9SECh. 1 - Prob. 10SECh. 1 - Entering transactions in the accounting equation...Ch. 1 - Transaction analysis (Learning Objective 5) 5-10...Ch. 1 - Transaction analysis (Learning Objective 5) 5-10...Ch. 1 - Prob. 14SECh. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Prob. 17AECh. 1 - Using the accounting equation to determine net...Ch. 1 - Transaction analysis (Learning Objective 5) 15-20...Ch. 1 - Types of business organizations and balance sheet...Ch. 1 - Types of accounts and income statement preparation...Ch. 1 - Using the accounting equation to determine net...Ch. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Prob. 24BECh. 1 - Prob. 25BECh. 1 - Prob. 26BECh. 1 - Transaction analysis (Learning Objective 5) 15-20...Ch. 1 - Prob. 28BECh. 1 - Prob. 29BECh. 1 - Prob. 30BECh. 1 - Transaction analysis and the calculation of net...Ch. 1 - Prob. 32APCh. 1 - A Preparing the income statement, statement of...Ch. 1 - Preparing the income statement and balance sheet;...Ch. 1 - Prob. 35APCh. 1 - Transaction analysis and the calculation of net...Ch. 1 - Prob. 37BPCh. 1 - Prob. 38BPCh. 1 - Preparing the income statement and balance sheet;...Ch. 1 - Prob. 40BPCh. 1 - Prob. 1CECh. 1 - This problem is the first problem in a sequence...Ch. 1 - Prob. 1CFSAPCh. 1 - Prob. 1EIACh. 1 - Prob. 2EIACh. 1 - Prob. 1FACh. 1 - Industry Analysis Purpose: To help you understand...Ch. 1 - Prob. 1SBACh. 1 - Prob. 1WC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Multiple Choice Quiz: Brunswick borrows $50,000 cash from Third NationalBank. How does this transaction affect the accounting equation for Brunswick? a. Assets increase by $50,000; liabilities increase by $50,000; no effect on equity. b. Assets increase by $50,000; no effect on liabilities; equity increases by $50,000. c. Assets increase by $50,000; liabilities decrease by $50,000; no effect on equity. d. No effect on assets; liabilities increase by $50,000; equity increases by $50,000. e. No effect on assets; liabilities increase by $50,000; equity decreases by $50,000.arrow_forwardHow will IFFA record the May 1 transaction? a. No entry is needed. b. decrease Cash and increase Bank Loan Payable, $12 c. decrease Cash and increase Accounts Payable, $12 d. increase both Cash and Owner's Capital, $12 Enter the letter that corresponds to your choice. (A B C D) How will IFFA record the May 2 transaction? a. increase both Cash and Accounts Payable, $4,000 b. increase both Cash and Bank Loan Payable, $4,000 c. increase both Cash and Owner's Capital, $4,000 d. increase both Cash and Revenue, $4,000 e. increase both Cash and Retained Earnings, $4,000 Enter the letter that corresponds to your choice. (A B C D E) How will IFFA record the May 3 transaction? a. increase both Cash and Accounts Payable, $3,000 b. increase both Cash and Bank Loan Payable, $3,000 c. increase both Cash and Owner's Capital, $3,000 d. increase both Cash and Revenue, $3,000 e. increase both Cash and Retained Earnings, $3,000 Enter the letter that corresponds to your choice.…arrow_forwardIf a business received $2,000.00 from sales, this would ____. a. increase assets and increase owner's equity b. increase assets and decrease liabilities c. increase liabilities and decrease owner's equity d. decrease assets and decrease owner's equityAnswer the question and explain why did you pick this answerarrow_forward
- How will IFFA record the May 1 transaction? a. No entry is needed. b. decrease Cash and increase Bank Loan Payable, $12 c. decrease Cash and increase Accounts Payable, $12 d. increase both Cash and Owner's Capital, $12 Enter the letter that corresponds to your choice. (A B C D) How will IFFA record the May 2 transaction? a. increase both Cash and Accounts Payable, $4,000 b. increase both Cash and Bank Loan Payable, $4,000 c. increase both Cash and Owner's Capital, $4,000 d. increase both Cash and Revenue, $4,000 e. increase both Cash and Retained Earnings, $4,000 Enter the letter that corresponds to your choice. (A B C D E) How will IFFA record the May 3 transaction? a. increase both Cash and Accounts Payable, $3,000 b. increase both Cash and Bank Loan Payable, $3,000 c. increase both Cash and Owner's Capital, $3,000 d. increase both Cash and Revenue, $3,000 e. increase both Cash and Retained Earnings, $3,000 Enter the letter that corresponds to your…arrow_forwardCalculate the missing amount in the accounting equation for each company (amounts in billions): Stockholders' Assets Liabilities Equity Hudson Gift and Cards $ ? $ 47 $ 41 Strawberry Bank 29 23 Auto Parts and Tires 28 7 Which company appears to have the strongest financial position? Explain your reasoning. Calculate the missing amounts. (Enter amounts in billions.) Stockholders' Assets Liabilities equity Hudson Gift and Cards $ 88 $ 47 $ 41 Strawberry Bank 29 6. 23 Auto Parts and Tires 28 7 21 Which company appears to have the strongest financial position? Explain your reasoning. (Round the percentage to the nearest hundredth percent, X.XX%.) appears to have the strongest financial position because its make up the smallest percentage of company assets. This percentage is %arrow_forwardCalculate the missing amount in the accounting equation for each company (amounts in billions): Stockholders' Assets Liabilities Equity Hudson Gift and Cards $ ? $ 47 $ 41 Strawberry Bank 29 23 Auto Parts and Tires 28 7 Which company appears to have the strongest financial position? Explain your reasoning. Calculate the missing amounts. (Enter amounts in billions.) Stockholders' Assets Liabilities equity Hudson Gift and Cards $ 47 $ 41 Strawberry Bank 29 23 Auto Parts and Tires 28arrow_forward
- The receipt of $8,000 cash for fees earned was recorded by Langley Consulting as an increase in cash of $8,000 and a decrease in retained earnings (revenues) of $8,000. What is the effect of this error on the accounting equation? A. Total assets will exceed total liabilities and stockholders’ equity by $8,000. B. Total assets will be less than total liabilities and stockholders’ equity by $8,000. C. Total assets will exceed total liabilities and stockholders’ equity by $16,000. D. The error will not affect the accounting equation.arrow_forwardWhat Would You Say? A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for 7,000, paid 3,000 in cash, and placed the remainder on account. This means that there are two credits and one debitone debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.arrow_forwardAssume a company has a $350 credit (not cash) sale. How would the transaction appear if the business uses accrual accounting? A. $350 would show up on the balance sheet as a sale. B. $350 would show up on the income statement as a sale. C. $350 would show up on the statement of cash flows as a cash outflow. D. The transaction would not be reported because the cash was not exchanged.arrow_forward
- Assume that you are the controller of a business that provides legal services to clients. Suppose that the company has had a tough year, so the revenues have been lagging behind, based on previous years standards. What would you do if your boss (the chief executive officer [CEO] of the company) asked to reclassify a transaction to report loan proceeds of $150,000 as if the cash came from service fee revenue from clients instead. Would following the CEOs advice impact the companys accounting equation? How would reclassifying this one transaction change the outcome of the balance sheet, the income statement, and the statement of retained earnings? Would making this reclassification change the perception that users of the financial statements would have of the companys current year success and future year potential? Write a memo, detailing your willingness (or not) to embrace this suggestion, giving reasons behind your decision. Remember to exercise diplomacy, even if you must dissent from the opinion of a supervisor. Note that the challenge of the assignment is to keep your integrity intact, while also keeping your job, if possible.arrow_forwardDiscuss how each of the following transactions will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. A company purchased $450 worth of office supplies on credit. B. The company parking lot was plowed after a blizzard. A check for $75 was given to the plow truck operator. C. $250 was paid on account. D. A customer paid $350 on account. E. Provided services for a customer, $500. The customer asked to be billed.arrow_forwardWhat accounting method (cash or accrual) would you recommend for the following businesses? a. A gift shop with average annual gross receipts of 900,000. b. An accounting partnership with average annual gross receipts of 12 million. c. A drywall subcontractor who works on residences and has annual gross receipts of 3 million. d. An incorporated insurance agency with average annual gross receipts of 28 million. e. A sole proprietor operating a retail clothing store with average annual gross receipts of 12 million. f. A sole proprietor operating a widget manufacturing plant with average annual gross receipts of 27 million.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeIndividual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY