1. Sharon Samson starts a plumbing service named Reliable Waterworks. Selected transactions are described as follows: A) Sharon deposits $7,000 into a new checking account for the business, recording the capital contribution. B) Reliable pays $4,000 cash for equipment to be used for plumbing repairs. C) Reliable borrows $15,000 from a local bank and deposits the money in the checking account. D) Reliable pays $600 rent for the first month. E) Reliable pays $400 cash for plumbing supplies to be used on various jobs in the future. F) Reliable completes a plumbing repair project for a local lawyer and receives $1,300 cash. G) Sharon takes a cash withdrawal of $2,500. After all of the transactions, what is the cash balance? A. $15,800 B. $300 C. $4,500 D. $1,300

QUESTION 2 1. Hamilton Lawn Service earned $1,000 for services rendered and collected cash from its customer. What is the effect on accounts? A. Cash account increases; Accounts payable increases. B. Cash account increases; Accounts receivable increases. C. Cash account increases; Supplies account decreases. D. Cash account increases; Owner's capital account increases.

QUESTION 3 1. If a proprietorship cannot pay its debts, the creditors may make claims against the: A. assets of the proprietorship only. B. assets of the proprietor. C. state government. D. employees of the business.

QUESTION 4 1. The financial statements should be prepared in what order? A. Income statement, statement of owner's equity, balance sheet, statement of cash flows B. Statement of owner's equity, balance sheet, income statement, statement of cash flows C. Balance sheet, statement of owner's equity, income statement, statement of cash flows D. Balance sheet, income statement, statement of owner's equity, statement of cash flows

QUESTION 5 1. Tim contributes capital into his business. The two accounts affected are: A. an asset and a liability. B. an asset and an equity. C. a liability and an equity. D. two asset accounts.

QUESTION 6 1. The total assets and the total liabilities of Ty Williams Financial Services, are shown below. During the year, the proprietor made no additional capital contributions, and took drawings of $15,000. Assets Liabilities Beginning of year $395,000 $290,000 End of year 455,000 320,000 What was the amount of net income for the year? A. $85,000 B. $40,000 C. $45,000 D. $135,000

QUESTION 7 1. One beneficial characteristic of a proprietorship is: A. that the owner also manages the business. B. the owner appoints a board of directors to manage the business. C. the owner's interest is separate from the manager's interest. D. the owner does not need to be involved in the day-to-day operations of the business.

QUESTION 8 1. Financial statements are prepared after an entity's transactions are analyzed and recorded. Which of the following reports is NOT one of the required financial statements? A. Statement of cash flows B. Balance sheet C. Statement of drawings D. Income statement

QUESTION 9 1. Which of the following financial statements reports expenses in decreasing order of their amounts, with the largest expense first? A. Statement of cash flows B. Income statement C. Statement of owner's equity D. Balance sheet

QUESTION 10 1. If an analyst wants to know how likely it is that a business would be able to pay off all its debts, which of the following statements would be MOST useful? A. Income statement B. Balance sheet C. Statement of owner's equity D. Statement of cash flows