Mgmt 210

I. Exercise 1-1 Types of Business Activities, p. 36

Braxton Corp. was organized on January 1, 2010, to operate a limousines service to and from the airport. For each of the following business activities, indicate whether it is a financing (F), investing (I), or operating (O) activity.

__ F______1 . Issued shares of stock to each of the four owners.

___I_____ 2. Purchased two limousines.

___O_____3. Paid first month’s rent for use of garage.

___F_ ____4. Obtained loan from local bank.

___O_____ 5. Received cash from customer for trip to the airport.

___O_____ 6. Paid driver first week’s wages.

___I_____ 7 . Purchased 500-gallon fuel tank.

II. Exercise 1-12 Accounting Principles and Assumptions, p. 39

The following basic accounting principles and assumptions were discussed in the chapter:

Economic entity

Monetary unit

Cost principle

Going concern

Time period

Fill in each of the blanks with the accounting principle or assumption that is relevant to the situation described.

Economic entity 1. Genesis Corporation is now in its 30th year of business. The founder of the company is planning to retire at the end of the year and turn the business over to his daughter.

Cost principle 2. Nordic Company purchased a 20-acre parcel of property on which to build a new factory. The company recorded the property on the records at the amount of cash given to acquire it.

Monetary unit 3. Jim Bailey enters into an agreement to operate a new law firm in partnership with a friend. Each partner will make an initial cash investment of $10,000. Jim opens a checking account in the name of the partnership and transfers $10,000 from his personal account into the new account.

Going concern 4. Multinational Corp. has a division in Japan. Prior to preparing the financial statements for the company and all of its foreign divisions, Multinational translates the financial statements of its Japanese division from yen to U.S. dollars.

Time period...