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ACC 201: Practice Exercises for Chapters 1 & 2 � Financial Transactions and Statements

Practice exercises covering financial transactions and statement preparation in accounting.

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ACC 201: Practice Exercises for Chapters 1 & 2 � Financial Transactions and Statements - Page 1 preview image

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Practice exercise1ACC 201: Practice Exercises for Chapters 1 & 2–FinancialTransactions and Statements

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ACC 201: Practice Exercises for Chapters 1 & 2 � Financial Transactions and Statements - Page 2 preview image

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Practice exercise2Chapter 1 and 2 practice exerciseACC: 201Instructor:Date:Exercise 1-2:Assume that Kennedy Company acquires $1,600 cash from creditors and$1,800 cash from investors.Requireda. Explain the primary differences between investors and creditors.Answer:a)The primary difference between creditors and investors is a creditor you must payback the money borrowed and most of the time there is interest. An investor issomeone that is investing in the company and normally has stock from doing so.If the company does not make it and dissolves creditors get paid first, and if thereis still money left, investors get it.b. If Kennedy has a net loss of $1,600 cash and then liquidates, what amount of cash willthe creditors receive? What amount of cash will the investors receive?Answer:b)Thecreditors will get $1,600, or all of their money, and the investors will get$200.c. If Kennedy has net income of $1,600 and then liquidates, what amount of cash will thecreditors receive? What amount of cash will the investors receive?Answer:
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Document Details

University
National University
Course
ACC 201
Subject
Accounting

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