Financial Analysis

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Financial Analysis

Problem: P1-29A

Matching the words with their definitions


D. Owner is referred to as a proprietor.

Faithful representation

E. Asserts that data are complete, neutral, and free from material errors.


G. Has unlimited liability.


H. Represents ownership in a company.

Limited Liability

A. Feature that enables a corporation to raise more money than proprietorships and partnerships.

Limited Liability company

I. Type of entity that is designed to limit personal liability exposure.

Cost Principle

B. Holds that the fair market value should not be used over the actual costs.


C. Stands for Financial Accounting Standards Board.

Net loss of $ 15,000

F. Revenues of $ 70,000 and expenses occurred of $ 85,000.


J. Person or business lending money.

Problem: P1-29A

Entity Concept

Basic accounting principle under which a business or organization is deemed as an entity in its own regard, separate from its stockholders (shareholders), managers, or proprietor. This is also called entity assumption (Smith, 1991).


Cash $50,000

Cash $100

Accounts receivable $ 17,000

Rent $1,500

Office furniture $ 9,700

Cash $1,000


Office Furniture $ 9,700


Stationary $ 100

Rent $ 1,500


With drawl $1,000

$ 50,000


Service provided to the costumer $17,000

Answer of requirement: 1

As $50,000 is induced in the business hence it increases the asset side of Alex shore, CPA by $50,000 and thus the capital of the firm will also increase.

Paying $ 100 for stationary will decrease the assets by $100 hence the expense side of the T account will be debited by the same amount as it comes under the expense of the company.

Purchase of office furniture will increase the assets of the company to an amount of $ 9,700 and since this transaction is made on account thus the liability of the company will increase by the same amount of $ 9,700.

As Alex Shore, CPA is a service providing company thus by providing services to their client on credit will hit two accounts i.e. Accounts receivables (assets) of the company will ...
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