2.x05When revenue exceeds expenses,_________ occurs,otherwise _____________ occurs.

3.x05Transactions are recorded in the accounting records using the _____________________.

4.x05Any accounting period of twelve months’ duration is called a ____________.

5.x05Accounting systems are designed to show the __________ and ________ in each financial statement item in a separate record.

6.x05An account’s normal balance is on the side of the account----________________ where increases are recorded.

1.x05Changes and reasons for changes,if necessary,and their impact on an enterprise’s financial position and operating results,should be reported in notes to the financial statements.

2.When business performs a service,makes a sale,or incurs an expense,the accountant must enter the transaction into the journals,whether or not cash has been received or paid.

3.x05A balance sheet is prepared under the assumption that the concern for which the statement is made will continue in operation,so far a going concern the assets used in carrying on its operations are not for sale.

4.x05Accounting is based on the assumption that money is the common denominator by which economic activity is conducted,and that the money unit provides an appropriate basis for accounting measurement and analysis.

5.x05The key of objective principle is that accounting records and financial reports must be based on financial and economic transactions as they actually take place,in order to reflect the financial position and operating results of an enterprise objectively.

1.Gap Co.began the year with total liabilities of $ 1.8 billion and total stockholders; equity of $ 1.6 billion.During the year,total assets increased by 20%.How much are total assets at the end of the year?

2.x05You have been requested by a friend named Stephanie Bernina to advise her on the effects certain transactions will have on her business.Time is short,so you cannot journalize the transactions.Instead,you must analyze the transactions without a journal.Bernina will continue the business only if she can expect to earn monthly net income of $ 5000.The following transactions occurred during March:

a)x05Bernina deposited $ 8000 cash in a business bank account to start the company.

b)x05Paid $ 300 cash for supplies.

c)x05Incurred advertising expense on account,$ 700.

d)x05Paid the following cash expenses:secretary’s salary,$1400; office rent,$ 1150.

e)x05Earned service revenue on account,$ 8800.

f)x05Collected cash from customers on account,$1200.

Required:Compute the amount of net income or net loss for this first month of operations.Would you recommend that Bernina continue in business?