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ACC 101 Exams with Answers An adjusting entries for unearned revenue affects Revenue and Liabilities How will it affect total Assets in the balance sheet if tangible fixed assets are not depreciated at the end of the period? Total Assets are overstated How will it affect Income Statement if an accrued expense of $450 is forgotten to record at the end of the period? Net Income in the Income Statement will be overstated for $ What accounting principle requires credit sales revenue also included in the income statement? Accrual basis Which kind of account is accumulated depreciation? Contra - asset account Where is Accumulated depreciation reported? Balance sheet Which statement is true about Mary's capital: The owner's equity account that contains the amount invested in the sole proprietorship by Mary Smith plus the net income since the company began minus the draws made by Mary Smith since the company began. Which account of these accounts will be presented in Post-closing trial balance? Retained Earnings Adjusting entries at the end of an accounting period would not be required for which of the following? Revenue that has been earned and recorded in the accounting records At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson will be billed for the utilities during the next accounting period. As a result, current period liabilities, and income, respectively, are Understate, overstate
How will the Financial Statements be affected if Accountant in the company forgot to adjust a prepaid expense account at the end of the period? Assets in the Balance sheet will be overstated and Expenses in the Income Statement will be understated The following transactions, among others, occurred during August. Which transaction represented an expense during August Rent a space for office on account. The rental amount will be paid in the next 2 months How many accounts does every business transaction affect at least? 2 Which type of information would be of most interest to creditors? Ability of the company to pay debts The account used to record the investment of owner into the business is: The owner's contributed capital account If assets are $199,000 and liabilities are $132,000, then equity equals $67, Provide descriptions for this transaction:Debit inventory $8,000 and credit Account payable $, Buying inventory on credit $8, Failure to make adjusting entries for prepaid expense will result in Understatement of expenses The company buys a new car for personal use of the owner is recorded with below entry: Credit cash and debit withdrawal Which of the following errors would result in the trial balance still balancing? Posted $500 to each account instead of $
A company might buy a service or product on credit. "On credit" implies that the cash payment will occur: on a later date Provide descriptions for this transaction:Increase cash $1,000 and Increase equity $, Investment of cash in business by owner or performed services for cash Provide descriptions for this transaction:Increase cash $4,000 and Increase CONTRIBUTED CAPITAL $4000 Investment of cash in business by owner Provide descriptions for this transaction:Debit office supplies $8,000 and credit liability $,8000 Buying office supplies on credit $8, Provide descriptions for this transaction:Decrease cash $3500 and Decrease equity $ Withdraw cash from the business by owner or paid cash for an expense Items used in business operations, such as office pens and paper are several samples of: Office supplies The difference between a company's assets and its liabilities, or net assets is: Equity Resources owned or controlled by a company that are expected to yield future benefits are: Assets Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? Assets increase by $75,000 and liabilities increase by $75,000. Internal users of accounting information include: Managers. A chart of accounts generally starts with which of the following types of accounts? Asset accounts
Which of the following is a liability? Account payable If a company paid $38,000 of its accounts payable in cash, what was the effect on the assets, liabilities, and equity? Assets would decrease $38,000, liabilities would decrease $38,000, and equity would not change. Assets created by selling goods and services on credit are: Accounts receivable. A payment to an owner for personal use is called a(n): Withdrawal. The properties used in operation activities of a business is called: Assets Which of the following is a liability? Note payable Which of the following is not considered as subcategory of owners Equity? Assets Which of the following is not a liability? Short term investment Which of the following is not a category or element of the balance sheet? Expense The account used to record the transfers of assets from a business to its owner is: The owner's withdrawals account. Reflects assumption that the business will continue operating instead of being closed or sold. Going- Concern Assumption
Another name for equity is: Net asset. On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year? $31, Accounts receivable refers: A promise from customer for service or product the company provided on credit Money which a company owes to vendors for products and services purchased on credit. This item appears on the company's balance sheet as a current liability. Account payable If the assets of a business increased $89,000 during a period of time and its liabilities increased $67, during the same period, equity in the business must have: Increased $22,000. If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets? Assets would have increased $55,000. The following transactions occurred during July:1. Received $900 cash for services provided to a customer during July.2. Received $2,200 cash investment from Barbara Hanson, the owner of the business.3. Received $750 from a customer in partial payment of his account receivable which arose from sales in June.4. Provided services to a customer on credit, $375.5. Borrowed $6,000 from the bank by signing a promissory note.6. Received $1,250 cash from a customer for services to be rendered next year.What was the amount of revenue for July? $ 1,275. Creditors' claims on the assets of a company are called: Liabilities. Distributions by a business to its owners are called: Withdrawals.
How would the accounting equation of Boston Company be affected by the billing of a client for $10, of consulting work completed? +$10,000 accounts receivable, +$10,000 revenue. $370.A company had inventory of 15 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 12 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? $454. A balance sheet lists: The types and amounts of assets, liabilities, and equity of a business as of a specific date. A business is accounted for separately from other business entities, including its owner. Business Entity Assumption A company acquires equipment for $75,000 cash. This represents a(n): Investing activity. A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n):Financing activity. A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $21 each. On November 6 it purchased 15 units at $25 each. On November 8, it sold 20 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 20 units sold? $480. A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? $
the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale? $60. A company has inventory of 20 units at a cost of $12 each on August 1. On August 5, it purchased 10 units at $13 per unit. On August 12 it purchased 15 units at $14 per unit. On August 15, it sold 30 units. Using the FIFO periodic inventory method, what is the value of Cost of goods sold on August 15? $370. A company has sales of $350,000, Account Receivable of 50,000 and estimates that 0.7% of its sales are uncollectible. The estimated amount of bad debts expense is $2,450. A company might provide a service or product on credit. "On credit" implies that the cash payment will occur: on a later date A company must record its expenses incurred to generate the revenue reported.It is about: Matching Principle A company purchased a new truck at a cost of $42,000 on July 1, 2009. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the truck for the year ended December 31, 2009? $3,250. A company purchased a plant asset for $45,000. The asset has an estimated salvage value of $6,000, and an estimated useful life of 10 years. The annual depreciation expense using the straight-line method is $3,900 per year. A company purchased new computers at a cost of $14,000 on October 1, 2010. The computers are estimated to have a useful life of 4 years and a salvage value of $2,000. The company uses the straight- line method of depreciation. How much depreciation expense will be recorded for the computers for the year ended December 31, 2010? $
A company purchased new computers at a cost of $28,000 on January 1, 2010. The computers are estimated to have a useful life of 5 years and have a salvage value of 3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the year ended December 31, 2010? $5, A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000, and had a five-year useful life. What is the depreciation expense for one year? $2000. A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period? $2,900. A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity? $71,000. A condition in which a company's expenses exceed its revenues. What does that mean: A loss A credit is used to record: All of these. A debit is used to record: An increase in the balance of the owner's withdrawals account. A debit is: The left-hand side of a T-account. A liability account that reports amounts received in advance of providing goods or services. It is about: Unearned revenue A method of valuing inventory in which the items acquired last are treated as the ones sold first. What is it? LIFO
Adjusting entries are journal entries made at the end of an accounting period for the purpose of: All of these. Adjusting entries: Affect both income statement and balance sheet accounts. After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses) into the income summary, the income summary account has a debit balance of $33,000. The entry to close the income summary account will include: A debit of $33,000 to owner capital. All expenditures necessary to bring an item to a salable condition and location. This statement is the definition of: Inventory costs An account used to record the owner's investments in the business is called a(n): Capital account. An adjusting entry could be made for each of the following except: Owner withdrawals. Owner capital. Cash. Account payable. Revenue. Cost of goods sold. An asset created by prepayment of an expense is: Recorded as a debit to a prepaid expense account. An estimate of an asset's value at the end of its benefit period is called: Salvage value An example of a financing activity is: Obtaining a long-term loan. An example of an investing activity is Purchase of land. An example of an operating activity is: Paying wages.
An overstatement of ending inventory will cause An overstatement of assets and equity on the balance sheet. Assets, liabilities, and equity accounts are not closed; these accounts are called: Permanent accounts. At the beginning of 2009, Beta Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During 2009, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during 2009 totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of 2009 would be: $123,000. At the beginning of 2009, a company's balance sheet reported the following balances: Total Assets = $125,000; Total Liabilities = $75,000; and Owner's Capital = $50,000. During 2009, the company reported revenues of $46,000 and expenses of $30,000. In addition, owner's withdrawals for the year totaled $20,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of 2009 would be: $46,000. At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Thomas $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be: $49. At the beginning of January of the current year, a Law company has a normal balance of $50,000 for accounts receivable. During January, the company collected $14,000 from customers and provided additional services to customers on account totaling $12,000. Additional, company used service of $ 1,000 on credit. At the end of January, the balance in the accounts receivable account should be: $48,000. Book value is equal to: None of these Borrow $ 1,000 loan to pay for new equipment of the company is recorded with: Debit equipment and credit loan
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: LIFO method. During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance? $2,900. Electron borrowed $15,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a: Debit to Notes Receivable for $15,000. Ending inventory is equal to merchandise available for sale minus cost of goods sold. Ending inventory is equal to merchandise available for sale minus cost of goods sold. External users of accounting information exclude: Manager Flash had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was: $40,500 increase. Flash has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is: $274,000. Flynn Company uses an allowance method for recording uncollectible. At the due date of that account receivable, Flynn determined that $4,000 due from Mitchell will not be collected and should be write off. The entry Flynn should record to write off the Mitchell account is: Dr. Allow. for Uncollectible Accounts 4,000 Cr. Accounts Receivable 4, Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June, 1: Beginning inventory 15 units at $20 each $120. Gross increases in equity from a company's earnings activities are: Revenues.
Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.January 2 Beginning Inventory: 500 units at $3.00 April 7 Purchased : 1,100 units at $3.20 June 30 Purchased : 400 units at $4.00 December 7 Purchased : 1,600 units at $4.40 Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, $10, How does Lead Company record by the billing of a client for $15,000 of service completed? + $15,000 accounts receivable, +$15,000 revenue. If Hussan, the owner of Hardware company, uses cash of the business to purchase a motorcycle for his travelling, the business should record this use of cash with an entry to: Debit Withdrawals and credit Cash. If Jones, the owner of Hardware company, uses cash of the business to purchase a family car, the business should record this use of cash with an entry to: Debit Withdrawals and credit Cash. If Smith, the owner of a restaurant, uses cash of the business to pay for renting his house, the business should record this use of cash with an entry to: Debit Withdrawals and credit Cash. If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to: Debit Tim Jones, Withdrawals and credit Cash. If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include: A debit to Salaries Payable and a credit to Cash. If assets are $365,000 and equity is $120,000, then liabilities are: $245,000. If equity is $300,000 and liabilities are $192,000, then assets equal: $492,000.
Lomax Enterprises purchased a depreciable asset for $20,000 on January 1, 2008. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on June 30, 2011? $ Merchandise inventory includes: All goods owned by a company and held for sale Nelson Company purchased equipment on July 1 for $27,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $3,500, the amount of monthly depreciation expense Nelson should recognize is: $ Net Income: Is the excess of revenues over expenses. Net Sales minus Cost of Goods Sold equals to: Gross profit Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. The journal entry on May 3 is: Dr allowance for doubtful debts 3000 Of the following account types, which would be increased by a debit? Assets and expenses. Of the following accounts, the one that normally has a credit balance is: Sales Salaries Payable. Office supplies available at the beginning of the year are 0. During the year, the company purchased $250 of office supplies. On December 31, $90 of office supplies remained. How much should the company report as office supplies expense for the year? $ Office supplies available at the beginning of the year are 0. During the year, the company purchased $3000 of office supplies. On December 31, $1000 of office supplies remained. Additional companys
insurance expense is $ 1000. How much should the company report as office supplies expense for the year? $ On April 1, 2009, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2009? $337.50. On April 30, 2009, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2009? $4,000. On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May? $47,000. On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: Debit Insurance Expense, $360; credit Prepaid Insurance, $360. On January 1, Southwest College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester, which spans four months beginning on January 2. What amount of tuition revenue should the college recognize on January 31? $300,000. On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much would the seller receive if the buyer pays on June 8? 792 On June 1, 2010, The company paid $1,000 cash for the loan owing the bank before. Recording this transaction. Credit cash and debit loan
