Accounting 211 Exam One
ABC Company has assets totaling $50,000, liabilities totaling $30,000. What is the balance of the Stockholders Equity accounts if Retained Earnings has a credit balance of $5,000. $20,000 $5,000 $80,000 $15,000
$20,000
JR Inc. purchases supplies costing $500 on account from Supplies Distributing Company. The journal entry would include: A credit to cash a credit to accounts payable a debit to supplies expense a debit to accounts payable
A credit to accounts payable
Allen pays its account ($3,500) with Able Co. In full
Accounts Payable + 3,500 Cash - 3,500
Alpha sold $2,000 of services to Beta on credit. Beta promised to pay for it next month. Beta will report a $2,000: Accounts Payable. decrease in Cash, since it plans to pay next month. Accounts Receivable. net income.
Accounts Payable.
Allen Co. provides services $5,000 to Chester Inc., on account. Chester agrees to pay it back fully in 30 days
Accounts Receivable + 5,000 Service Revenue - 5,000
Alpha sold $2,000 of services to Beta on credit. Beta promised to pay for it next month. Alpha will report a $2,000: Accounts Payable. Accounts Receivable. net income. decrease in Cash, since it plans to pay next month.
Accounts Receivable.
What is the accounting equation?
Assets = Liabilities + Stockholders Equity
Allen invests $20,000 cash into his new company Allen Company in exchange for common stock
Cash + 20,000 Common Stock - 20,000
ABC borrows $25,000 cash from first bank. The note is due to be paid in 12 months.
Cash + 25,000 Notes Payable - 25,000
Chester Inc. pays its account ($5,000) in full
Cash + 5,000 Accounts Receivable - 5,000
Jeff Washburn incorporates a business names ABC Co. To provide funds for the new business, Jeff invests $5000 cash in exchange for common stock.
Cash + 5,000 Common Stock -5,000
ABC performed services for a client in the amount of $6,000 and received cash as payment.
Cash + 6,000 Service Revenue - 6,000
ABC purchases a computer costing $2,000 and pays cash
Computer + 2,000 Cash - 3,000
ABC purchases equipment costing $12,000. Paid Cash.
Equipment + 12,000 Cash - 12,000
Common Stock is a liability account.
False
Income from operating activities represents income generated from gains or losses generated in the sales of company assets like equipment or vehicles, unless the company is in the business of selling equipment and vehicles.
False
The Balance Sheet is dated as of a period of time, such as the Month ended December 31, 2022.
False
The normal balance of Notes Payable is a debit.
False
The normal balance of cash is a credit.
False
ABC purchases furniture from FH furniture costing $1,500 on account. The payable is due in 30 days.
Furniture + 1,500 Accounts Payable - 1,500
Four financial statements
Income statement, statement of retained earnings, balance sheet, statement of cash flow
What is the purpose of a trial balance?
Make sure financial statements for the period are correct and up to date.
Allen Co. purchases a 12- month insurance policy and pays $1,200 cash
Prepaid Insurance + 1,200 Cash - 1,200
ABC pays rent for the month of $1,000
Rent Expense + 1,000 Cash - 1,000
Revenue recognition principle
Revenue is recognized when the product is delivered not when its paid for
ABC pays salaries to its employees of $3,000 dollars cash
Salaries + 3,000 Cash - 3,000
Allen Co. Pays its employees $2,000 in cash for employment services provided
Salaries Expense + 2,000 Cash - 2,000
Allen Co. purchases services from Able Co. costing $3,500, on account, Allen will pay in full in 30 days
Service Expense + 3,500 Accounts Payable - 3,500
ABC purchases supplies costing $200 from Staples and pays cash.
Supplies + 200 Cash - 200
Allen Co. purchases supplies costing $600 and pays cash
Supplies + 600 Cash - 600
ABC Co. contracts Libby Design to create a logo for the company. ABC pays Libby Design $5,000 cash for the logo. Which of the following responses is correct? The journal entry would increase cash and increase logo. The journal entry would include a debit to Logo and a credit to cash The account logo is a liability The cost of the logo should be debited to an account named logo expense.
The journal entry would include a debit to Logo and a credit to cash
ABC purchases a truck costing $30,000. ABC paid $5,000 cash and signed a note for the $25,000 balance
Truck + 30,000 Cash - 5,000 Note Payable - 25,000
Debits must equal credits on a trial balance.
True
The normal balance of sales revenues is a credit.
True
Allen Co. pays utilities expense of $500 in cash
Utilities + 500 Cash - 500
ABC pays utilities of $300 cash
Utilities Expense + 300 Cash - 300
The normal balance of a liability is:
a credit
The normal balance of common stock is:
a credit
Jim invests $20,000 cash into his new company names JR, Inc. The company issues Jim common stock. The journal entry to record this transaction would include: a debit to common stock a credit to cash none of the above a credit to common stock
a credit to common stock
The normal balance of an asset is:
a debit
Net income is the amount: by which revenues exceed expenses. by which assets exceed expenses. the amount revenues exceed dividends and expenses by which assets exceed liabilities.
by which revenues exceed expenses.
What are the four external users of financial statements?
creditors, investors, directors, government
A cost of doing business is referred to as a(n) ______ and is considered necessary to earn ______. expense; revenue liability; expenses revenue; asset dividend; revenue
expense; revenue
Expense Recognition Principle
expenses should be recognized in the same period as the revenues to which they relate
Amounts earned by selling goods or services to customers are called dividends common stocks expenses revenues
revenues
The creditors' claims to a company's resources are represented by: total liabilities. retained earnings. common stock. total stockholder's equity.
total liabilities.