Accounting Ch 2 Review

To meet its cash flow needs, a company obtained a 6 month bank loan in the amount of $10,000. Annual interest on the loan (note payable) is 10%, payable when the note is due. What would the effect of this transaction on the company's current month accounting equation?

$10,000 increase in Assets; $10,000 increase in Liabilities; No effect on Stockholders' Equity

If the beginning Cash account balance of Rainbow, Inc. was $36,800, the ending balance was $20,400, and total cash received during the period was $88,000, what amount of cash was paid out during the period?

$104,400

A company received $11,000 cash in exchange for 200 shares of the company's common stock. What would the effect of this transaction on the current year's accounting equation?

$11,000 increase in Assets; No effect on Liabilities; $11,000 increase in Stockholders' Equity

Piglet Company's Accounts Payable account had a balance of $14,800 on September 1, 2016, and a balance of $18,000 on September 30, 2016. During September 2016, the company made total payments of $131,200 on accounts payables. What must have been their total purchases on account during September 2016?

$134,400

At the beginning of the month, a company purchased a new truck for $45,000, paying $21,000 cash and agreeing to pay the balance over 12 months through a no-interest financing offer provided by the car dealer. The entry to record the purchase of the truck is recorded at month-end. What would the effect of this transaction on the company's current month-end accounting equation? (Hint: First financing payment was made before current month-end.)

$22,000 increase in Assets; $22,000 increase in Liabilities; No effect on Stockholders' Equity

A company received a $24,000 payment for services to be performed over the next few months. What would the effect of this transaction on the current year's accounting equation?

$24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders' Equity

On December 31, 2016, Alsfeld Company had a $122,550 balance in Accounts Receivable. During the year 2017, the company collected $200,000 from its credit customers. The December 31, 2017 balance of the Accounts Receivable was $170,650. Determine the amount of sales on accounts for 2017.

$248,100

During its first month of operations, Pluto Company (1) borrowed $200,000 from a bank, and then (2) purchased an equipment costing $80,000 by paying cash of $40,000 and signing a long term note for the remaining amount. During the month, the company also (3) purchased inventory for $60,000 on credit, (4) performed services for clients for $120,000 on account, (5) paid $30,000 cash for accounts payable, and (6) paid $60,000 cash for utilities. What is the amount of total liabilities at the end of the month?

$270,000

The accounting equation for Monkey Enterprises is as follows: Assets = Liabilities + Stockholders' Equity $240,000 = $120,000 + $120,000 If the company now issues stock for $30,000, the accounting equation will change to:

$270,000 = $120,000 + $150,000

The accounting equation for Monkey Enterprises is as follows: Assets = Liabilities + Stockholders' Equity $240,000 = $120,000 + $120,000 If the company now signs a bank note payable in exchange for $30,000, the accounting equation will change to:

$270,000 = $150,000 + $120,000

The accounting equation for Sammy Cat Enterprises is as follows: Assets = Liabilities + Stockholders' Equity $240,000 = $120,000 + $120,000 If the company now performed $30,000 of services and received a payment in the amount of $20,000 cash with the remaining $10,000 to be paid by customers within 60 days, the accounting equation will change to:

$270,000 = $150,000 + $120,000

During its first month of operations, Pluto Company (1) borrowed $200,000 from a bank, and then (2) purchased an equipment costing $80,000 by paying cash of $40,000 and signing a long term note for the remaining amount. During the month, the company also (3) purchased inventory for $60,000 on credit, (4) performed services for clients for $120,000 on account, (5) paid $30,000 cash for accounts payable, and (6) paid $60,000 cash for utilities. What is the amount of total assets at the end of the month?

$330,000

The accounting equation for Owl Enterprises is as follows: Assets = Liabilities + Stockholders' Equity $360,000 = $180,000 + $180,000 If the company now pays employee wages for $30,000, the accounting equation will change to:

$330,000 = $180,000 + $150,000

The accounting equation for Snoopy Enterprises is as follows: Assets = Liabilities + Stockholders' Equity $480,000 = $240,000 + $240,000 If the company now purchases office supplies for $20,000 cash, the accounting equation will change to:

$500,000 = $260,000 + $240,000

A company performed $8,635 of services and received $3,000 in cash with the remaining amount to be paid in 60 days with no interest. What would the effect of this transaction on the company's current month-end accounting equation?

$8,635 increase in Assets; No effect on Liabilities; $8,635 increase in Stockholders' Equity

Beginning and ending Cash account balances of Moonbeam, Inc. were $28,000 and $64,000 respectively. If total cash paid out during the period was $60,000, what amount of cash was received during the period?

$96,000

An individual record of increases and decreases in specific assets, liabilities, and stockholders' equity is called:

an account

What is the correct order of the steps in the accounting cycle?

analyze, record, adjust, report, and close

A company paid employee wages of $24,000 for the month. What would the effect of this transaction on the current month's accounting equation?

A. $24,000 decrease in Assets; No effect on Liabilities; $24,000 decrease in Stockholders' Equity

What does the double-entry system of debits and credits mean?

at least two entries, a debit and a credit, must be made for each transaction

Chinmae Company had a transaction that caused a $50,000 increase in both assets and stockholders' equity. This transaction could have been a(n):

Investment of $50,000 cash in the business by the stockholders

Account titles are commonly grouped into what five categories in the chart of accounts?

Assets, Liabilities, Equity, Revenue, Expenses

Thomas Jones, starting his own business, made an investment of a building to the company. The building is valued at $800,000 with a $720,000 outstanding mortgage payable. The effect of this transaction on the accounting equation of the business would be to:

Increase stockholders' equity by $80,000

A transaction caused a $200,000 increase in both assets and total liabilities. This transaction could have been:

Purchase of office equipment for $240,000, paying $40,000 cash and issuing a note payable for the balance

Aditia Company had a transaction that caused a $30,000 increase in both assets and liabilities. This transaction could have been a(n):

Purchase of office equipment for $44,000, paying $14,000 cash and issuing a note payable for the balance

Aashish Company had a transaction that caused a $40,000 decrease in both assets and liabilities. This transaction could have been a(n):

Repayment of a $40,000 bank loan

The general ledger can be described as:

a grouping of the accounts used by an organization to prepare its basic financial statements

How does paying monthly rent in cash affect stockholders' equity?

decreases it because it is an expense

What will properly record the payment of a two-year insurance policy?

increase and decrease assets

Cash collected on accounts receivable would produce what effect on the balance sheet?

increase assets and decrease assets

How does providing services to clients with payment received immediately affect stockholders' equity?

increases it because it is a service revenue

Which of the following is one effect of a purchase of $600 of supplies on credit?

it would increase liabilities by $600 and the supplies account in the asset section of the balance sheet would also increase

Folgers Industries recorded and paid $1,400 advertising for the current month. Which occurred?

net income decreases