Accounting exam 1

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $25,000. During the period, the company reports a net income of $10,000 and a dividend of $4,000. The ending balance in the Retained Earnings account is: $35,000. $10,000. $39,000. $31,000.

$31,000

Deferred tax liabilities

(Long term liability)

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month, did assets increase or decrease and by how much? $34,000 increase $76,000 increase $34,000 decrease $55,000 increase

34000

A company has the following final balances after the first year of operations: liabilities, $28,000, stockholders' equity, $8,900, net income $12,300, dividends $3,000. What is the amount of assets at the end of the year? $12,300 $19,100 $36,900 $33,900

36,900

A company has the following account balances at the end of the year: Retained earnings, $15,000; equipment, $38,000; accounts payable, $9,000; inventory, $15,000; notes payable, $20,000; accrued expenses, $10,000; common stock, $9,000; cash, $10,000. What is the amount of total liabilities? $19,000 $29,000 $39,000 $48,000

39000

The adjusting entry required to record accrued expenses includes: A credit to Cash. A debit to an asset. A credit to an asset. A credit to liability.

A credit to liability

Bank account overdrafts

A type of short term loan provided by a bank when a payment is processed with insufficient funds available in the bank account (Current liability)

Which of the following is not an example of a long-term liability? Accounts Payable Leases Bonds Pension Obligations

Accounts Payable

Which of the following regarding year-end adjustments is correct? Adjustments are recorded to make sure all cash inflows and outflows are recorded in the current period. Adjustments are needed because we use accrual-basis accounting. Adjustments are recorded for all external transactions. After adjustments, all temporary accounts should have a balance of zero.

Adjustments are needed because we use accrual-basis accounting.

Providing services to customers on account would affect the balances reported in which financial statement(s)? Income statement Statement of stockholders' equity Balance sheet All of the financial statements in the other answer choices would be affected.

All of the financial statements in the other answer choices would be affected.

Adjusting entries: Usually are recorded at the beginning of the accounting period. Always involve at least one income statement account and one balance sheet account. Adjust the balance of revenue and expense accounts to zero. Often include the Cash account.

Always involve at least one income statement account and one balance sheet account.

Current assets

Are assets that can be easily covered into cash and cash equivalents (typically within a year). Example, Cash, Short term deposits,accounts recivables, inventory, marketable securities, office supplies.

When a payment is made on an account payable: Assets and expenses decrease. Assets and stockholders' equity decrease. Assets and liabilities decrease. Liabilities and revenues decrease.

Assets and liabilities decrease.

Fixed or Non-Current assets

Assets that cannot be easily and readily converted into cash and cash equivalents Long term assets. Examples, Land, Building, Machinery, Patents, Equipment

Intangible assets

Assets that lack physical existence, Examples Goodwilll, patents,Brand, Copyrights

Tangible assets

Assets with physical existence (we can touch, feel and see them). Examples, Land, building, cash, equipment, office supplies, inventory and marketable securities.

During the year, Maiden Company paid salaries of $23,800. In addition, $9,700 in salaries has accrued by the end of the year but has not been paid. The year-end adjusting entry would include which one of the following? Debit to Salaries Payable for $23,800 Credit to Salaries Payable for $9,700 Debit to Salaries Expense for $33,500 Credit to Salaries Expense of $9,700

Credit to Salaries Payable for $9,700

Summer Leasing received $12,000 from a customer to cover 24 months of rent in advance. How should Summer record this transaction? Debit Prepaid Rent; credit Rent Expense Debit Rent Expense; credit Cash Debit Cash; credit Deferred Revenue Debit Cash; credit Service Revenue

Debit Cash; credit Deferred Revenue

Savory Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Savory Foods would record which of the following adjusting entries? Debit Insurance Expense and credit Prepaid Insurance for $2,450 Debit Insurance Expense and credit Accounts Payable for $4,200 Debit Prepaid Insurance and credit Insurance Expense for $1,750 Debit Insurance Expense and credit Prepaid Insurance for $1,750

Debit Insurance Expense and credit Prepaid Insurance for $1,750

A company receives a utility bill each month for services received. The company's policy is to pay the utility bill within 30 days of receipt. On December 31, 2024, the company receives a utility bill of $4,200 for the month of December and plans to pay the bill by January 30, 2025. What adjusting entry, if any, will the company record on December 31, 2024? No adjusting entry is necessary at the end of the year. Debit Utilities Payable and credit Utilities Expense for $4,200 Debit Utilities Expense and credit Utilities Payable for $4,200 Debit Utilities Expense and credit Cash for $4,200

Debit Utilities Payable and credit Utilities Expense for $4,200

An increase to an expense account is shown with a _____________. An increase to a revenue account is shown with a _____________. Credit; Credit Credit; Debit Debit; Credit Debit; Debit

Debit;Credit

In November, a company hires three temporary employees that are scheduled to work only the month of December. Those employees work during December, and they are then paid their full salaries in January. In which month should the company record salaries expense? November January December Evenly over the three months

December

Receiving cash from customers before services are performed affects which of the following accounts? Sales Revenue Deferred Revenue Prepaid Assets Accounts Receivable

Deferred Revenue

Non-current (long term liabilities)

Due longer than one year

Accrued expenses

Expenses that have been incurred but no supporting documentation has been received or issued to the company by the vendor (Current liability)

Cash transactions of a company with lenders and with stockholders are referred to as: Operating Activities External Activities Investing Activities Financing Activities

Financing Activities

Deferred revenue

Generated when a company receives early payment for goods and services that have not been delivered or completed yet

Amortized cost

Historical cost of an asset adjusted for the depreciation or amortization accumulated over its lifetime

Mortgag epayable

If a company takes out a mortgage or a long term debt, it records the value of the borrowed principal amount as non-current liability. (Long term liability)

Receiving cash from an account receivable: Increases one asset and decreases another asset Decreases a liability and increase an asset Increases an asset and increases revenue. Increases revenue and decreases an asset.

Increases one asset and decreases another asset

Which is not an example of current assets? Cash and cash equivalents Accounts receivable, net Intangible assets Inventory

Intangible assets

Interest payable

Interest expense that has already been incurred but has not been paid (Current liability)

accounts recivables

Is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers

Operating cycle

Is the period of time from the purchase of inventory until the time the company collects cash from customer from sale of inventory.

Resources owned by the company that will provide a benefit for more than one year are called: Long-term assets. Current liabilities. Current assets. Revenues.

Long term assets

Net realizable value

Net amount of cash which an asset could be converted in the ordinary course of business

Operating cash outflows would include: Purchase of a building Purchase of an investment Payment on debt Payment of wages

Payment of wages

Fair value

Price that would be received to sell assets in an orderly transaction between market participants on a given date

Credit

Record all of the money flowing out of an account

Which of the following accounts would appear in a company's income statement? Accounts Payable Cash Dividends Rent Expense

Rent Expense

The component of stockholders' equity that measures total net income over the life of the company minus all dividends paid out to stockholders is: Additional paid-in-capital Retained earnings Accumulated other comprehensive income Common stock

Retained earnings

Under accrual-basis accounting: 1.Revenue should be recorded in the period the cash is received. 2.Revenue should be recorded in the period goods and services are provided. 3.Revenue is a component of common stock. 4. Revenue should be recorded in the balance sheet.

Revenue should be recorded in the period goods and services are provided.

Income taxes payable

The income tax amount owed by a company to the government. (Current liability)

Which statement below best describes the accounting equation? a. Financing activities equal investing and operating activities. b.The total resources of the company equals creditors' and owners' claims to those resources. c. Revenue and expense transactions tend to equal out over time. d.The change in retained earnings equals net income less dividends.

The total resources of the company equals creditors' and owners' claims to those resources.

Providing services to customers for cash would have what effect on the accounting equation? Total liabilities decrease; total stockholders' equity increases. Total assets increase; total stockholders' equity increases. Total assets increase; total liabilities decrease. Total liabilities increase; total stockholders' equity decreases.

Total assets increase; total stockholders' equity increases.

Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Paid rent for the current month. Collected cash from customers on account. How many of these transactions increased the company's total assets? Two One Four Three

Two Issued common stock for cash and Collected cash from customers on account.

Leases

When a company enters into a long term rental agreement for property or equipment.

Bonds payable

are recored when a company issues bonds to generate cash, (Long term liability)

Current liabilities

are those that are due within a year, these primarily occur as part of a regular business operations.

The total resources of a company are referred to as: Liabilities Revenues Assets Expenses

assets

Historical cost

based on their original transaction value

In the statement of cash flows, long-term borrowing is classified as a(n): investing activity. noncash activity. operating activity. financing activity.

financing activity.

Debit

record all of the money flowing into an account

Notes payable

the money the company owes its financiers, banks and sources of funds. (Long term liability)

Accounts payable

yet-to-be-paid bills to company's vendors. (Current Liability)