Accounting Final 7

Question 11 / 1 pts Mod 7.1: Add up and enter the balance for all the assets listed below: Trademark 3Cash 5Prepaid rent 6Unearned revenue 7Warehouse equipment 5Accounts payable 10Patents 8Note payable 3Land 2Goodwill 10Office supplies 6 Correct! Correct Answer45 Correct. I assume you properly added up the following assets: trademark+cash+prepaid rent+warehouse equipment+patents+land+goodwill+office supplies Question 21 / 1 pts Mod 7.1: Add up and enter the balance for all the assets listed below: Accounts payable 2Cash 6Prepaid rent 29Unearned revenue 19Warehouse equipment 24Patents 29Land 31Goodwill 42Office supplies 6 Correct! Correct Answer167 Correct. From the list provided you properly added up all of the following assets: Cash Prepaid rent Warehouse equipment Patents Land Goodwill Office supplies Question 31 / 1 pts Mod 7.1: Which of the following is NOT considered "Cash"? Note: if it is a "Cash equivalent" it is NOT "Cash", that is why they call it a "Cash equivalent" and not just plain old Cash. Correct! US Treasury bills Correct. US Treasury bills are not cash, they are a cash equivalent. They are not "cash" yet, but within 3 months they will be. Correct! Money market funds Correct. A money market fund is not cash, it is a cash equivalent. It is not "cash" yet. Currency and coin Money orders Correct! Accounts receivable Correct. Accounts receivable are not cash. Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. Bank deposits Checks Correct. The following items are considered to be "cash equivalents" and are not "Cash" per say. Money market funds and US Treasury bills Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. All the other items, such as bank deposits, checks, money orders, currency and coin would be classified as cash on a balance sheet. Question 41 / 1 pts Mod 7.1: Compute Company A's ending cash balance based on the following information:Company A is a brand new company this year. It began the year with $177 of cash which it received as a capital contribution from its owners. During the period the company made sales of $32 of which it collected $15, the difference is still receivable as of the end of the year. It borrowed $40 from a bank, no interest will be due and payable until the following year. During the year it purchased $58 of inventory on credit, of which it only paid $2 prior to the end of the year. The remainder is still payable as of the end of the year. It purchased a new computer for cash of $20. Correct! Correct Answer210 Correct. In this instance students find it to be helpful to imagine their wallet, when cash goes in the wallet, add the cash flow, when cash leaves the wallet, deduct the cash flow. In this example, the formula would appear as follows: Beginning Cash + Cash Collections + Cash received from bank borrowing - Cash paid to suppliers - Cash paid for computer = Ending cash If we were doing this using T-accounts, the beginning balance would have started on the left, all the cash inflows would have appeared on the left and been added, all the cash outflows would have appeared on the right and been deducted, and the ending balance in cash would have appeared on the left, because the beginning cash + the inflows - the outflows winds up with a positive ending balance, which will also appear on the left. Question 50.67 / 1 pts Mod 7.1: Click on all the asset accounts below: Interest Payable Correct Answer Notes Receivable Correct! Prepaid Insurance Correct. Prepaid Insurance represents that you paid for your insurance (on your car, your house, your business, etc.) but the insurance period has not begun yet. Therefore it is an asset because you will receive a benefit in the future of being insured based on having paid for it in the past. Capital Stock Correct! Patents Correct. Patents are assets. They are an exclusive legal right granted by the government to an entity for the right to use a given process, or build a given product. Drugs, production processes, software are often patented. Salaries Payable Mortgages Payable

Question 10 / 1 pts Mod 7.1: Company B began the year with $58 of accounts receivable and then had the following transactions during the year. Made $29 in sales on account to customers (i.e. credit sales). Received $20 of customer payments related to prior and current year accounts receivable. Wrote off $8 of receivables that totally became worthless. Made an all cash sale to a customer of $3. Compute Company B's ending balance in accounts receivable. You Answered Correct Answer59 Incorrect. Based on the information provided, you would have computed ending accounts receivable as follows: Beginning A/R + Sales on Acccount - Customer Payments - Write-off of a bad account receivable = Ending A/R As you noted, the all cash sale neither increased or decreased accounts receivable, because it was never a credit sale and therefore, accounts receivable were not affected. Question 21 / 1 pts Mod 7.1: Which of the following is NOT considered "Cash"? Note: if it is a "Cash equivalent" it is NOT "Cash", that is why they call it a "Cash equivalent" and not just plain old Cash. Correct! US Treasury bills Correct. US Treasury bills are not cash, they are a cash equivalent. They are not "cash" yet, but within 3 months they will be. Correct! Accounts receivable Correct. Accounts receivable are not cash. Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. Money orders Checks Correct! Money market funds Correct. A money market fund is not cash, it is a cash equivalent. It is not "cash" yet. Currency and coin Bank deposits Correct. The following items are considered to be "cash equivalents" and are not "Cash" per say. Money market funds and US Treasury bills Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. All the other items, such as bank deposits, checks, money orders, currency and coin would be classified as cash on a balance sheet. Question 31 / 1 pts Mod 7.1: Which of the following items are assets? Revenues Accounts payable Correct! Cash Correct. Cash is an asset. The most common type of cash is currency and coin, but other things such as money orders, customer checks and your deposits at the bank are considered to be cash. Correct! Inventory Correct. Inventory is an asset. This is the product you have obtained, and plan to benefit from by selling it to customers in the future. Really any tangible asset you own that you are in the business of buying from suppliers and selling to customers can be considered "inventory". Inventory could be childrens' toys, it can even by high-rise buildings, if you are in the business of buying and selling them. Correct! Land Correct. Land is an asset. It is controlled by an entity that obtained it in the past and it will benefit the entity in the future, for example when something is built on it, or it is sold. Correct! Copyrights Correct. Copyrights are assets. They represent the legal right to protect a creative work by composers, for music, writings for authors, and artists for art. Warranty obligations Correct! Prepaid rent Correct. Prepaid rent is an asset. In the past the company paid cash for rent, but the rental period is in the future (which is when the benefit will occur by allowing the payer to stay in the rented facility), which rental period the company effectively controls. Correct. The easiest way to think of an asset is "Is it something a company can possess or control?" "Is it something that can be obtained through a transaction or event?" "Will it provide a probable future economic benefit?" If the answer to all three are "Yes", then what you are looking at is an asset. Question 41 / 1 pts Mod 7.1: On September 30, X2, Company F paid $12,000 in advance to rent a building from October 1, X2 until Sept. 30, X3 of the following year. If Company F used the rented building as planned, how much of an asset did Company F possess as of December 31, X2? Correct! Correct Answers9,000 (with margin: 0) Correct. By the end of December 31, X2, Company F will have used up 3 months of the 12 month rental period. Because the $12,000 payment is for a full year (i.e. 12 months), Company F will record $1,000 of rent expense each month as it uses up and reduces the prepaid rent asset account. Therefore, since Company F began Oct. 1, X2 with $12,000 of prepaid rent and used up $3,000 of it over the 3 months to December 31, X2, it must still have a prepaid rent asset of $9,000. Question 51 / 1 pts Mod 7.1: Click on all the asset accounts below: Correct! Patents Correct. Patents are assets. They are an exclusive legal right granted by the government to an entity for the right to use a given process, or build a given product. Drugs, production processes, software are often patented. Correct! Prepaid Insurance Correct. Prepaid Insurance represents that you paid for your insurance (on your car, your house, your business, etc.) but the insurance period has not begun yet. Therefore it is an asset because you will receive a benefit in the future of being insured based on having paid for it in the past. Correct! Notes Receivable Correct. Notes Receivable is an asset. It represents the amount of a loan that you lent to someone, who signed the note agreement, and has not yet been repaid. Salaries Payable Interest Payable Mortgages Payable Capital Stock Correct. These are assets.

Question 10 / 1 pts Mod 7.1: Add up and enter the balance for all the assets listed below: Trademark 2Cash 8Prepaid rent 2Unearned revenue 6Warehouse equipment 3Accounts payable 1Patents 6Note payable 7Land 7Goodwill 9Office supplies 7 You Answered Correct Answer44 Incorrect. The assets in the list were: trademark+cash+prepaid rent+warehouse equipment+patents+land+goodwill+office supplies Unearned revenue represents an amount that you owe customers who prepaid you for goods or services that you have not yet delivered to them. Accounts payable represent amounts you owe your suppliers for goods you purchased on account and have not pay for yet. Notes payable represent the amount you owe related to a sum of money that you borrowed for a period of time, usually with interest. Question 21 / 1 pts Mod 7.1: Compute Company A's ending cash balance based on the following information:Company A is a brand new company this year. It began the year with $150 of cash which it received as a capital contribution from its owners. During the period the company made sales of $23 of which it collected $11, the difference is still receivable as of the end of the year. It borrowed $45 from a bank, no interest will be due and payable until the following year. During the year it purchased $52 of inventory on credit, of which it only paid $38 prior to the end of the year. The remainder is still payable as of the end of the year. It purchased a new computer for cash of $14. Correct! Correct Answer154 Correct. In this instance students find it to be helpful to imagine their wallet, when cash goes in the wallet, add the cash flow, when cash leaves the wallet, deduct the cash flow. In this example, the formula would appear as follows: Beginning Cash + Cash Collections + Cash received from bank borrowing - Cash paid to suppliers - Cash paid for computer = Ending cash If we were doing this using T-accounts, the beginning balance would have started on the left, all the cash inflows would have appeared on the left and been added, all the cash outflows would have appeared on the right and been deducted, and the ending balance in cash would have appeared on the left, because the beginning cash + the inflows - the outflows winds up with a positive ending balance, which will also appear on the left. Question 30 / 1 pts Mod 7.1: On October 31, X2, Company F paid $12,000 in advance to rent a building from November 1, X2 until April 30, X3 of the following year. If Company F used the rented building as planned, how much of an asset did Company F possess as of December 31, X2? You Answered Correct Answers8,000 (with margin: 0) Incorrect. By the end of December 31, X2, Company F will have used up 2 months of the 6 month rental period. Because the $12,000 payment is for only 6 months, Company F will record $2,000 of rent expense each month as it uses up and reduces the prepaid rent asset account. Therefore, since Company F began Nov. 1, X2 with $12,000 of prepaid rent and used up $4,000 of it over the 2 months to December 31, X2, it must still have a prepaid rent asset of $8,000. Question 41 / 1 pts Mod 7.1: Click on all the asset accounts below: Correct! Notes Receivable Correct. Notes Receivable is an asset. It represents the amount of a loan that you lent to someone, who signed the note agreement, and has not yet been repaid. Interest Payable Correct! Patents Correct. Patents are assets. They are an exclusive legal right granted by the government to an entity for the right to use a given process, or build a given product. Drugs, production processes, software are often patented. Capital Stock Salaries Payable Mortgages Payable Correct! Prepaid Insurance Correct. Prepaid Insurance represents that you paid for your insurance (on your car, your house, your business, etc.) but the insurance period has not begun yet. Therefore it is an asset because you will receive a benefit in the future of being insured based on having paid for it in the past. Correct. These are assets. Question 50 / 1 pts Mod 7.1: On September 30, X2, Company F paid $12,000 in advance to rent a building from October 1, X2 until Sept. 30, X3 of the following year. If Company F used the rented building as planned, how much of an asset did Company F possess as of December 31, X2? You Answered Correct Answers9,000 (with margin: 0) Incorrect. By the end of December 31, X2, Company F will have used up 3 months of the 12 month rental period. Because the $12,000 payment is for a full year (i.e. 12 months), Company F will record $1,000 of rent expense each month as it uses up and reduces the prepaid rent asset account. Therefore, since Company F began Oct. 1, X2 with $12,000 of prepaid rent and used up $3,000 of it over the 3 months to December 31, X2, it must still have a prepaid rent asset of $9,000.

Question 10 / 1 pts Mod 7.1: Company B began the year with $60 of accounts receivable and then had the following transactions during the year. Made $35 in sales on account to customers (i.e. credit sales). Received $11 of customer payments related to prior and current year accounts receivable. Wrote off $1 of receivables that totally became worthless. Made an all cash sale to a customer of $1. Compute Company B's ending balance in accounts receivable. You Answered Correct Answer83 Incorrect. Based on the information provided, you would have computed ending accounts receivable as follows: Beginning A/R + Sales on Acccount - Customer Payments - Write-off of a bad account receivable = Ending A/R As you noted, the all cash sale neither increased or decreased accounts receivable, because it was never a credit sale and therefore, accounts receivable were not affected. Question 21 / 1 pts Mod 7.1: Add up and enter the balance for all the assets listed below: Accounts payable 2Cash 8Prepaid rent 27Unearned revenue 18Warehouse equipment 25Patents 28Land 32Goodwill 44Office supplies 5 Correct! Correct Answer169 Correct. From the list provided you properly added up all of the following assets: Cash Prepaid rent Warehouse equipment Patents Land Goodwill Office supplies Question 31 / 1 pts Mod 7.1: On September 30, X2, Company F paid $12,000 in advance to rent a building from October 1, X2 until Sept. 30, X3 of the following year. If Company F used the rented building as planned, how much of an asset did Company F possess as of December 31, X2? Correct! Correct Answers9,000 (with margin: 0) Correct. By the end of December 31, X2, Company F will have used up 3 months of the 12 month rental period. Because the $12,000 payment is for a full year (i.e. 12 months), Company F will record $1,000 of rent expense each month as it uses up and reduces the prepaid rent asset account. Therefore, since Company F began Oct. 1, X2 with $12,000 of prepaid rent and used up $3,000 of it over the 3 months to December 31, X2, it must still have a prepaid rent asset of $9,000. Question 40 / 1 pts Mod 7.1: Which of the following is NOT considered "Cash"? Note: if it is a "Cash equivalent" it is NOT "Cash", that is why they call it a "Cash equivalent" and not just plain old Cash. Currency and coin You Answered Money orders Incorrect.. Money orders are considered to be cash and are a more reliable form of cash payment than checks. You Answered Checks Incorrect. Checks that the company has received from customers are considered to be cash as they increase the company's bank deposits within a very short period of time. Correct! US Treasury bills Correct. US Treasury bills are not cash, they are a cash equivalent. They are not "cash" yet, but within 3 months they will be. Correct Answer Accounts receivable Bank deposits Correct! Money market funds Correct. A money market fund is not cash, it is a cash equivalent. It is not "cash" yet. Incorrect. The following items are considered to be "cash equivalents" and are not "Cash" per say. Money market funds and US Treasury bills Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. All the other items, such as bank deposits, checks, money orders, currency and coin would be classified as cash on a balance sheet. Question 50 / 1 pts Mod 7.1: When using the T-account format for computing the balance of an asset account, on what side would you "normally" expect to find the beginning and ending balance for assets? The right side of the T-account. You Answered Assets do not have a "normal" side on which beginning and ending balances normally appear. Incorrect. Because assets appear on the left-hand side of the balance sheet equation (i.e. Assets = Liabilities + Equity), they will normally have their balance appear on the left-hand side of their respective T-accounts. Correct Answer The left side of the T-account. Incorrect. Because assets appear on the left-hand side of the balance sheet equation (i.e. Assets = Liabilities + Equity), they will normally have their balance appear on the left-hand side of their respective T-accounts.

Question 11 / 1 pts Mod 7.1: Company B began the year with $69 of accounts receivable and then had the following transactions during the year. Made $39 in sales on account to customers (i.e. credit sales). Received $5 of customer payments related to prior and current year accounts receivable. Wrote off $3 of receivables that totally became worthless. Made an all cash sale to a customer of $5. Compute Company B's ending balance in accounts receivable. Correct! Correct Answer100 Correct. Based on the information provided, you would have computed ending accounts receivable as follows: Beginning A/R + Sales on Acccount - Customer Payments - Write-off of a bad account receivable = Ending A/R As you noted, the all cash sale neither increased or decreased accounts receivable, because it was never a credit sale and therefore, accounts receivable were not affected. Question 21 / 1 pts Mod 7.1: Compute Company B's ending balance for inventory given the following information: Beginning inventory was $129. During the year, Company B incurred $26 of costs for direct materials, direct labor and manufacturing overhead to produce new inventory. It also purchased $35 of new finished inventory from a supplier. During the year it sold $32 of inventory at a sales price of $70 and had to throw away $7 of inventory that had become obsolete. Correct! Correct Answer151 Correct. Ending inventory is computed as follows: Beginning inventory + inventory purchases + manufacturing costs which includes direct materials, direct labor and manufacturing overhead - cost of goods sold - destroyed inventory - stolen inventory - obsolete inventory. Question 31 / 1 pts Mod 7.1: In order for something to be an asset, it must have which of the following characteristics? must be the result of a sale. must be the result of a future transaction or event Correct! must be obtained or controlled by the entity Correct. Per the FASB's Statement of Financial Accounting Concepts No. 6 Elements of Financial Statements, an asset must be obtained or controlled by an entity. Correct! must be the result of a past transaction or event Correct. Per the FASB's Statement of Financial Accounting Concepts No. 6 Elements of Financial Statements, an asset must must be the result of a past transaction or event. must be able to be converted into cash within one year. Correct! must be able to provide a future economic benefit Correct. Per the FASB's Statement of Financial Accounting Concepts No. 6 Elements of Financial Statements, an asset must be able to provide a future economic benefit. must be denominated in US dollars. Correct. Well done. Please refer to the official definition of an asset as provided in the PowerPoint notes and related videos for this topic. the key points are 1) a probable future economic benefit, 2) obtained or controlled by an entity 3) as the result of a past transaction or event. Question 41 / 1 pts Mod 7.1: Which of the following is NOT considered "Cash"? Note: if it is a "Cash equivalent" it is NOT "Cash", that is why they call it a "Cash equivalent" and not just plain old Cash. Currency and coin Bank deposits Money orders Correct! Accounts receivable Correct. Accounts receivable are not cash. Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. Correct! Money market funds Correct. A money market fund is not cash, it is a cash equivalent. It is not "cash" yet. Correct! US Treasury bills Correct. US Treasury bills are not cash, they are a cash equivalent. They are not "cash" yet, but within 3 months they will be. Checks Correct. The following items are considered to be "cash equivalents" and are not "Cash" per say. Money market funds and US Treasury bills Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. All the other items, such as bank deposits, checks, money orders, currency and coin would be classified as cash on a balance sheet. Question 50 / 1 pts Mod 7.1: On October 31, X2, Company F paid $12,000 in advance to rent a building from November 1, X2 until April 30, X3 of the following year. If Company F used the rented building as planned, how much of an asset did Company F possess as of December 31, X2? You Answered Correct Answers8,000 (with margin: 0) Incorrect. By the end of December 31, X2, Company F will have used up 2 months of the 6 month rental period. Because the $12,000 payment is for only 6 months, Company F will record $2,000 of rent expense each month as it uses up and reduces the prepaid rent asset account. Therefore, since Company F began Nov. 1, X2 with $12,000 of prepaid rent and used up $4,000 of it over the 2 months to December 31, X2, it must still have a prepaid rent asset of $8,000.

Question 11 / 1 pts Mod 7.1: Compute Company B's ending balance for inventory given the following information: Beginning inventory was $139. During the year, Company B incurred $40 of costs for direct materials, direct labor and manufacturing overhead to produce new inventory. It also purchased $39 of new finished inventory from a supplier. During the year it sold $34 of inventory at a sales price of $73 and had to throw away $7 of inventory that had become obsolete. Correct! Correct Answer177 Correct. Ending inventory is computed as follows: Beginning inventory + inventory purchases + manufacturing costs which includes direct materials, direct labor and manufacturing overhead - cost of goods sold - destroyed inventory - stolen inventory - obsolete inventory. Question 21 / 1 pts Mod 7.1: Company B began the year with $56 of accounts receivable and then had the following transactions during the year. Made $35 in sales on account to customers (i.e. credit sales). Received $24 of customer payments related to prior and current year accounts receivable. Wrote off $6 of receivables that totally became worthless. Made an all cash sale to a customer of $4. Compute Company B's ending balance in accounts receivable. Correct! Correct Answer61 Correct. Based on the information provided, you would have computed ending accounts receivable as follows: Beginning A/R + Sales on Acccount - Customer Payments - Write-off of a bad account receivable = Ending A/R As you noted, the all cash sale neither increased or decreased accounts receivable, because it was never a credit sale and therefore, accounts receivable were not affected. Question 31 / 1 pts Mod 7.1: Click on all the asset accounts below: Salaries Payable Correct! Prepaid Insurance Correct. Prepaid Insurance represents that you paid for your insurance (on your car, your house, your business, etc.) but the insurance period has not begun yet. Therefore it is an asset because you will receive a benefit in the future of being insured based on having paid for it in the past. Correct! Patents Correct. Patents are assets. They are an exclusive legal right granted by the government to an entity for the right to use a given process, or build a given product. Drugs, production processes, software are often patented. Interest Payable Capital Stock Correct! Notes Receivable Correct. Notes Receivable is an asset. It represents the amount of a loan that you lent to someone, who signed the note agreement, and has not yet been repaid. Mortgages Payable Correct. These are assets. Question 41 / 1 pts Mod 7.1: Which of the following is NOT considered "Cash"? Note: if it is a "Cash equivalent" it is NOT "Cash", that is why they call it a "Cash equivalent" and not just plain old Cash. Correct! US Treasury bills Correct. US Treasury bills are not cash, they are a cash equivalent. They are not "cash" yet, but within 3 months they will be. Currency and coin Money orders Bank deposits Correct! Money market funds Correct. A money market fund is not cash, it is a cash equivalent. It is not "cash" yet. Checks Correct! Accounts receivable Correct. Accounts receivable are not cash. Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. Correct. The following items are considered to be "cash equivalents" and are not "Cash" per say. Money market funds and US Treasury bills Accounts receivable represent the right to receive cash from a customer in the future, but it is neither cash NOR a cash equivalent. All the other items, such as bank deposits, checks, money orders, currency and coin would be classified as cash on a balance sheet. Question 51 / 1 pts Mod 7.1: Click on all of the asset accounts below. Correct! Inventory Retained Earnings Correct! Cash Correct. Cash is an asset, because you control it and it will benefit you in the future. It is money you own. Notes Payable Correct! Office Supplies Correct. Office Supplies are assets because the paper, pens, printer toner, etc. are controlled by the business and will benefit it in the future to administrate the business. Correct! Land Correct. Land is an asset because you control the dirt or geographic location and it can benefit you in the future because you can build on it, rent it out, run a business on it, or possibly sell it for cash. Accounts Payable Correct. These are all assets.

Mod 7.2: Click on all of the liabilities accounts noted below. Warehouse Equipment Correct! Dividends Payable Correct. Dividends Payable is a liability account. It represents the amount of dividends that you "declared" would be paid to your stockholders, BUT you have not paid yet. Accounts Receivable Copyrights Correct! Utilities Payable Correct. Utilities Payable are a liability. They represent that you have already used up a service such as water, electric, phone, cell, internet services, BUT you have not yet paid for them. You owe this money to your service providers. Correct! Unearned Sales Revenue Correct. Unearned Sales Revenue is a liability. It represents that a customer paid you in advance for a service that you have not yet delivered. In other words, your sales revenue is not yet earned, you OWE your customer the service (or a refund of the amount paid) in the future. Correct! Wages Payable Correct. Wages Payable is a liability. It represents an amount that you owe to your hourly employees for work they have performed for which you have not yet paid them. Correct. You have selected the correct liability accounts. Question 20 / 1 pts Mod 7.2: Paint Co. began the month, owing $49 in painting services to Customer C. During December X4, a Paint Co. had the following transactions and performed the following painting services. Customer A paid $53 to Paint Co. for a painting job to be performed in the future. Customer B paid $39 for prior painting services that it received last month and finally paid for this month. Customer C prepaid $31 for painting services to be received in the future. During December X4, Paint Co. provided the following painting services, $49 for Customer A, $13 for Customer B, and $33 for Customer C. Compute Paint Co.'s total ending balance in Unearned Sales Revenues as of the end of December X4. You Answered Correct Answer51 Incorrect. A company's unearned sales revenues increase when customers prepay and it decreases when the company delivers the services for which the customers prepaid. Therefore: Beginning paint services owed to customer C + prepayments by customer A + prepayments by customer C - painting services rendered to customer A - painting services rendered to customer C = Ending unearned sales revenues You evidently noticed that customer B was NOT making a prepayment but rather was paying off an account receivable that it owed to the painting company for services it ALREADY received in the past. This situation is exactly opposite of Customer A and Customer C's prepayments. Customer B is a post payment. Question 30 / 1 pts Mod 7.2: Company B began January 1, 20X5 year owing $28,000 on a note payable with a(n) 4% annual interest rate due December 31, 20X5. Its beginning interest payable on that loan was $4. On July 1, 20X5, it borrowed another $25,000 on a 5 year note payable with a(n) 10% annual interest rate. Assuming Company B fully paid off the $28,000 loan on December 31, 20X5 as planned, as well as all of the related interest owed on it, what is the total balance in notes payable as of January 1, 20X6? You Answered Correct Answer25,000 Incorrect. We are only focusing on the "Note Payable" balance. The balance in Interest Payable is tracked in a totally separate account. We are able to compute the ending note payable balance as follows: Beg. Note Payable + New Borrowings - Payments against principle on old Notes Payable = End. Notes Payable As noted above, the information about interest is irrelevant to the computation of the note payable balance. Question 40 / 1 pts Mod 7.2: Compute Company A's ending balance in accounts payable using the following information: Company A began the year owing $38, during the year it paid off $3 of its accounts payable, it also purchased $3 of inventory on account, and purchased another $1 of inventory for cash. You Answered Correct Answer38 Incorrect. In order to compute the ending balance of accounts payable, you evidently used the following formula: Beginning Accounts Payable + Purchases on Account - Payments against accounts payable = Ending Accounts Payable Cash purchases do not affect accounts payable because no liability is ever recorded. The company receives the goods and immediately pays for them, so the net affect on accounts payable, is $0. This ending balance should normally be on the right-hand side of its T-account. Question 51 / 1 pts Mod 7.2: Company B began the month owing $23 for water services received in the past but has not been paid for yet. During the month it received bills for electricity in the amount of $11 and Sewage $21. It also made total payments for water, electricity and sewage of $44. How much in utilities payable does Company B still owe at the end of the current month? Correct! Correct Answer11 Correct. Ending Utilities Payable is computed as follows: Beginning Utilities Payable + Utility Services Received - Payments for Utility Services = Ending Utilities Payable

Mod 7.2: Here is a list of accounts you might see in a company. Add up all the amounts below that are classified as liabilities and enter it in the box provided: Cash $4Notes payable $4Accounts payable $7Prepaid rent $3Unearned sales revenue $6Bonds payable $1Insurance expense $4Cost of goods sold $6 You Answered Correct Answer18 Incorrect. The only liabilities provided in the list above are notes payable, accounts payable, unearned sales revenue and bonds payable. The other items are classified as follows: Assets: cash, prepaid rent Expenses: insurance expense, cost of goods sold Question 21 / 1 pts Mod 7.2: Which of the following transactions will result in a reduction to a company's bonds payable account? Choose all that apply. The company issued new bonds. Correct! The company paid off its bonds upon maturity. Correct. When bonds are paid off upon maturity the bonds payable account will decrease. The company borrowed additional funds by using bonds. Correct! The company "called" its bonds. Correct. When bonds are called early, that means that they are paid off early and therefore bonds payable will decrease. Correct. The computation of the ending bonds payable is as follows: Beginning Bonds Payable + Issuances of and new borrowing using bonds payable - (Payments on bonds upon maturity + Payments made to call and retire bonds early) = Ending Bonds Payable Question 31 / 1 pts Mod 7.2: Company B began the month owing $21 for water services received in the past but has not been paid for yet. During the month it received bills for electricity in the amount of $10 and Sewage $29. It also made total payments for water, electricity and sewage of $44. How much in utilities payable does Company B still owe at the end of the current month? Correct! Correct Answer16 Correct. Ending Utilities Payable is computed as follows: Beginning Utilities Payable + Utility Services Received - Payments for Utility Services = Ending Utilities Payable Question 40 / 1 pts Mod 7.2: In the prior month, Hot Dog Co. received $54 of customer prepayments for hot dogs to be delivered in the current month. During the current month, additional customers paid $24 for future hot dog deliveries. During the current month, one customer canceled her order of $8 and received a full refund. Hot Dog Co. delivered hot dogs with a sales value of $41 to the customers who had prepaid. How much in hot dog sales does it still owe customers for their prepayments? You Answered Correct Answer29 Incorrect. The computation of Unearned Sales Revenue is as follows: Beginning Unearned Sales Revenues + Customer Prepayments - (delivery of goods and services to customers who prepaid+customer refunds) Question 50 / 1 pts Mod 7.2: Compute Company A's ending balance in accounts payable using the following information: Company A began the year owing $38, during the year it paid off $3 of its accounts payable, it also purchased $3 of inventory on account, and purchased another $1 of inventory for cash. You Answered Correct Answer38 Incorrect. In order to compute the ending balance of accounts payable, you evidently used the following formula: Beginning Accounts Payable + Purchases on Account - Payments against accounts payable = Ending Accounts Payable Cash purchases do not affect accounts payable because no liability is ever recorded. The company receives the goods and immediately pays for them, so the net affect on accounts payable, is $0. This ending balance should normally be on the right-hand side of its T-account.

Question 11 / 1 pts Mod 7.2: Paint Co. began the month, owing $42 in painting services to Customer C. During December X4, a Paint Co. had the following transactions and performed the following painting services. Customer A paid $57 to Paint Co. for a painting job to be performed in the future. Customer B paid $32 for prior painting services that it received last month and finally paid for this month. Customer C prepaid $34 for painting services to be received in the future. During December X4, Paint Co. provided the following painting services, $8 for Customer A, $28 for Customer B, and $32 for Customer C. Compute Paint Co.'s total ending balance in Unearned Sales Revenues as of the end of December X4. Correct! Correct Answer93 Correct. A company's unearned sales revenues increase when customers prepay and it decreases when the company delivers the services for which the customers prepaid. Therefore: Beginning paint services owed to customer C + prepayments by customer A + prepayments by customer C - painting services rendered to customer A - painting services rendered to customer C = Ending unearned sales revenues You evidently noticed that customer B was NOT making a prepayment but rather was paying off an account receivable that it owed to the painting company for services it ALREADY received in the past. This situation is exactly opposite of Customer A and Customer C's prepayments. Customer B is a post payment. Question 20 / 1 pts Mod 7.2: Company B began January 1, 20X5 year owing $22,000 on a note payable with a(n) 3% annual interest rate due December 31, 20X5. Its beginning interest payable on that loan was $3. On July 1, 20X5, it borrowed another $24,000 on a 7 year note payable with a(n) 2% annual interest rate. Assuming Company B fully paid off the $22,000 loan on December 31, 20X5 as planned, as well as all of the related interest owed on it, what is the total balance in notes payable as of January 1, 20X6? You Answered Correct Answer24,000 Incorrect. We are only focusing on the "Note Payable" balance. The balance in Interest Payable is tracked in a totally separate account. We are able to compute the ending note payable balance as follows: Beg. Note Payable + New Borrowings - Payments against principle on old Notes Payable = End. Notes Payable As noted above, the information about interest is irrelevant to the computation of the note payable balance. Question 31 / 1 pts Mod 7.2: Choose all of the liabilities noted in the following listing: Warehouse equipment Salaries and wages expense Cost of goods sold Correct! Accounts payable Correct. Accounts payable is a liability. It represents amounts owed to suppliers in relation to purchases on account that have not yet been paid for. Rent expense Correct! Bonds Payable Correct. Bonds payable is a liability. It represents amounts borrowed using a bond as a debt instrument. Correct! Unearned sales revenue Correct. Unearned sales revenue is a liability. It represents goods or services that a company is expected to deliver to customers because the customers prepaid for it. Correct. Great job. You must be studying hard. The following items are liabilities: bonds payable, accounts payable and unearned sales revenue See additional information above to better understand why the others are not liabilities. Question 41 / 1 pts Mod 7.2: Assume that on December 1, 20X7, Company Z owed $13,000 on a 30-year, 7% fixed rate mortgage payable it took out many years ago. If on January 1, 20X8, the company were to make a $2,000 payment, of which $75.83 was used to pay for interest. How much does Company Z owe on its mortgage payable immediately after making the $2,000 payment? $10,924.17 $11,000 Unable to compute using the information provided. Correct! $11,075.83 Correct. Part of the $2,000 payment is used to pay for interest of $75.83 and the other part of the $2,000 payment being $1,924.17 is used to reduce the principle balance of the $13,000 mortgage payable. Therefore, $13,000 less $1,924.17 = a remaining balance of $11,075.83. Incorrect. Part of the $2,000 payment is used to pay for interest of $75.83 and the other part of the $2,000 payment being $1,924.17 is used to reduce the principle balance of the $13,000 mortgage payable. Therefore, $13,000 less $1,924.17 = a remaining balance of $11,075.83. Question 50 / 1 pts Mod 7.2: In order for something to be classified as a liability, it must possess which of the following characteristics (choose all that apply)? Correct Answer be the result of past transactions or events. Correct Answer be expected to result in the transfer of assets or provide services to other entities You Answered be the result of a purchase Incorrect. There is no requirement that a liability be the result of a purchase. Example: If you borrow $10,000 from a bank under note agreement, you will have a $10,000 note payable. No purchase occurred, but you have a liability. "Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events." Statement of Financial Accounting Concepts No. 6 *Elements of Financial Statements—a replacement of FASB Concepts Statement No. 3 (incorporating an amendment of FASB Concepts Statement No. 2) CON6-12.25 *Copyrighted by, and reproduced with permission of, *the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, USA. be an amount owed to a publicly traded company Correct! be a probable future sacrifice of economic benefits Correct. "Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events." Statement of Financial Accounting Concepts No. 6 *Elements of Financial Statements—a replacement of FASB Concepts Statement No. 3 (incorporating an amendment of FASB Concepts Statement No. 2) CON6-12.25 *Copyrighted by, and reproduced with permission of, *the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, USA. be settled in cash Incorrect. See additional explanations above, but here is the official definition of a liability. "Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events." Statement of Financial Accounting Concepts No. 6 *Elements of Financial Statements—a replacement of FASB Concepts Statement No. 3 (incorporating an amendment of FASB Concepts Statement No. 2) CON6-12.25 *Copyrighted by, and reproduced with permission of, *the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, USA.

Mod 7.2: Steve Incorporated began the year owing $49 in dividends to its stockholders. During the year it declared another $5 and sent out dividend checks amounting to $5. At the end of the current year, how much in Dividends are still owed to Steve Inc.'s stockholders? Correct! Correct Answer49 Correct. Great job. The computation for dividends payable is as follows: Beginning Dividends Payable + Dividends Declared - Dividends Paid = Ending Dividends Payable Question 21 / 1 pts Mod 7.2: Compute the ending salaries and wages payable for Company B using the information provided below. During the prior year, Company B's workers earned $32 of which $6 had still not been paid out to them by the end of the prior year. During the current year workers worked and earned $182. During the current year, Company B made total payments to workers of $64. Correct! Correct Answer124 Correct. For this problem, you need to first compute the beginning salaries and wages payable which is the amount that workers earned in the prior year and had not been paid for yet. Then use the following formula: Beginning Salaries Wages Payable as given in the problem + Amount worked and earned in the current year - Total payments made to employees during the current year = Ending Salaries Wages Payable. This ending balance should normally be on the right-hand side of its T-account. Question 31 / 1 pts Mod 7.2: Compute Company A's ending balance in accounts payable using the following information: Company A began the year owing $35, during the year it paid off $8 of its accounts payable, it also purchased $6 of inventory on account, and purchased another $6 of inventory for cash. Correct! Correct Answer33 Correct. In order to compute the ending balance of accounts payable, you evidently used the following formula: Beginning Accounts Payable + Purchases on Account - Payments against accounts payable = Ending Accounts Payable Cash purchases do not affect accounts payable because no liability is ever recorded. The company receives the goods and immediately pays for them, so the net affect on accounts payable, is $0. This ending balance should normally be on the right-hand side of its T-account. Question 41 / 1 pts Mod 7.2: Assuming the following listing provides ALL of a given company's assets and liabilities. How much equity do the owners of this company have in its assets? Prepaid rent $16Cash $59Bonds payable $2Goodwill $86Accounts payable $20Patents $3Salaries and wages payable $10Notes payable $28Unearned sales revenue $1 Correct! Correct Answer103 Correct. The owners' equity in assets is computed by taking all assets and deducting all liabilities. Equity is the same as "net assets". Cash+Prepaid Rent+Patents+Goodwill Less: (Accounts Payable+Salaries and Wages Payable+Unearned Sales Revenues+Notes Payable+Bonds Payable) Question 51 / 1 pts Mod 7.2: If you were given a complete list of all of a company's liabilities in T-account format, with their ending balance on their normal balance side, what side of the T-account would you normally expect the liabilities' account balances to appear on? The left side There is no such thing as a normal side for liability T-accounts. Correct! The right side Correct. The normal balance side for liabilities is on the right side, because liabilities appear on the right side of the balance sheet equation. Assets are the accounts whose normal balance appears on the left side. Assets = Liabilities + Equity T-accounts do not have a right side or a left side. Correct. As noted in the videos, because liabilities are on the right-hand side of the balance sheet equation, their normal balance is on the right-hand side. The normal balance side is also the side on which all increases for liabilities are recorded.