ACCT CHAP 2

What is Acme Corporation's net income or net loss if it had Revenue of $2,800, Salary Expense of $500, Utility Expense of $250, and Withdrawals of $5,000 during October?

$2,050 net income Calculation: $2,800-500-250 = $2,050 net income

The accounts payable account shows the following: Beginning balance $10,000 (Credit) Total credits for the period = $15,000 Total debits for the period = $5,000 What is the balance at the end of the period?

$20,000 (credit) Credits increase the balance of a liability while debits reduce the balance. $10,000 + $15,000 - $5,000 = $20,000 credit ending balance.

Notes payable

$46,000

A company had beginning equity of $25,000. During the period, it earned $27,000 of net income and the owner withdrew $6,000. What is the ending equity?

$46,000 Beginning equity of $25,000 + Net Income of $27,000 - $6,000 of withdrawals = $46,000

If the ending equity is $60,000 and the net income for the past period was $20,000 while withdrawals were $7,000, what was the beginning equity?

$47,000 With net income of $20,000 and withdrawals of $7,000, equity would have change by a positive $13,000. If the ending equity is $60,000, then the beginning equity was $47,000 ($60,000 - $13,000).

What is Acme Corporation's net income or net loss if it had Revenue of $5,800, Salary Expense of $500, Utility Expense of $250, and Withdrawals of $3,000 during October?

$5,050 net income

Accounts payable had a normal starting balance of $500. There were debit postings of $100 and credit postings of $200 during the month. The ending balance is:

$600 credit

If the ending balance in the accounts payable account is $20,000 and the following activity occurred in that account during the period, what would be the beginning balance? Total credits for the period = $15,000 Total debits for the period = $5,000

10,000 Since credits increase and debits decrease the balance of accounts payable, if the account went up by $15,000 (credit) and down by $5,000 (debit), then the account changed by $10,000 (an increase) during the period. If the ending balance was $20,000, then the beginning balance would be $10,000 ($20,000 - $10,000).

The following balances are taken from a company's trial balance. What is the net income? Cash $10,000 Accounts Receivable $5,000 Sales of product $25,000 Operating expenses $10,000 Withdrawals $2,000

1500 Net income is found by subtracting expenses from revenue.

A particular transation resulted in an expense being debited and a liability credited. Which of the following choices would have that effect?

A business received the utilities bill but did not pay it immediately

What would explain this entry: Debit cash and credit consulting fees?

A company provided services and was paid cash upon providing those services

If advertising expense is debited and accounts payable is credited, which of the following explanations of the transaction would be correct?

A company ran an advertisement in a newspaper and will pay for it next month

What is a ledger?

A group of accounts that records data from business transactions

Which of the following best describes the trial balance?

A list of all the accounts from the ledger and their ending balances

An account that would be increased by a debit is:

Accounts receivable

Which of the following accounts would you find on a balance sheet?

Accounts receivable

A business received the utilities bill but did not pay it immediately. What would be the effect on accounts?

An expense would be increased with a debit and a liability would be increased with a credit

Which of the following would be a correct explanation of a transaction that is a debit to computer equipment and a credit to capital?

An owner has contributed computer equipment to be used in the operation of the business.

Which statement would reveal the amount of money that the company is waiting to collect from customers as a result of past transactions such as sales of products and services provided?

Balance sheet Accounts receivable -is a type of asset- which is money the company is waiting to collect from its customers.

What is the effect on accounts if a business provided consulting services to a customer for cash?

Cash would be debited and consulting fee revenue would be credited

Which type of account would NOT be reported on the balance sheet?

Expense Expenses are found on the Income Statement.

The financial statement that shows revenue and expenses for a period of time is the:

Income Statement.

After preparing the Trial Balance, which of the following financial statements is prepared first?

Income statement

Expenses are reported on which of the following financial statements?

Income statement

Which of the following statements is true regarding the account named notes payable?

It normally has a credit balance Notes payable is a liability account. Liabilities normally have a credit balance.

An account that would be increased by a debit is:

Land

Which of the following accounts would have a normal credit balance?

Notes payable

The balance sheet would reveal the account balance of which of the following?

Prepaid expenses

Which of the following accounts have a normal credit balance?

Revenue, liabilities, and capital

The credit side of the any account is always the:

Right-hand side of the account

To calculate net income, which of the following formulas would be correct?

Sales from products less expenses Net income is found by subtracting expenses from revenue.

Which of the following accounts have a normal credit balance?

Sales, accounts payable and capital

When the credits exceed the debits in an account, which of the following would be true?

The account would have an ending credit balance

A company runs a $200 promotion that appears today in a local newspaper, regarding a 20% off sale of tires. The $200 will be paid next month. Which of the following is the correct entry for the transaction?

The advertising expense account is debited; accounts payable is credited

What would be the effect on the accounting equation if an owner contributes $750 of computer equipment to the company for use in the company?

The computer equipment account would be increased by $750 and the increase capital by $750

The Balance Sheet and Statement of Owner's Equity would both show:

The ending balance in the capital account

An account has a credit balance if:

The total of the credit exceeds the total of the debits

At the end of a period, certain steps are followed to prepare the financial statements. Which of the following would be the correct sequence of steps of report preparation?

Trial balance, income statement, statement of owner's equity, balance sheet

The chart of accounts:

is a listing of all the accounts used by a company.

A formal account that has columns for date, explanation, posting reference, debit, and credit is called the:

standard account.