BA 3302 ch.2

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Which of the following shows how the adjustment to recognize the portion of prepaid rent that has been used affects a company's financial statements?

assets= - lib= NA eq= - rev= NA exp= + net inc= - CF= NA

Knoll Company started Year 2 with a $500 in cash, $500 in supplies, and $1,000 in common stock accounts. During Year 2 the company experienced the following events. (1) Paid $400 cash to purchase supplies. (2) Physical count revealed $100 of supplies on hand at the end of Year 2. Based on this information the amount of supplies expense reported on the Year 2 income statement is

$800

The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the balance sheet?

1 2 4 7 8 11 14

Sanka Company's Year 1 balance sheet showed $1,700 cash, $5,200 supplies, $2,300 accounts payable, $4,000 common stock, and $600 retained earnings. The company experienced the following events during Year 2. (1) Purchased $14,000 of supplies on account (2) Earned $19,000 cash revenue (3) Paid $14,200 cash to reduce accounts payable created in Event 1 above (4) Paid a $1,000 cash dividend. (5) Physical count revealed $4,900 of supplies on hand at the end of Year 2 Based on this information, the Year 2 after closing balance in retained earnings is

4300

The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the income statement?

5 9 10

The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above are temporary accounts?

5, 9, 10, 12

Lawyers Inc. accepted a $12,000 retainer for which the company agreed to provide services in the future. Recognizing this event would

all answers are correct

When a company earns revenue on account

all of the answers are correct

On December 1, Year 3 Walton Company paid $3,600 cash for office space to be used during the coming year. This event is

asset exchange transaction

Styles Company paid cash to purchase supplies. This event is

asset exchange transaction

Crowe Company collected $18,000 in advance for services to be performed in the future. This event is

asset source transaction

During its Year 2 accounting cycle Styles Company had $4,000 of supplies available for use. A year-end physical count of supplies found $300 of supplies on hand. Based on this information, the year-end adjusting entry necessary to recognize supplies expense is

asset use transaction

On December 1, Year 3 Walton Company paid $3,600 cash for office space to be used during the coming year. This transaction was recorded as an asset exchange transaction. Based on this information, the year-end adjusting entry to recognize rent expense is

asset use transaction

AAA Consulting Services collected cash for services to be provided in the future. Recognizing this event would cause the company's

assets and liabilities to increase

Which of the following shows how the event "collected cash for services to be rendered in the future" affects a company's financial statements?

assets= + lib= + eq= NA rev= NA exp= NA net inc= NA CF= +OA

Which of the following shows how recognizing revenue on account will affect a company's financial statements?

assets= + lib= NA eq= + rev= + exp= NA net inc= + CF= NA

Which of the following shows how paying off an accrued liability such as salaries payable will affect a company's financial statements?

assets= - lib= - eq= NA rev= NA exp= NA net inc= NA CF= - OA

Fowler Company's December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings. The company experienced the following event during Year 2. (1) On October 1, collected $1,200 in advance for an agreement to provide office space for one year beginning immediately. Based on this information alone,

the Year 3 income statement would show $900 of rent revenue

Alpha Company's December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings. The company experienced the following event during Year 2. (1) On March 1, paid $1,200 to purchase insurance coverage for one year beginning immediately. Based on this information alone,

the Year 3 statement of cash flows would show zero outflow to purchase insurance.

The accounts receivable account appears on

the balance sheet

On December 31, Year 3 Snack, Inc. adjusted its records to recognize $5,000 of accrued salaries. Based on this information alone

the balance sheet at the beginning of Year 4 would show $5,000 of accrued salaries payable.

If a company recognizes accrued salary expense

the employees have completed work but have not been paid.

When a company collects cash from accounts receivable,

total assets are not affected

When a company pays cash to reduce accounts payable

total assets decrease

When a company pays cash to purchase supplies

total assets is not affected

Delta Company started Year 2 with a $1,700 in cash, $700 in supplies, and $2,400 in common stock accounts. During Year 2 the company experienced the following events. (1) Paid $1,600 cash to purchase supplies. (2) Physical count revealed $400 of supplies on hand at the end of Year 2. Based on this information the year-end adjusting entry to recognize supplies expense would cause

total stockholders equity decrease by $1900

A company using accrual accounting may report revenue on the income statement even if it does not collect cash. This statement is

true

A cost may be recorded as an expense or as an asset purchase. This statement is

true

Unearned revenue is a liability account that normally needs to be adjusted at the end of an accounting cycle. This statement is

true

On October 1 of Year 1 Zeta Company collected $1,200 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of revenue appearing on the Year 1 income statement would be

$300

On August 1 of Year 1 Presco Enterprises paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense appearing on the Year 1 income statement would be

$500

Sanka Company's Year 1 balance sheet showed $1,700 cash, $5,200 supplies, $2,300 accounts payable, $4,000 common stock, and $600 retained earnings. The company experienced the following events during Year 2. (1) Purchased $14,000 of supplies on account (2) Earned $19,000 cash revenue (3) Paid $14,200 cash to reduce accounts payable created in Event 1 above (4) Paid a $1,000 cash dividend. (5) Physical count revealed $4,900 of supplies on hand at the end of Year 2 Based on this information, the Year 2 before closing balance in retained earnings is

$600

On October 1 of Year 1 Lesikar Company paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31. Based on this information, the amount of prepaid insurance appearing on the Year 1 balance sheet would be

$900

On November 1 of Year 1 Falloch, Inc. paid $2,400 cash for a contract allowing the company to use office space for one year. The company's fiscal closing date is December 31. Based on this information, the amount of cash flow from operating activities appearing on the Year 1 statement of cash flows would be

(2400)

The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the statement of changes in stockholders' equity?

11 12 14

The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the statement of cash flows?

3 6 13

Which of the following is not an asset source transaction?

Collected cash from accounts receivable.

Which of the following accounts would be closed at the end of an accounting period?

None of the accounts listed would be closed at the end of an accounting period.

Which of the following statements is false?

Prepaid insurance is shown on the income statement.

Kim Company recorded a claims exchange transaction that had the following effects on its financial statements: Which of the following adjustments could have caused these effects?

Recognized a portion of unearned revenue as earned revenue.

Knopp Company experienced an event that had the following effects on its financial statements.

Recognized accrued salary expense

Kim Company recorded an asset use transaction that had the following effects on its financial statements: Which of the following adjustments could have caused these effects?

Recognized expense associated with prepaid insurance.

Which of the following most accurately depicts the steps in an accounting cycle?

Record transaction data → Adjust accounts → Prepare Statements → Close temporary accounts.

During Year 1 Xing Enterprises experienced the following events. (1) Earned $4,000 of revenue on account. (2) Incurred $3,500 of expenses on account. Based on this information the amount of total assets, net income, and cash flow from operating activities appearing on the year 1 financial statements is

TA= $4000 NI= $500 CF= zero

Guadalupe, Inc. provided $5,000 of services in Year 1 but did not collect cash from its customers until Year 2. Select the correct answer from the following options assuming Guadalupe used accrual accounting.

The Company will recognize $5,000 of revenue in Year 1 and $5,000 of cash flow from operations in Year 2

Brown Company's December 31, Year 1 balance sheet showed $1,800 cash, $200 accounts payable, $600 common stock, and $1,000 retained earnings. The company experienced the following events during year 2. (1) On April 1, Year 2 the company paid $1,800 cash to rent office space for the coming year starting immediately. (2) Earned $1,700 cash revenue. (3) Paid a $300 cash dividend. Based on this information, the company would report

a $1,050 balance in retained earnings on the Year 2 balance sheet.

GreyCo and Sons earns $6,900 of revenue on account in Year 1. Cash collections of receivables amount to $6,300 in Year 1 with the remainder being collected in Year 2. Based on this information alone the company's financial statements would show

a balance of $600 in accounts receivable at the beginning of Year 2.

Which of the following shows how adjusting the accounts to recognize supplies expense will affect a company's financial statements?

assets= - lib= NA eq= - rev= NA exp= + net inc= - CF= NA

During Year 1, Pang Enterprises experienced the following events. (1) Earned $4,000 of revenue on account. (2) Collected $3,500 cash from accounts receivable. The remainder of the receivable was collected in Year 2. Based on this information, the amount of accounts receivable, net income, and cash flow from operating activities appearing on the Year 2 financial statements is

acct rec= zero net inc= zero CF= $500

When a company incurs accrued expenses

al answers are correct

Hector Company's December 31, Year 1 balance sheet showed $900 cash, $600 supplies, $500 accounts payable, $400 common stock, and $600 retained earnings. The company experienced the following events during year 2. (1) Purchased $1,200 of supplies on account. (2) Earned $1,800 cash revenue. (3) Paid $1,100 cash to reduce accounts payable created in Event 1 above. (4) Physical count revealed $200 of supplies on hand at the end of Year 2. Based on this information, the company would report

all answers are correct

On September 1 Christopher Company collected $1,200 for an agreement to provide insurance coverage that protects its client for a one year term starting immediately. On December 31 the company adjusted the accounts to show the portion of the insurance that had been provided. Which of the following shows how the adjustment will affect the company's financial records?

assets= NA lib= (400) eq= 400 rev= 400 exp= NA net inc= 400 CF= NA

Which of the following shows how recognizing accrued expense will affect a company's financial statements?

assets= NA lib= + eq= - rev= NA exp= + net inc= - CF= NA

Which of the following shows how the adjusting entry to recognize services provided to a client who paid for the services prior to the work being performed?

assets= NA lib= - eq= + rev= + exp= NA net inc= + CF= NA

Which of the following shows how collecting cash from accounts receivable will affect a company's financial statements?

assets= NA lib= NA eq= NA rev= NA exp= NA net inc= NA CF= + OA

Which of the following shows how paying cash to purchase supplies will affect a company's financial statements?

assets= NA lib= NA eq= NA rev= NA exp= NA net inc= NA CF= - OA

Which of the following shows how the event "paying cash for an insurance policy that protects the company for some future time period" affects a company's financial statements?

assets= NA lib= NA eq= NA rev= NA exp= NA net inc= NA CF= - OA

The closing process normally occurs at

at the end of an accounting cycle

A prepaid rent account appears of which on the following financial statements?

balance sheet

The accounts payable account appears on

balance sheet

The unearned revenue account appears of which of the following financial statements?

balance sheet

A deferral

both statements

Adams Company adjusted its records to recognized accrued salary expense at the end of its Year 1 accounting period. The recognition is

claims exchange transaction

Crowe Company collected $18,000 in advance for services to be performed in the future. The year-end adjusting entry necessary to recognize the portion of the revenue that was earned during the year is

claims exchange transaction

All permanent accounts are adjusted at the end of an accounting period. This statement is

false

Normally a company closes its books and then adjusts its records to update the account balances before preparing the financial statements. This statement is

false

On May 1 of Year 1 Matthew Company paid $2,400 cash for an insurance policy that would protect the company for one year. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense and the cash flow from operating activities shown on the Year 1 financial statements would be

insurance exp= 1600 cash flow= (2400)

Recognizing an expense may cause

liabilities to increase

Stannous Company earns $2,000 of revenue on account in Year 1. Cash collections of receivables amount to $1,800 in Year 1 with the remainder being collected in Year 2. Based on accrual accounting the company's financial statements would show

net income of $2,000 in Year 1.

Baltimore Company paid cash to purchase insurance that would protect the company during the coming year. The recognition of this event would

not affect total assets or equity

Bookmyer Company experienced a business event that affected its financial statements as indicated below.

paid cash to purchase supplies

On June 1 of Year 1 Doe Company paid $1,800 cash for an insurance policy that would protect the company for one year. The company's fiscal closing date is December 31. Based on this information alone, the amount of prepaid insurance and insurance expense shown on the Year 2 financial statements would be

prepaid in= zero in exp= 750

On May 1 of Year 1 Matthew Company collected $2,400 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of service revenue and the cash flow from operating activities shown on the Year 1 financial statements would be

serv rev= 1600 cf= 2400

Which of the following accounts would most likely need to be adjusted at the end of an accounting cycle?

supplies

If a company recognizes $5,000 of accrued salary expense on December 31, Year 1,

the December 31, Year 1 expense recognition will not affect the cash account.

Alpha Company's December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings. The company experienced the following event during Year 2. (1) On March 1, paid $1,200 to purchase insurance coverage for one year beginning immediately. Based on this information alone,

the Year 2 balance sheet would show $200 of prepaid insurance.

On June 1 of Year 1 Zoe Company collected $1,800 cash for medical services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information the amount of unearned revenue and service revenue shown on the Year 1 financial statements would be

unearned rev= 750 serv rev= 1050

On August 1 of Year 1 Accounting Associates collected $1,200 cash for consulting services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of unearned revenue appearing on the Year 2 balance sheet would be

zero


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