Part 3 Practice Test for Intuit Bookkeeping Professional Certificate

Stellar Consultants inc. is a service company that provides consulting and training to clients. On June 30, Stellar Consultants, Inc. had the following balances in its liability accounts: Accounts payable: $30,000 Loans payable: $48,000 Taxes payable: $10,000 Deferred revenue: $12,000 On July 1, Stellar Consultants, Inc. pays $5,000 to one of its suppliers and $2,000 to the bank as part of the loan repayment. Question: What is the total amount of liabilities that Stellar Consultants, Inc. should report on its balance sheet as of July 1?

$93,000

RST Company withdraws $15,000 of cash from the business for personal use. How does this transaction affect the accounting equation?

Assets decrease by $15,000, and equity decrease by $15,000

Power Tool & Die, Inc. is a manufacturing company that needs to purchase a piece of new equipment for $50,000. In June, the company obtains a 5-year loan from the local credit union with an interest rate of 6% per annum, compounded monthly. The loan requires equal monthly payments of $966.64, starting from the end of the first month. The company records the loan using the amortization method. Question: What is the journal entry that Power Tool & Die Inc. should make at the end of the first month to record the loan payment?

Debit Interest Expense $246.58, Debit Notes Payable $720.06, Credit Cash $966.64

You're the bookkeeper for Tom, who is a sole proprietor of a car repair shop. He wants to know how much money he made in the past year and how much money he has invested in his business. You have the following information from his financial records: -He started the year with a balance of $25,000 in his Owner's Investment account. -He invested another $10,000 in the business during the year to buy new tools and equipment. -He withdrew $15,000 from the business for his personal use during the year. -His income statement shows that he had a total revenue of $120,000 and a total expense of $80,000 for the year. Question: What is Tom's net income for the year, and what is his total owner's equity at the end of the year?

Net Income: $40,00 Owners Equity: $60,000 (Total Revenue ($120,00) - Total Expenses ($80,000) = Net Income ($40,000) Capital Contribution ($25,000 + $10,000) + Net Income ($40,000) - Draw ($15,000) = Owner's Equity ($60,000))

Which of the following statements is true about exempt and non-exempt employees under the Fair Labor Standards Act (FLSA)?

Non-exempt employees are subject to overtime pay benefits, while exempt employees are not

Which type of business has no owners, only founders or board members, and has net assets instead of equity?

Nonprofit Corporation

Net pay

The amount an employee takes home after taxes and other payroll deductions

Withholding and deductions

The amount of money withheld from an employee's paycheck for taxes and other purposes

Pay period

The length of time for which an employee is paid, such as weekly, biweekly, or monthly

Payroll

The process of paying employees, keeping track of employee compensation and related payroll costs, and recording these transactions in financial journal entries

Gross pay

The total amount an employee earns before payroll deductions

Which of the following statements best describes the difference between assets and liabilities

assets are what a company own, and liabilities are what a company owes

Match each liability transaction with its effect on the accounting equation: Paying interest on a loan

decrease assets, decrease equity

Match each liability transaction with its effect on the accounting equation: borrowing money from a bank

increase assets, increase liabilities

Match each liability transaction with its effect on the accounting equation: Issuing shares of common stock

increases assets, increases equity

Form 941

used by businesses to report payroll information on salaries, wages, tips, and taxes to the federal government quarterly

W-9

used by independent contractors to provide their tax identification number (TIN) to the business that hire them

The owner of a small nail salon invests $10,000 of their own cash in the business. How does this transaction affect the accounting equation?

assets increase by $10,000, and equity increases by $10,000

Fit Trainers inc. issues 500 shares of common stock for $10 each. How does this transaction affect the accounting equation?

assets increase by $5,000, and equity increase by $5,000

Selma owns a beauty salon and buys various products and supplies from different vendors. She records her purchases in her accounting system using either cash or accounts payable, depending on the payment terms. Question: Which of the following statements is true about her purchases?

Accounts payable purchases are recorded as credits to accounts payable and debits to expenses or assets

capital contributions

money or assets given to the business by the owner or partners

Which of the following are considered non-current liabilities?

monthly lease payment on a 10-year lease, employee pension, and bondswith a maturity date of 5 years.

What type of liability is mortgage payable?

non-current liability

equity

owners rights to the assets of the business after subtracting all of the liabilities

Johan runs a small woodworking business and sells his products to customers on credit. He also buys wood, paint, varnish, and other supplies from various suppliers on credit. At the end of the month, he records his transactions in his accounting system. Question: Which of the following transactions will increase his liabilities?

He buys $800 worth of wood from a new supplier on credit

Pay stub

A document that outlines the details of an employee's pay, such as gross pay, net pay, withholding and deductions, and pay rate

Wage garnishment

A legal process that allows a creditor to take money from an employee's paycheck to pay off a debt