Principles of accounting competency exam (ACCY 111)

Nelson Company experienced the following transactions during 2016, its first year in operation. 1.Issued $7,600 of common stock to stockholders.2.Provided $3,900 of services on account.3.Paid $2,000 cash for operating expenses.4.Collected $2,700 of cash from accounts receivable.5.Paid a $180 cash dividend to stockholders. The amount of net income recognized on Nelson Company's 2016 income statement is:

$1,900

Warner Company received $48,000 cash in advance for services to be performed over the one-year period from September 1, 2015 through August 31, 2016. What amount of revenue will Warner Company report on its 2015 income statement assuming the work is performed evenly throughout the one-year contract period?

$16,000

The trial balance of Barger Company at the end of the accounting period, immediately prior to recording closing entries, showed: Dr. Cash 24,000 Dr. Land 46,000 Cr. Notes payable 27,400 Cr. Common stock 17,000 Cr.Retained earnings 10,800 Cr. Service revenue 59,000 Dr. Expenses 42,400 Dr. Dividends 1,800 Total: Dr. $114,200 Cr. $114,200 After closing entries, the Retained Earnings account will have a balance of

$25600

On December 31, 2016, Hanover Corporation had the following account balances: Cash$ 24,000 Service Revenue 73,000 Advertising Expense 12,000 Accounts Receivable 20,000 Salaries Payable 2,000 Land 15,000 Retained Earnings, 18,000 1/1/2015 Salaries Expense 28,000 Common Stock 10,000 Dividends 4,000 What is Hanover's balance in Retained Earnings after the temporary accounts are closed at the end of its 2016 accounting period?

$47,000

Ballard Company uses the perpetual inventory system. The company purchased $9,000 of merchandise from Andes Company under the terms 2/10, net/30. Ballard paid for the merchandise within 10 days and also paid $350 freight to obtain the goods under terms FOB shipping point. All of the merchandise purchased was sold for $17,000 cash. The amount of gross margin for this merchandise is:

$7,830

[The following information applies to the question displayed below.] Assume the perpetual inventory method is used. 1) The company purchased $13,000 of merchandise on account under terms 2/10, n/30. 2) The company returned $2,500 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $20,000 cash. The amount of gross margin from the four transactions is:

$9,710

Which of the following are elements that are typically present when fraud occurs?

All 3 mentioned (Opportunity, Pressure, and Rationalization)

The recording rules of double-entry accounting related to assets, liabilities, and stockholders' equity accounts can be summarized as

Debits increase asset accounts; credits increase liability and stockholders' equity accounts

Kincaid Company provided consulting service of $3,000 to a customer who paid $1,400 and promised to pay the remainder next month. Which of the following journal entries correctly records this transaction?

Dr. Accounts Receivable 1,600 Dr. Cash 1,400 Cr. Revenue 3,000

On December 1, 2016, King Company collected $26,000 of cash in advance from a customer for services to be provided from January 1, 2017 through June 30, 2017. Which of the following is the correct general journal entry to record this transaction?

Dr. Cash 26,000 Cr. Unearned Service Revenue 26,000

Vargas Company purchased a computer for $6,800 on January 1, 2016. The computer is estimated to have a 8-year useful life and a $2,400 salvage value. What adjusting entry would Vargas record on December 31, 2016 to recognize expense related to use of the computer?

Dr. Depreciation expense 550 Cr. Accumulated depreciation 550

On August 1, 2016, Billias Company issued a $48,000 6%, 1-year note to Citizens Bank. Which of the following entries reflects the end of the year adjustment to record the expense incurred?

Dr. Interest expense 1,200 Cr. Interest payable 1,200

Manhattan Company paid $850 in interest on a loan. $500 of the interest had been accrued in a prior accounting period. Which of the following journal entries correctly records this transaction?

Dr. Interest expense 350 Dr. Interest payable 500 Cr. Cash 850

Abbott Company purchased $8,300 of merchandise inventory on account. Advent uses the perpetual inventory method. Which of the following entries would be required to record this transaction?

Dr. Inventory 8,300 Cr. Accounts Payable 8,300

Jarvis Company is preparing the closing entries at the end of the accounting period. Jarvis Company's trial balance has normal balances in the following revenue accounts: Service Revenue 50,000 Interest Revenue 2,800 Unearned Service Revenue 10,100 Which of the following represents the closing general journal entry for Jarvis Company's revenue accounts?

Dr. Service Revenue 50,000 Dr.Interest Revenue 2,800 Cr. Retained Earnings 52,800

The information reported in financial statements is organized into categories known as elements. Which of the following categories is not a financial statement element?

Land

At the beginning of 2016, Stillwater Company had a $250 balance in its Supplies account. During the year the company paid $1,500 cash for additional supplies. The physical count of supplies on hand at the end of 2016 was $1,400. Which of the following statements related to Stillwater Company's 2016 transactions is incorrect?

The account Supplies represents a liability on the balance sheet.

Rushmore Company provided services for $16,500 cash during the 2016 accounting period. Rushmore incurred $13,000 expenses on account during 2016, and by the end of the year, $3,500 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Rushmore during 2016,

The amount of net income shown on the income statement is $3,500.

The Wilson Company purchased $28,000 of merchandise from the Poole Wholesale Company. Wilson also paid $2,100 for freight costs to have the goods shipped to its location. Which of the following statements regarding the necessary entries for the transactions is true? Wilson uses the perpetual inventory system.

Total debits to the inventory account would be $30,100.

Jack's Snow Removal Company received a cash advance of $14,700 on December 1, 2016 to provide services during the months of December, January, and February. The 2016 year-end adjustment to recognize the partial expiration of the contract will

increase equity by $4,900