ACC 210 exam 1

Assume that Sallisaw Sideboards, Inc. had a retained earnings balance of $10,000 on April 1, and that the company had the following transactions during April. Issued common stock for cash, $5,000. Provided services to customers on account, $2,000. Provided services to customers in exchange for cash, $900. Paid April rent, $800. Paid workers salaries for April, $700. What was Sallisaw's retained earnings balance at the end of April?

($11,400)

Given the information below about Thomas co. What was the amount of dividends the company paid in the current period -beginning retained earnings 540000 -ending retained earnings 110,000 -decrease in cash ..... Net income 84,000 Change in stockholders equity ......

(28,000) (Ending retained earnings) = (beginning retained earnings) + (net income) - Dividends**

Which of these would be found on a company's balance sheet? (Select all that apply.) Depreciation expense Sales revenue Accounts receivable Equipment Notes payable

-Accounts receivable -Equipment -Notes payable

Which of the following appear(s) on the balance sheet? Accounts receivable Salaries expense Common stock Utilities payable Net income

-Accounts receivable(assets -Common stock (stockholders equity -Utilities payable (liability)

Period of time Statements

-Income Statement -Stockholders Equity and Retained Earnings -Statement of Cash Flows

The two sources of stockholders' equity are amounts ______. paid in from shareholders borrowed from banks borrowed from related companies earned by the corporation

-Paid in from shareholders -Earned by corp

Income Statement

-Reports the companies REVENUES and EXPENSES over an interval of time -Key: Income statement compares revenues and expenses for the current period to assess the companies ability to earn PROFT from running its operations --If revenues> expenses =net income --If expenses > revenues= net loss

April 15. Received a cash deposit of $2,000 for services to be provided in May.

Cash Unearned Revenue

1.Below are the transactions for Racer, Inc. for April, the first month of operations (10pnts) April 1. Borrowed $50,000 from the bank payable with intrest in two years.

Cash 50,000 Notes Payable 50,000

Accounts Receivable

Debit

The independent private sector group that is primarily responsible for setting financial reporting standards

FASB

A company borrows $20,000 with 12% intrest on December 1, 2018. This amount plus intrest is due on November 31, 2019. Record the adjusting entry on December 31, 2018

Insurance Expense 200 Int Payable 200

Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11 Pumpkin collected the cash from that customer. What is the impact on Pumpkin's accounting equation from the collection of cash?

No net effect on the overall accounting equation

Inventory

Resources-Assets

Ending retained earnings is calculated as net income + dividends assets + net income - dividends beginning retained earnings + net income - dividends beginning retained earnings + net income + dividends

beginning retained earnings + net income - dividends

Service Revenue

credit

common stock

credit

(cash) (common stock) Analyze the following postings. Which of the following is the transaction that required this posting? Perform services for customers for cash Borrow from bank Issue common stock to investors Record income for the period

issue common stock to investors

Retained Earnings

Claims to resources-Stockholders Equity

Deferred Revenue refers to

Customers paying cash in advance of the good or service to be provided.

Purchasing office equipment on account has what impact on the accounting equation?

Liabilities increase and assets increase

Accounts Receivable

Resocrces--Assets

Prepaid Assets

Resources--Assets

Which of the following appear(s) on the balance sheet? Utilities payable Net income Common stock Accounts receivable Salaries expense

Utilities payable Common Stock Accounts Receivable

A chronological record of all economic events affecting a firm are recorded in a(n) trial balance Rationale: listing of account balances at the balance sheet date balance sheet Rationale: one of the financial statements journal ledger Rationale: contains all the individual accounts used by a company

journal

Two other types of information in addition to the financial statements that must be reported in the annual reports include management discussion and analysis. notes disclosures. corporate income tax returns. press releases.

management discussion and analysis. notes disclosures.

Cash

resources- assets

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as ____ ______

retained earnings

Temporary accounts would not include

salaries payable

Which of the stagements below best describes the objectibes of financial acc

(All of the other answers are objectives of financial acc) 1. Provide info that helps predict cash flow 2. Provide information about economic resorces, claims to resorces and changes in resprces and claims 3. Privde information that is useful in decision making

Two other types of information in addition to the financial statements that must be reported in the annual reports include management discussion and analysis. corporate income tax returns. notes disclosures. press releases.

-management discussion and analysis -notes disclosure

Objectives of Financial Accounting

-measure a company's activities. (help predict cash flow) (Tells about economic resources, claims to resources, -communicate information to decision makers.

Credits increase ______, whereas debits increase expenses and dividends. common stock and retained earnings. assets and liabilities. Rationale: Debits increase assets, but credits increase liabilities. liabilities and stockholders' equity.

-revenues -expenses and dividends

Statement of Stockholders' Equity

-summarizes the changes in stockholders' equity over an interval of time -Equation: Stockholders Equity=Common Stock (external source)+Retained Earnings (internal source)

Cash-Basis accounting records what two things

1. revenues at the time we receive cash 2. expenses at the time we pay cash

Management discussion and analysis and note disclosures to the financial statements are included in the

10 -k

Management discussion and analysis and note disclosures to the financial statements are included in the

10 k

(Below are the transactions for Racer, Inc. for April, the first month of operations (10pnts)) April 13. Provided $7,000 of services to customers on account

Accounts Receivable $7,000 Service Revenue $7,000

Air France collected cash on February 4 from the sale of a ticket to a customer on January 26. The flight took place on April 5. According to the revenue recognition principle, in which month should Air France have reorganized this revenue?

April

Point in time Statement

Balance Sheet ex. 12/31/17

An accrued expense occurs when: A. Cash payment (or an obligation to pay cash) occurs before the expense recognition. B. An expense is recorded at the same time as the cash payment. C. Cash payment occurs after the expense is recognized and a liability is recorded. D. Cash is paid but an expense is never recorded.

Cash payment occurs after the expense is recognized and liability is recorded

Accounts Payable

Claims to resources- Liabilities

Notes Payable

Claims to resources- Liabilities

Paid- In Capital

Claims to resources-Stockholders Equity

Below is the company's Cash T‐account Cash -------------------------------------- Beg. 1,200 5,200 3,100 ---------------------------------- End. 3,300 The $5,200 amount could represent which of the following? A. Purchase of supplies on account B. Ending balance of cash C. Payment for salaries D. Collection from customers

Collection from customers

Salaries Expense

Debit

Liabilities are best defined as

Debits or obligations the company owes resulting from past transactions

A company purchases new equipment for $24,000 cash on december 1, 2018. At the time of purchase, the equipment is expected to be used in operations for four years (48 months) and have no resale or scrap value at the end.

Deprecation Expense $500 Accumulated Depreciation $500

Paid dividends of $700 to stockholders

Dividends Cash 8

Deffered revenue is not a revenue account deffered= company hasnt provided serv ice yet but has collected customers cash -so, the comapany owes the customer a service which creates a liability

Don't let the account name fool you. Even though the term revenue appears in the account title for deferred revenue, this is NOT a revenue account. Deferred indicates that the company has yet to provide services even though it has collected the customer's cash. The company owes the customer a service, which creates a liability.

The types of accounts which affect retained earnings are assets. liabilities. expenses. revenues. dividends.

EXPENSES REVENUES DIVIDENDS

Which of these would be found on a company's balance sheet? (Select all that apply.) Depreciation expense Sales revenue Equipment Accounts receivable Notes payable

Equipment Accounts receivable Notes payable

(.Below are the transactions for Racer, Inc. for April, the first month of operations (10pnts) April 7. Purchased equipment for $40,000 cash.

Equipment $40,000 Cash $40,000

represent a company's primary means of communicating information to external users. (Enter one word per blank.)

Financal Accounting

The financial statement that is most useful in explaining a company's stock price performance is the statement of stockholders' equity. balance sheet. income statement.

Income Statement

he financial statement that summarizes the profit-generating activities of a company during a particular period of time is the

Income Statement

Statement of Cash Flows -Operating cash flows -investing cash flows -financing cash flows

Measures activities involving cash recipes and cash payments over an interval of time operating cash flows: Cash transactions involving revenues and expenses Investing cash flows: cash transactions involving purchase and sale of long term assets Financing cash flows: cash transactions involving lenders and stockholders (cash at end of the period comes from balance sheet cash)

Which of these would be found on a company's balance sheet? (Select all that apply.) Notes payable Equipment Depreciation expense Accounts receivable Sales revenue

Notes payable Equipment Accounts receivable

Which of the following transactions would cause a decrease in both assets and stockholders' equity?

Paying for advertising for the current month

Salaries expense

Rationale: Salaries expense appears on the income statement as an expense. Salaries payable is a different account (liability) that shows up on the balance sheet.

Suppose a company rents office space for one year, paying $12,000 (1,000/month) in advance on December 1. Record the adjusting entry on December 31

Rent expense $1,000 Prepaid Rent $1,000

An accrued revenue represents:

Revenue being recorded prior to cash collection from the customer

A company pays its employees $5,600 every two weeks ($400/day). the current two week pay period ends on December 26, 2018, and employees are paid $5,600 on the 26th. The next two-week pay period ends on January 9, 2019, and employees will be paid $5,600. Record the adjusting entry on December 31, 2018.

Salaries Expense 2,000 Salaries Payable 2,000

Generally accepted Accounting Principles (GAAP)are best defined as:

Standards or methods for presenting financial accounting information.

Record the adjusting entries (10 points) At the beginning of the period, a company reports a balance in office supplies of $500. During the period, the company purchases an additional $3,500 of office supplies for cash. By the end of the period, only $700 of office supplies remains. Record the period-end adjusting entry

Supplies Expense $3300 Suplies $3300 (500+3,500 - 700 = 330)

Do assets equal liabilities plus stockholders' equity?

THEY MUST!!! EVERY TIME!!

If a company has stockholders equitty of 60,000 At the end of the year which of the following statements must be true?

The companies assets exceed liabilities by $60,000

Salaries Payable

credit

To be useful for decision making, information should possess the fundamental qualities of relevance and ___representation.

faithful

CH 3. Revenue recognition principle

record when the service is recivied not when the cash is exchanged for it