ACC200 exam1
Accumulated Depreciation: a. increases with a debit. b. decreases with a credit. c. increases with a credit. d. is an adjunct account.
C
Which of the following are noncurrent assets? a. Machinery and equipment b. Accounts receivable c. Inventories d. Unearned revenues
A
Fireside Corporation reported the following information for the year ended December 31, 2012. Net income $100,000 Dividends 6,000 Retained earnings at December 31, 2012 $120,000 Refer to the information provided above for Fireside Corporation. What was the balance of retained earnings at January 1, 2012? a. $ 21,000 b. $ 26,000 c. $106,000 d. $214,000
B
In which of the following organization forms are the owners' legal responsibility for the debt of the business limited to the amount they invested in the business? a. Sole proprietorship b. Corporation c. Partnership
B
Glass Corporation sold merchandise to a customer for $30,000 on credit on July 15. The customer paid Glass the amount due on July 31. Under the accrual basis of accounting, how should Glass record the transaction? a. Glass should recognize the revenue on July 31. b. The July 15th transaction increases revenue, but has no effect on assets because cash has not been received. c. Revenue is recognized after the cost of the merchandise sold has been paid by Glass Corporation d. Revenue is recognized on July 15. The July 31st transaction has no effect on total assets under the accrual basis.
D
Accrued expenses originate from: a. previously unrecorded expenses that have been incurred but not yet paid in cash. b. items paid in advance, but not incurred. c. collecting cash from customers. d. paying off liabilities.
A
Cash-$234,000 Accounts payable-$97,000 Inventories-$121,000 Notes payable (due 2020)-$211,000 Land-$453,000 Accounts receivable-$46,000 Refer to the information provided for Wing Company. Calculate current liabilities. a. $ 97,000 b. $211,000 c. $354,000 d. $143,000
A
Machinery is purchased on credit. What effect does this transaction have on the accounting equation? a. Assets and liabilities increase b. Assets and stockholders' equity increase c. Liabilities increase and stockholders' equity decreases d. Assets and liabilities decrease
A
Joe's Auto Company uses the accrual basis of accounting. Which situation violates the matching principle during 2012? a. Sales commissions are charged to expense in 2012 on all sales revenue recognized in 2012 even though some of the commissions have not been paid. b. Insurance expense is recognized for the total cost of a 1-year policy purchased in May, 2012. c. Rent expenses are recognized as expenses in 2012 even though the last bill received in 2012 will not be paid until 2013. d. Sales commissions paid in 2012 for 2013 commissions are recorded as prepaid expenses for 2012.
B
Services are provided to customers who paid immediately. What effect does this transaction have on the accounting equation? a. Assets and liabilities increase b. Assets and retained earnings increase c. Liabilities increase and retained earnings decreases d. Assets and liabilities decrease
B
Which of the following terms best describes a distribution of the net income of a corporation to its owners? a. Retained earnings b. Dividends c. Liquidation of assets d. Revenue
B
Wing Company Cash-$234,000 Accounts payable-$97,000 Inventories-$121,000 Notes payable (due 2020)-$211,000 Land-$453,000 Accounts receivable-$46,000 .Refer to the information provided for Wing Company. Calculate current assets. a. $498,000 b. $401,000 c. $854,000 d. $709,000
B
A question asked by stockholders is, "How much gross profit did the company make?" What financial statement would have the "gross profit" indicated as a separate line item? a. The balance sheet because retained earnings represents gross profits b. The statement of cash flows as cash inflows and outflows represents gross profits c. The multi-step income statement d. The single-step income statement
C
Bellarim Corporation made cash sales to customers. What effect does this transaction have on the accounting equation? a. Liabilities and retained earnings increase b. Assets and liabilities increase c. Assets and retained earnings increase d. There is no net effect on the accounting equation, as one asset account increases while another asset account decreases.
C
Cash received from customers for mowing their lawns is reported on the statement of cash flows in the: a. financing activities section. b. investing activities section. c. operating activities section. d. supplemental section.
C
During March, Connor Corporation purchased supplies for cash. The supplies will be used in April. What effect does this transaction have on the accounting equation at the time the supplies are purchased? a. Assets increase and stockholders' equity decreases b. Assets and liabilities increase c. There is no net effect on the accounting equation, as one asset account increases while another asset account decreases. d. There is no net effect on the accounting equation, as the transaction should not be recognized until April.
C
Fireside Corporation reported the following information for the year ended December 31, 2012. Net income $100,000 Dividends 6,000 Retained earnings at December 31, 2012 $120,000 Refer to the information provided above for Fireside Corporation. What was the economic effect of the payment of Fireside's dividends? a. The dividend reduced net income for 2012. b. The dividend should be added to net income if the company's accounting equation is in balance. c. The dividend reduced total retained earnings. d. The dividends must be paid whenever Fireside Corporation reports net income.
C
Pine Corporation makes adjusting entries monthly. As of March 31, the general ledger shows Prepaid Rent to have a debit balance of $6,000. Rent expires at a rate of $1,200 per month. No entry for rent has been recorded in the month of March. What adjusting entry is necessary at March 31? a. Prepaid Rent 500 Cash 500 b. Rent Expense 1,200 Cash 1,200 c. Rent Expense 1,200 Prepaid Rent 1,200 d. Prepaid Rent 6,000 Rent Expense 6,000
C
Suppose that a business sells 6-month subscriptions to its monthly magazine. On January 1, the company receives a total of $600 for 10 subscriptions. To record this transaction, the company debits "Cash" for $600 and credits "Unearned Subscription Revenue" for $600. As of January 31, the company has provided one month of magazines and has earned one month of revenue. If this company makes adjusting entries at the end of each month, what adjusting entry will be made on January 31? a. Unearned Subscription Revenue 600 Subscription Revenue 600 b. Subscription Revenue 100 Unearned Subscription Revenue 100 c. Unearned Subscription Revenue 100 Subscription Revenue 100 d. Subscription Revenue 600 Unearned Subscription Revenue 600
C
The telephone bill for the current period is received and recorded, but payment will be made later. What effect does this transaction have on the accounting equation? a. Assets and liabilities increase b. Assets and contributed capital increase c. Liabilities increase and retained earnings decrease d. Assets and liabilities decrease
C
Which of the following accounts is increased by a credit entry? a. Accounts receivable b. Dividends c. Service revenue d. Salaries expense
C
Which of the following transactions affects the liabilities for Stallion Corporation? a. Equipment is purchased for cash b. Services are provided to a customer on credit c. Payment is made on a bank loan d. Common stock is issued
C
Which one of the following is an example of a deferred revenue? a. Sales are made to customers on credit. b. Revenue has been earned but not yet recorded. c. Payments are received prior to providing the services to customers. d. Cash sales are made to customers.
C
Lang Industries received payments from customers who had been billed earlier for services provided. What effect does this transaction have on Lang's accounting equation? a. Assets and liabilities increase. b. Assets and stockholders' equity increase. c. Assets and liabilities decrease. d. There is no net effect on the accounting equation, as one asset account increases while another asset account decreases.
D
Who among the following generally lends funds to a business entity and expects repayment of the funds? a. A partner b. A stockholder c. An owner d. A creditor
D
