Accounting 1A Final
Finnegan Co. Income Statement
Fees earned 78,000 Expenses: Rent expense:34,000 Depreciation expense 7,250 Supplies expense 1,800 Total expenses 43,050 Net income 34,950
Which of the following accounts ordinarily appears in the post-closing trial balance?
Unearned Rent
Primary ledger containing all the balance sheet and income statement accounts is the
a) general ledger.
General term used to indicate delaying the recognition of an expense already paid or of a revenue already received is
b. deferral
Unearned Fees appear on the
b.balance sheet as a current liability
On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000;Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of owner's equity (John Wong's capital) as of July 1 of the current year?
($27,000 Cash + $12,300 Accounts Receivable + $3,100 Supplies + $35,000 Land)- $13,900 Accounts Payable = $63,500
Prior to adjustment at August 31, Salary Expense has a debit balance of $298,500. Salaries owed but not paid as of the same date total $4,200.Present the entries to record the following: 1Accrued salaries as of August 31. 2Closing of Salary Expense as of August 31
(1) Salary Expense4,200Salaries Payable4,200 (2) Income Summary302,700Salary Expense302,700
On March 1, a business paid $3,600 for a twelve month liability insurance policy. On April 1 the same business entered into a two-year rental contract for equipment at a total cost of $18,000. Determine the following amounts: (a) insurance expense for the month of March (b) prepaid insurance as of March 31 (c) equipment rent expense for the month of April (d) prepaid equipment rental as of April 30
(a)$300 ($3,600/12 = $300 ) (b)$3,300 ($3,600 - $300 = $3,300) (c)$750 ($18,000/24 = $750) (d)$17,250 ($18,000 - $750 = $17,250)
At January 31, the end of the first month of the year, the usual adjusting entry transferring expired insurance to an expense account is omitted. Which items will be incorrectly stated, because of the error, on (a) the income statement for January and (b) the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understate
(a)Insurance expense (or expenses) will be understated. Net income will be overstated.(b)Prepaid insurance (or assets) will be overstated. Stockholders' equity will be overstated.
Using accrual accounting, 1.revenue is recorded and reported only: 2.expenses are recorded and reported only
1 b. when the services are rendered without regard to when cash is received. 2 a.When they are incurred, whether or not cash is paid.
After the accounts have been adjusted at January 31, the end of the fiscal year, the following balances are takenfrom the ledger of Harrison's Dog Walking Service Company:
31Fees Earned124,600 Income Summary124,600 31Income Summary85,000 Wages Expense29,000 Rent Expense43,000 Supplies Expense7,300 Miscellaneous Expense5,700 31 Income Summary39,600 Retained Earnings39,600 31Retained Earnings6,000 Dividends6,000
On January 31, the cash account balance was $96,750. During January, cash receipts totaled $305,000 and cash payments totaled was $375,880. Determine the cash balance on January 1.
??? + $305,000 - $375,880 = $96,750 Cash balance at Janaury 1 is $167,630.
What is a subsidiary ledger?and examples
A large number of individual accounts with a common characteristic grouped together in a separate ledger. Accounts payable ledger. Accounts receivable ledger. Fixed assets ledger. Inventory ledger. Purchases ledger
Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions.
Accounting reports would become unstable and unreliable
Controlling account in the general ledger that summarizes the debits and credits to the individual customers accounts in the subsidiary ledger is entitled
Accounts Receivable
Abigail Company Balance Sheet
Assets: Current assets: Cash 3400 Supplies 850 Prepaid rent 6800 Total current assets 11050 Property, plant, and equipment: Trucks 49300 Less accumulated depreciation42400 Total property, plant, and equipment 6900 Total assets 17950 Liabilities: Current liabilities: Unearned fees 7310 Owner's Equity Abigail, Capital10,640 Total liabilities and owner's equity17,950
Which of the following is considered to be unearned revenue？
Concert/theatre tickets sold for next month's performance
Given the following: Beginning capital $ 58,000 Ending capital $ 30,000 Owner's withdrawals $ 25,000 Calculate net income or net loss.
Ending capital $30,000 Beginning capital 58,000 Decrease in capital $28,000 Less: Owner's withdrawals 25,000 Net loss $ 3,000
Hannah Roberts owns and operates Hannah's Pool Service Company. On January 1, Hannah Roberts, Capital had a balance of $252,000. During the year Hannah invested an additional $32,000 and withdrew $52,400. For the year ended December 31 Hannah's Pool Service Company reported a net income of $73,200. Prepare a statement of owner's equity for the year ended December 31
Hannah Roberts, capital, January 1 252,000 Investment during year 32,000 Net income 73,200 Less withdrawals(52,400) Increase in owner's equity 52,800 Hannah Roberts, capital, December 31 304,800
Finley Company End-of-Period Spreadsheet For the Year Ended December 31 48,000 48,000
Journal entry to close revenues:debit Fees Earned $155,000; credit Income Summary $155,000 Entry to close expenses would be:Debit Income Summary; credit expense account Entry to close income summary:Debit Income summary $50000,Credit C.Finley, Capital $50000 Entry to close C.Finley, Drawing:debit Retained Earnings, $3,000; credit Dividends, $3,000 ending balance in C.Finley, Capital:$80000
Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow. Stockton Company Adjusted Trial Balance For the Year Ended December 31 Cash $ 6,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation $ 1,100 Accounts Payable 1,900 Notes Payable 4,300 Capital Stock 2,000 Retained Earnings 10,940 Dividends 790 Fees Earned 9,250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 185 Totals $29,490 $29,490
Net Income $3,580 Total Assets $21,930 Total liabilities $6200 Ending balance $15,730 Current assets$9,330
There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to close ____, and the last one is to close ____.
Revenues, expenses, income summary, drawing account
Connie and Jill operate Reardon's Bakery which has the following segment revenues for the most recent two fiscal years.
Segment;Current year;percent; Prior year;percent Cake 691,000 27.70%$ 662,000 26.53% Cupcake 512,000 20.52% 550,000 22.04% Dessert 417,000 16.71% 468,000 18.76% Beverage 875,000 35.07% 815,000 32.67% Total revenue $2,495,000 100.00%$2,495,000 100.00%
123 Kids TV operates in five major international segments.
SegmentCurrent Year(in millions)Prior Year(inmillions)Amount Increaseor(Decrease)PercentIncreaseor(Decrease) United States $ 9,132 $ 8,528 $ 604 7.08% Canada 8,248 6,391 1,857 29.06 England 4,734 4,141 593 14.32 China 11,700 13,299 (1,599) (12.02) Brazil5,645 6,391 (746) (11.67) Total revenues$39,459 $38,750 $ 709 1.83%
Which of the following is an example of a prepaid expenses?
Supplies
Explain the difference between the accrual basis of accounting and the cash basis of accounting
The difference between the two types of accounting is when revenues and expenses are recorded. In cash basis accounting, revenues are recorded when cash is actually received and expenses are recorded when they are actually paid (no matter when they were actually invoiced).Accrual basis accounting is the method of accounting most businesses and professionals are required to use by law.
You have just accepted your first job out of college, which requires you to evaluate loan requests at EastwoodNational Bank. The first loan request you receive is from Richard Enterprises, a small proprietorship. RichardTracy, the owner, is requesting $105,000 and brings you the following trial balance (or statement of accounts) for his first year of operations ended December 31
The three accounts that should be relabeled for greater clarity as follows: Billings Due from Others—Accounts ReceivableAmounts Owed to Others—Accounts PayableInvestment in Business—Richard Tracy, Capital
A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom, FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?
a$12,285 $4,356 $5,292
Record the following selected transactions for April in a two-column journal, identifying each entry by letter. Omit explanation. April (a) received $18,000 from Katie Long, owner. (b) purchased equipment for $27,000, paying $10,000 in cash and giving a note payable for the remainder. (c) paid $2,300 for rent for April. (d) purchased $1,500 of supplies on account. (e) recorded $9,800 of fees earned on account. (f) received $7,500 in cash for fees earned. (g) paid $1,200 to creditors on account. (h) paid wages of $3,425. (i) received $7,900 from customers on account. (j) recorded owner's withdrawal of $1,875.
a)Cash 18000 Owner's capital 18000 b) Equipment 27000 Cash 10000 Notes payable 17000 c) Rent expense 2300 Cash 2300 d) Supplies 1500 Account payable 1500 e) Account receivable 9800 Fees revenue 9800 f) Cash 7500 Fees revenue 7500 g) Account payable 1200 Cash 1200 h) Wages expense 3425 Cash 3425 i) Cash 7900 Account receivable 7900 j) Owner's drawing 1875 Cash 1875
Explain the meaning of a)Objective Concept b)the unit of measure con
a)requires that the amounts recorded in the accounting records be based on objective evidence b)Accounting convention that financial data should be recorded with a common unit of measure.
Ting Hsu is the owner of Hsu's Financial Services. At the end of its accounting period, December 31, of Year 1,Hsu's has assets of $575,000 and owner's equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts. a. Hsu's liabilities as of December 31 of Year 1. b. Hsu's liabilities as of December 31 of Year 2, assuming that assets increased by $56,000 landowner's equity decreased by $32,000. c. Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000,liabilities were $450,000, and there were no additional investments or withdrawals.
a. $575,000 − $335,000 = $240,000 b. ($575,000 + $56,000) − ($335,000 − $32,000) = $328,000 c. $592,000 − $450,000 = $142,000 owner's equity Year 2$335,000 − $142,000 = $193,000 net loss
Snelling Company does business in two regional segments: North and South. The following annual revenue information wasdetermined from the accounting system's invoice data:SegmentCurrent YearPrior YearNorth$ 75,000$100,000South260,000220,000Total revenues$335,000$320,000
a. 18.2%
Abbie Marson is the sole owner and operator of Great Plains Company. As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $940,000 and liabilities of $300,000. During Year 2, Marson invested an additional $73,000 and withdrew $33,000 from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $995,000, and liabilities were $270,000?
a.$45,000
Statement of Owner's Equity begins with the beginning balance followed by
a.Adding investments plus Net Income (loss) less withdrawals
Requirement: Make the journal entries for both of the following: (a) On December 1, $18,000 was received for a service contract to be performed from December 1 through until April 30. (b) If the service work for this contract is performed evenly and on a regular basis throughout this period, prepare the adjusting journal entry as of year-end, December 31.
a.Cash 18000 Unearned service revenue 18000 b.Unearned service revenue 3600 Service revenue 3600
What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
a.Gross profit
April 14 Equipment 15,000 Cash 5,000 Note Payable 10,000 ???????????? Which is the best explanation for this journal entry?
a.Purchased equipment, paid cash of $5,000, with the remainder to be paid in payments.
Which of the following is not a characteristic of accrual basis of accounting?
a.Revenues and expenses are reported in the period in which cash is received or paid
At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?
a.Salary Expense for the year was understated.
Under a perpetual inventory system
a.accounting records continuously disclose the amount of inventory
Prepaid expenses are eventually expected to
a.become expenses when their future economic value expires
Prepaid Insurance is reported on the balance sheet as a
a.current asset
Balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is
a.debit Rent Expense, $8,000; credit Prepaid Rent, $8,000
Adjusting entry for gym memberships earned that were previously recorded in the unearned gym memberships account is
a.debit Unearned Gym Memberships; credit Gym Memberships Revenue
Adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statements by having
a.expenses understated and therefore net income overstated
Adjusting entries affect at least one
a.income statement account and one balance sheet account
Earning revenue
a.increases assets, increases owner's equity
Accounting concepts upon which deferrals and accruals are based is
a.matching
The primary difference between periodic and perpetual inventory system is that a
a.periodic system determines the inventory on hand only at the end of an accounting period
each individual entry in the revenue journal is posted to
b) the accounts receivable subsidiary ledger
Accrued expenses are ordinarily reported on the balance sheet as
b.
Waller Company does business in two regional segments: North and South. The following annual revenue information was determined from the accounting system's invoice data:SegmentCurrent YearPrior YearNorth$ 80,000$100,000South260,000200,000Total revenues$340,000$300,000Using horizontal analysis, determine the percentage change in revenues
b. (20.0%)
Matching concept
b. determines that expenses related to revenues be reported at the same time the revenues are reported.
Following is an example ofSegmentCurrent YearPercentPrior YearPercentCollege textbooks$ 78,00025.0%$ 55,00018.9%High school textbooks129,00041.3%115,00039.5%Elementary school textbooks105,00033.7%121,00041.6%Total textbook revenue$312,000100.0%$291,000100.0%
b. vertical analysis
Using accrual accounting, revenue is recorded and reported only
b. when the services are rendered without regard to when cash is received.
If total liabilities decreased by $46,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is
b.$14,000 increase
Land, originally purchased for $30,000, is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?
b.Assets increase $32,000; stockholders' equity increases $32,000
Corbit Corp. sold merchandise for $10,000 cash. The cost of the merchandise sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be
b.Cash 10,000 Sales 10,000 Cost of Merchandise Sold 7,590 Merchandise Inventory 7,590
Which one of the fixed asset accounts listed below will not have a related contra asset account?
b.Land
Connie's Specialties Inc. offers exclusive interior design services. The following revenue information was determined from Connie's records. Current YearPrior YearConsultation Services$1,000,000$ 800,000Design Services1,800,0001,500,000Using a horizontal analysis, which is correct?
b.The consultation services showed an increase in revenue of 25%.
Which of the following accounts would likely be included in a deferral adjusting entry?
b.Unearned Revenue
Which of the following is NOT true of accounting principles?
b.a new accounting principle can be adopted with stockholders approval
Accumulated Depreciation appears on the
b.balance sheet in the property, plant, and equipment section
As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
b.depreciation
Adjusting Entries are
b.needed to bring accounts up to date and match revenue and expense
That the total dollar amount of the debits equals the total dollar amount of the credits in the ledger accounts can be verified through a(n):
b.trial balance
Calculate income from operations for Jonas Company based on the following data: Sales $764,000 Operating expenses 52,500 Cost of merchandise sold 538,000
c. $173,500
Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. The Pound Co. paid the invoice within the discount period. What is amount of sales from the above transactions?
c. $24,990
Following is an example ofSegmentCurrent YearPrior YearAmountPercentCollege textbooks$ 78,000$ 55,000$23,00041.8%High school textbooks129,000115,00014,00012.2%Elementary school textbooks105,000121,000(16,000)(13.2%)Total textbook revenue$312,000$291,000$21,0007.2%
c. horizontal analysis
A summary of selected ledger accounts appear below for Alberto's Plumbing Services for the current calendar year end. Alberto, Capital 12/31 8,500 1/1 6,500 12/31 15,000 Alberto, Drawing 6/30 3,500 12/31 8,500 11/30 5,000 Income Summary 12/31 18,500 12/31 33,500 12/31 15,000 Net income for the period is
c.$15,000
How does the purchase of equipment by signing a note affect the accounting equation?
c.Assets increase; liabilities increase
Which of the following concepts related to separating the reporting of business and personal economic transactions?
c.BUSINESS ENTITY CONCEPT
Financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or a year, is called a(n)
c.Income Statement
At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?
c.Net income for the year will be overstated.
At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?
c.Net income will be overstated for the current year.
Two income statements for Toby Sam Enterprises are shown below: Toby Sam Enterprises Income Statement For the Years 2 and 1 Ending December 31 Year 2 Year 1 Fees earned $674,350 $520,600 Operating expenses 472,045 338,390 Operating income $202,305 $182,210
c.No.Operating income is decreased by 5%.
All of the following statements regarding the ratio of liabilities to stockholders' equity are true except
c.The higher this ratio, the better able a business is to withstand poor business conditions and pay creditors.
Expenses are recorded when
c.assets are used in the process of earning revenue
How does paying a liability in cash affect the accounting equation?
c.assets decrease; liabilities decrease
Difference between the balance of a fixed asset account
c.book value
Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is
c.debit Salary Expense, $12,000; credit Salaries Payable, $12,000
By matching revenues and expenses in the same period in which they incur
c.net income or loss will be properly reported on the income statement.
when there are a large number of individual accounts with a common characteristic, it is common to place them in a separate ledger called a(n)
d) Subsidiary ledger.
Which of the following is considered to be an accrued expense?
d. A computer technician has installed the latest software updates, but you have not received an invoice or made payment
Balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand at January 31 were $2,000. The amount to be used for the appropriate adjusting entry is
d.$8000
Richardson Mcmann Company has a condensed income statement as shown:: 2014 2013 Sales $150,000 $165,500 Total operating expenses 133,000 147,500 Net income 17,000 18,000 Using horizontal analysis, calculate the amount and percent change for Sales. Round to one decimal place.
d.($15,500), (9.4%)
The accounting equation may be expressed as:
d.Assets - Liabilities = Owner's Equity
Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?
d.Debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000
What effect will the following adjusting journal entry have on the accounting records? Depreciation Expense1,070 Accumulated Depreciation1,070
d.Decrease net book value
The statement of owner's equity shows
d.all the changes in the owner's capital as a result of net income, net loss, additional investments, and withdrawals
which account would normally not require an adjusting entry?
d.cash
Entry to adjust the accounts for salaries accrued at the end of the accounting period is
d.debit Salaries Expense; credit Salaries Payable
Assets are:
d.financed by owners and/or creditors
Net income plus operating expenses is equal to
d.gross profit
Deferred revenue is revenue that is
d.not earned but the cash has been received
Deferred expenses have
d.not yet been recorded as expenses
Revenues are reported when
d.work is completed on the job
Entry to adjust for the cost of supplies used during the accounting period is
debit Supplies Expense; credit Supplies
Accounts in the ledger of Monroe Entertainment Co. are listed in alphabetical order. All accounts have normal balances. Accounts Payable 1,500 Fees Earned 3,600 Accounts Receivable 1,800 Insurance Expense 1,300 Prepaid Insurance 2,000 Land 3,000 Cash 3,200 Wages Expense 1,400 Drawing 1,200 Capital 8,800 Prepare a trial balance. The total of the debits is The total of all the assets is:
debit:$13900 asset:$10000
What effect will this adjustment have on the accounting records? Unearned Revenue 6,375 Fees Earned 6,375
increase revenues reported for the period increase net income decrease liabilities