Accounting Exam #1

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Assets - decrease Stockholder's equity - decreases

QRS Corp. made cash sales to customers. What effect does this transaction have on the accounting equation?

Assets - increase Stockholders' equity - increases

Owner of Gymnastics Inc, Bart and Nadia, are sent a dividend check from the company. For this transaction, identify the effect on the accounting equation

Assets -decrease Stockholders' equity - decreases

Which of the following invests funds into a business and is considered an owner?

Stockholders

Vassel Corp. had $1800 of supplies on hand at Jan 1. During the year, supplies with a cost of $4,000 were purchased. At Dec. 31, the actual supplies on hand amount to $1300. After the adjustments are recorded and posted at Dec 31, determine the balances in the Supplies and Supplies Expense accounts

Supplies - 1300 Supplies expense - 4500

During December, Oxfard Inc. purchased $800 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 75% had been paid. What amounts will appear on the company's balance sheet on Dec. 31

Supplies on Hand - 160 Accounts Payable - 200

Raspier Company purchased a truck at a cost of $12,000 in 2005. Jan 1, 2010 depreciation of 10,000 had been recorded on this asset. Depreciation expense for 2010 is 2,000. What is carrying value of truck on Dec 31, 2010?

0

Baker Corp. end-of-year (RETAINED EARNINGS)

10,000

Home Solutions began operations on Jan 2, 2010, w/an investment of 50,000 by each of its 2 stockholders. Net income for its 1st year of business was 240,000. Home Solutions paid a total of $100,000 in dividends to its stockholders during the year. What were their RETAINED EARNINGS on Dec 31, 2010

140,000

Bailey Comp. Current Assets (2010)

150,000

Baker Corp. end-of-year (TOTAL ASSETS)

170,000

CRISP COMPANY received a 6 month, 6% note for 10,000 from its president on Oct. 1, 2010. The note is due on Mar. 31, 2011. If CRISP's accounting period ends on Dec 31, how much interest revenue should CRISP recognize during 2010 and 2011?

2010 - 150 2011 - 150

ZAPATA CORP. received an 8 month, 9% note for 100,000 from its agent on Oct 1, 2010. The note is due on May 30, 2011. If ZAPATA's accounting period ends on Dec. 31, 2010, how much interest revenue should ZAPATA recognize during 2010 and 2011

2010 - 2,250 2011 - 3,750

Newsome Corp. 2010 dividends payed out

25,000

Curbo Brothers Inc. Current Ratio (2010)

3.00 to 1

Ring Company has current assets of 20,000, current liabilities of 8,000, and long-term liabilities of 3,000. Ring wants to buy new equipment. How much of its existing cash can Ring use to acquire equipment without allowing its current ratio to decline below 2 to 1

4,000

Bailey Comp. Current Liabilities (2010)

45,000

Rayburn Comp. current year Net Income

65,000

Which one of the following items appears on a balance sheet?

Accounts payable

You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you with info needed in order to evaluate your concern?

Balance sheet

Which set of items below are classified as current assets?

Cash, accounts receivable, inventory, and office supplies

Dakota Corp. Equipment/Accumulated Depreciation (2010)

Equipment - 320,000 Accumulated Depreciation - 200,000

Which of the following events will cause a company's current ratio to decrease?

Paying off long-term debt with cash

Dec 1, 2010, Zane Corp. paid $8,000 rent in advance. Rent/month is 1,000. If Zane's accounting period ends on Dec 31, 2010, what will be reported on financial statements?

Prepaid rent of $7,000 on balance sheet at Dec 31, 2010

An accountant describes the effects of an economic event on an entity by recording the transaction and reporting the amount on the financial statements. What is this called?

Recognition

Which of the following statements best describes the term "revenues"?

Revenues represent assets received from the sale of products or services

A company forgot to record four adjustments during 2010. Which one of the following omissions of adjustments will understand net income

Sales made during the last week of the period are not yet recorded

Which of the following would be classified as external users of financial statements?

The creditors and stockholders of the company

Which of the following best describes the term "retained earnings"?

The cumulative profits earned by the business less any dividends distributed

A question asked by stockholders is "How much profit did the company make?" What financial sheet will be most useful for this?

The income statement since it shows the revenues and expenses for the period

When are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

Under the cash basic of accounting

Hanna's Swim Club

Unearned swim membership revenue of $3,000

The three forms of business entities are

sole proprietorships, partnerships, and corporations