Accounting Test 1

The book value of a plant asset is the:

cost of the asset less the accumulated depreciation

all of the following accounts are closed EXCEPT for: a) service revenue b) dividends c) utilities expense d) cash

d) cash

On January, 2017, a customer places an orderer for a new customized vehicle. The contract price in $45,000. The vehicle is delivered to the dealer and customer on April 1, 2017. What amount of revenue does the dealer record on January 1, 2017 and April 1, 2017?

$0;$45,000 (when delivered)

A company completed the following transactions during the month of October: what was the company's net income for the month? I. purchased office supplies on account, $4,800 II. provided services for cash, $22,000 III. provided services on account, $12,000 IV. Collected cash form a customer on account, $7,400 V. paid the month rent of $18,000

$16,000 22,000 + 12,000 - 18,000 = 16,000

Golden Company had the following accounts and balances at the end of the year. What are total assets at the end of the year? Cash $75,000 A/P $14,000 Common Stock $21,000 COGS $95,000 Dividends declared and paid $12,000 Operating expenses $12,000 A/R $55,000 Inventory $42,000 Long-term notes payable $33,000 Revenues $130,000 Salaries Payable $28,000

$172,000

In 1990, Johnson Company purchased a building for $200,000. In 2017, a real estate professional says the building has a fair value of $1 million. In 2017, a similar building down the street recently sold for $900,000. What value, before consideration of accumulated depreciation, is reported for the building on the balance sheet ad December 31, 2017?

$200,000

The following accounts and balances are taken from Moore Company's adjusted trial balance: What is the ending balance in retained earnings after the closing entries are completed? A/P $12000 A/R $2900 Accumulated Depreciation $1500 Depreciation Expense $1100 Dividends $2400 Insurance expense $2600 Interest Revenue $1140 Prepaid Insurance $2020 Retained Earnings $10,600 Salary Expense $22,100 Service Revenue $37,800

$21,340 Retained earnings (t-account) debit side: 1100 2400 2600 22100 credit side: 10,600 1140 37,800 total: 21,340

Seidner Company had the following account balances at the end of the first year of operations: Revenues $106,000 COGS $42,000 Salaries expense $15,000 Advertising expense $9000 Short-term investments $20,000 Cash $34,000 Land $50,000 Common stock $50,000

$25,000

Winter Company earned revenues of $170,000 in cash and $230,000 on account during 2016. Of the $230,000 on account, $66,000 was collected in cash in 2016 and the rest in 2017. The company incurred expenses of $105,000 in 2016 and made payments of $80,000 towards the expenses in 2016. What is the net income in 2016 under accrual accounting?

$295,000 170,000 + 230,000 - 105,000 = 295,000

The shepherd company has the following information available at December 31, 2017: What are the total net long-term assets at December 31, 2017? cash - Debit: $1000 A/R - Debit: $1000 Inventory - Debit: $1900 Supplies - Debit: $2100 Prepaid Rent - Debit: $500 Land - Debit: $5800 Building - Debit: $39,900 Accumulated Depreciation - Credit: $8500 Accounts Payable - Credit: $7500 Unearned Revenue - Credit: $4100 Notes Payable, due 2020 - Credit: $2300 Common stock - Credit: $6600 Retained Earning - Credit: $3100 Service Revenue - Credit: $33,000 Rent Expense - Debit: $2300 Supplies Expense - Debit: $1200 Salaries Expanse - Debit: $6400 Depreciation Expense - Debit: $1400 Utilities Expense - Debit: $1600 Totals Debit: $65,100 Credit: $65,100

$37,200 39,900 - 8500 + 5800 = 37,200

Doorglam paid $91,000 for office furniture. The furniture is depreciated using the straight-line method and has an estimated service life of 7 years and no residual value. After three years of use, the accumulated depreciation of the furniture will be:

$39,000 91,000/7 =13 13x3

The account receivable account for Johnny's Mechanic Shop had a beginning balance of $35,000. During the month, Johnny made sales on account of $42,000. The ending balance in the accounts receivable account is $32,000. What are cash collections for the month?

$45,000

Andy Company had a cash balance on May 1 of $29,000. A the end of May, the cash balance has decreased to $30,000. During the month of May, Andy received cash of $47,000 from various sources. Based on this information, cash payments for the month of May were:

$46,000 Cash (t-account): debit side: 29,000 47,000 Credit side: ? Total: 30,000 29,000 + 47,000 - 30,000 = 46,000

On November 1, 2016, a company using accrual accounting, pays $720,000 for a television advertising campaign. Commercials will run evenly over six months beginning on November 1, 2016. How much advertising expense will be recorded on an income statement prepared for the year ended December 31, 2017.

$480,000

a company sells travel mugs online for $9. they purchase the mugs for $5 and charge the customers $1 for shipping and handling. Cost on goods sold per mug is:

$5

Lori Nichols started an engineering firm, Engineering Enterprises P.C. During its first month of operations, the following transactions were completed: At the end of the month, cash equals: I. Lori invested $35,000 in the business, which in turn issued common stock to her. II. The business purchased equipment on account for $10,000. III. The business provided engineering services on account, $13,000. IV. The business paid salaries to the receptionist, $4,000 V. The business received cash from a customer as payment on account $11,000. VI. Th business borrowed $13,000 from the bank, issuing a not payable.

$55,000 35,000 - 4,000 + 11,000 + 13,000 = 55,000

On August 1, 2016, Brian Quinn received $9000 for legal services to be preformed evenly though out the next twelve months, beginning August 1, 2016. An adjusted trial balance prepared on December 31, 2016 will show a credit balance in unearned revenue in the amount of:

$5600 9600/12 = 800 5 months = 4000 balance 5600

a company purchased medical equipment for $190,000 on January 1, 2016. The company determined that the yearly depreciation expense is $19,000. What will be the ending balance in the accumulated depreciation - medical equipment at December 31, 2018?

$57,000 19,000 x 3 = 57,000

A company completed the following transactions during the month of October: What was the company's total revenue for the month? I. purchased office supplies on account, $5,600 II. provided services for cash, $22,000 III. provided services on account, $36,000 IV. Collected cash from a customer on account, $27,000 V. paid the month rent of $3,800

$58,000 22,000 + 36,000 = 58,000

Census Company had the following accounts and balances at the end of the year. What are total liabilities at the end of the year? Cash $75,000 A/P $12,000 Common Stock $21,000 COGS $80,000 Dividends declared and paid $12,000 Operating expenses $12,000 A/R $56,000 Inventory $49,000 Long-term notes payable $37,000 Revenues $105,000 Salaries Payable $29,000

$78,000

a trial balance worksheet can be used to prepare:

- income statement - balance sheet - statement of retained earnings

On May 1, a business provided legal service to a client and billed the client $3,700. the client promised to pay the business in one month. Which journal entry should the business record on May 1?

Debit accounts receivable for $3700 and credit service revenue for $3700

Deere Company holds a $4800 note receivable dated July 1, 2015, with 10% interest. What adjusting entry is needed on December 31, 2015?

Debit interest receivable for $240 and credit interest revenue for $240 4800 x .10 = 480 480 x 6 (months) = 2,880 2,880/12 = 240

A company has a the following adjusting trial balance:term-47 Which closing entry is needed? cash - Debit: $700 A/R - Debit: $1200 Inventory - Debit: $2000 Supplies - Debit: $1700 Prepaid Rent - Debit: $400 Land - Debit: $5700 Building - Debit: $40,100 Accumulated Depreciation - Credit: $8100 Accounts Payable - Credit: $7100 Unearned Revenue - Credit: $4500 Notes Payable, due 2020 - Credit: $2500 Common stock - Credit: $6900 Retained Earning - Credit: $2800 Dividends - Debit: $1000 Service Revenue - Credit: $33,200 Rent Expense - Debit: $1400 Supplies Expense - Debit: $1400 Salaries Expanse - Debit: $6500 Depreciation Expense - Debit: $1400 Utilities Expense - Debit: $1600 Totals Debit: $65,100 Credit: $65,100

Debit service revenue for $33,200 and credit retained earnings for $33,200 Retained Earning (t-account) Debit side: 1000 1400 1400 6500 1400 1600 Credit side: 2800 ? -33,200

_______ is the allocation of the cost of an asset over the asset's useful life.

Depreciation

Stockholders of a corporation:

Have limited liability for the corporation's debt

A company incorrectly recorded a receipt of cash on account. Account receivable was debited for $900 and cash was credited for $900. Is the trial balance out of balance?

No

All of the following are expenses EXCEPT for: a) dividends b) salary expense c) cost of goods sold d)depreciation expense

a) dividends

A company received a utility bill for $1000 and divided to pay it next month due to a shortage of cash. How does this transaction affect the accounting equation?

add $1000 to A/P and subtract $1000 from retained earnings

When an adjustment is made for prepaid rent:

an asset decreases and an expense increase

the accounting equation can be stated as:

assets = liabilities + paid in capital + retained earnings

which of the following transactions will increase one asset and decrease another asset? a) the performance of services on account b) the purchase of equipment on for cash c) the purchase of office supplies on account d) the performance of services for cash

b) the purchase of equipment for cash

two employees worked one week were paid salaries of $1600. The journal entry would:

debit salary expense for $1600 and credit cash for $1600

On December 1, 2015, Carrie's Day Care receives $1500 in advance for an agreement to care for Susan's children for the months of December, January, and February. Carrie's Day Care will make an adjusting entry on December 31, 2015 to:

debit unearned revenue for $500 (1 months revenue - debit unearned; credit revenue)

Operating income reflects:

earnings from a company's core business activities

The accounting assumption that states that the business, rather than its owners, is the reporting unit is the:

entity assumption

Decrease in stockholders' equity that results from the cost of operating the business are:

expenses

Prepaid expenses will become __________ when their future benefits expire.

expenses

On January 1, 2017, total assets for Winigner Technologies were $140,000; on December 31, 2017, total assets were $155,000. On January 1, 2017, total liabilities were $111,000; on December 31, 2017, total liabilities were $118,000. What is the amount of the change and the direction of the change in Wininger Technologies' stockholders' equity for 2017?

increase of $8000 Change in assets: $15,000 (140,000 - 155,000) Change in liabilities: $7000 (111,000 - 118,000) $15,000 - $7000 = $8000

the accumulated depreciation account:

is a contra asset account

COGS:

is the direct cost of the produce sold

a company's main source of cash should be:

operating activities

under accrual-basis accounting, if a company fails to record a sale on accounting:

revenue will be understated and assets will be understated

net income is computed as:

revenues - expenses

The major types of transactions that affect retained earnings are:

revenues, expenses, and dividends

an expense occurred in 2016, but is not paid until 2017. Using accrual accounting, the expense should appear on:

the 2016 income statement

Assume the balance in retained earnings account at January 1, 2017 is zero, and no dividends are declared in 2017. If a debit balance of $6000 exist in retained earnings after closing out revenues and expenses at the end of 2017, the indicates:

the company had net income of $6000

a journal entry contains a debit to a liability account and a credit to a revenue account. This is an example of a:

unearned revenue

Under accrual accounting, revenue is recored:

when the service are performed, regardless of when the cash is received

If an inventor wants to know a company's cash balance at the end of the year, this balance is reported on the:

balance sheet and statement of cash flows