ACCT 2301

Which of the following is the correct entry for closing a company expense accounts?

Debit each expense account for its balance and credit Income Summary for total expenses

Which of the following is the correct entry for closing a company revenue accounts?

Debit each revenue account for its balance and credit Income Summary for total revenues

Balance Sheet

describes a company's financial position (types and amounts off assets, liabilities, and equity) at a point in time.

Statement of Retained Earnings

explains changes in equity form net income (or net loss) and from any dividends over a period of times.

Statement of Cash Flows

identifies cash inflows (receipts) and cash outflows (payments) over a period of time.

Equity

owners' claims on the assets of a business

Income Statement

reports a company's revenues and expenses along with net income or loss over a period of time.

Assets

resources a business owns and controls

The Supplies account balance was $5,000 before adjustment at year-end. A physical inventory count of supplies taken at the end of the period is $1,000. What adjusting entry does the company make to record supplies used during the period?

Debits Supplies $1,000 and credits Supplies Expense $1,000 Debits Supplies $4,000 and credits Supplies Expense $4,000 Debits Supplies Expense $1,000 and credits Supplies $1,000 Debits Supplies Expense $4,000 and credits Supplies $4,000 Correct Feedback Good work! Supplies used = Balance before adjustment - Physical count = $5,000 - $1,000 = $4,000 The amount used is debited to the expense account, Supplies Expense, and credited to the asset, Supplies. Selected Answer: Debits Supplies Expense $4,000 and credits Supplies $4,000 Response Feedback: Good work! Supplies used = Balance before adjustment - Physical count = $5,000 - $1,000 = $4,000 The amount used is debited to the expense account Supplies Expense and credited to the asset Supplies.

Beginning Common Stock balance is $40,000, beginning Retained Earnings balance is $50,000, investments through stock issuances are $20,000, net income is $30,000, and dividends are $10,000. What is total ending equity?

Selected Answer: $110,000 Response Feedback: I'm sorry, that's not correct. Ending common stock = Beginning common stock + Investments through stock issuances = $40,000 + $20,000 = $60,000 Ending retained earnings = Beginning retained earnings + Net income - Dividends = $50,000 + $30,000 - $10,000 = $70,000 Total ending equity = Ending common stock + Ending retained earnings = $60,000 + $70,000 = $130,000

What adjusting entry does a company make to record accrued employee salaries?

Selected Answer: Debit Salaries Payable and credits Salaries Expense Response Feedback: I'm sorry, that's not correct. Accrued expenses have been incurred but not yet paid or recorded; therefore, the adjusting entry increases (debits) an expense account and increases (credits) a liability account. Salaries Expense is debited and Salaries Payable is credited.

What journal entry does a company make to record the purchase of supplies on credit?

Selected Answer: Debits Accounts Payable and credits Supplies Response Feedback: I'm sorry, that's not correct. The journal entry to record the purchase of supplies on account/on credit increases the asset, Supplies (debit), and increases the liability, Accounts Payable (credit). The journal entry to record the purchase of supplies for cash increases one asset, Supplies (debit), and decreases another asset, Cash (credit).

What journal entry does a company make to record a cash investment by the owner in exchange for common stock?

Selected Answer: Debits Cash and credits Common Stock Response Feedback: Good work! The journal entry to record the investment of cash by the owner in exchange for common stock increases the asset Cash (debit) and increases the equity account Common Stock (credit). The journal entry record the declaration and payment of dividends to owners increases the contra equity account Dividends (debit) and decreases the asset Cash (credit).

What journal entry does a company normally make to record the payment of cash for future insurance coverage?

Selected Answer: Debits Insurance Expense and credits Prepaid Insurance Response Feedback: I'm sorry, that's not correct. The journal entry to record the prepayment of insurance for more than one month increases the asset Prepaid Insurance (debit) and decreases the asset Cash (credit). As this insurance expires (is used up), Insurance Expense is debited and Prepaid Insurance is credited. The journal entry to record the payment of just the current month's insurance only benefits one period so it increases the expense account Insurance Expense (debit) and decreases the asset Cash (credit).

Temporary accounts closed at the end of an accounting period include which of the following?

Selected Answer: Dividends, expenses, income summary, revenues Response Feedback: Good work! The temporary, or nominal, accounts are revenues, expenses, and dividends. The Income Summary is only used in closing but that makes it a temporary account also. The balances in these temporary accounts are closed out at the end of the accounting period to get the accounts ready to measure the same things for the next period. The permanent, or real, accounts are assets, liabilities, and equity (common stock and retained earnings). The permanent accounts are not closed; their balances are carried forward to the new accounting period.

declaration and payment of dividends

The journal entry record the declaration and payment of dividends to owners increases the contra equity account Dividends (debit) and decreases the asset Cash (credit).

investment of cash by the owner in exchange for common stock

The journal entry to record the investment of cash by the owner in exchange for common stock increases the asset Cash (debit) and increases the equity account Common Stock (credit).

Liabilities

creditors' claims to the assets of a business