Acct. Prac. Quiz Unit 1

On April 1, a company paid the $1,800 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31?

$1,800 * 9/36 = $450.00

A company purchased new computers at a cost of $14,000 on September 30. The computers are estimated to have a useful life of 4 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the first year ended December 31?

$14,000 - $2,000 = $12,000/48 = $250 * 3 = $750

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: 1. Office supplies used during the period, $1,200. 2. Expiration of prepaid rent, $700. 3. Accrued salaries expense, $500. 4. Depreciation expense, $800. 5. Accrued service fees receivable, $400. The Adjusted Trial Balance columns total is:

$85,700.

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

A debit to Salaries Payable and a credit to Cash.

On June 30 of the current calendar year, Apricot Co. paid $8,400 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 for Apricot would include:

A debit to an expense for $2,100.

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Assets = Liabilities + Owner's Equity Assets = $92,000 + (Beginning Equity + Revenues - Expenses) Assets = $92,000 + ($145,000 + $210,000 - $165,000) Assets = $92,000 + $190,000; Assets = $282,000

A company had revenues of $59,000 and expenses of $46,000 for the accounting period. The owner withdrew $6,500 in cash during the same period. Which of the following entries could not be a closing entry?

Debit Income Summary $59,000; credit Revenues $59,000.

If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

Debit Tim Jones, Withdrawals and credit Cash.

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Debit Unearned Legal Fees and credit Legal Fees Earned.

The J. Godfrey, Capital account has a credit balance of $17,850 before closing entries are made. If total revenues for the period are $57,700, total expenses are $41,700, and withdrawals are $9,450, what is the ending balance in the J. Godfrey, Capital account after all closing entries are made?

Ending Capital Balance = Beginning Capital Balance + Revenues - Expenses - Withdrawals Ending Capital Balance = $17,850 + $57,700 - $41,700 - $9,450 = $24,400

Zed Bennett opened an art gallery and as a dealer completed these transactions: 1. Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000. 2. Purchased $70 of office supplies on credit. 3. Paid $1,200 cash for the receptionist's salary. 4. Sold a painting for an artist and collected a $4,500 cash commission on the sale. 5. Completed an art appraisal and billed the client $200. What was the balance of the cash account after these transactions were posted?

Ending Cash Balance = $40,000 (#1) - $1,200 (#3) + $4,500 (#4) = $43,300

Flash has beginning equity of $285,000, net income of $65,000, withdrawals of $54,000 and investments by owners of $20,000. Its ending equity is:

Ending Equity = Beginning Equity + Investments by Owners + Net Income - Withdrawals Ending Equity = $285,000 +$20,000 + $65,000 - $54,000; Ending Equity = $316,000

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

Going-concern assumption.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the:

Income Summary account.

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

It will understate expenses and overstate net income by $9,000.

Unearned revenues are:

Liabilities created when a customer pays in advance for products or services before the revenue is earned.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Matching Principle

The statement of owner's equity:

Reports how equity changes over a period of time.

A simple account form widely used in accounting as a tool to understand how debits and credits affect an account balance is called a:

T-Accouunt

The general journal provides a place for recording all of the following except:

The balance in each account.

Account Balance

The difference between the total debits and total credits for an account including the beginning balance.

On May 1, Carter Advertising Company received $3,600 from Kaitlyn Breanna for advertising services to be completed April 30 of the following year. The Cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31, Year 2 would include:

a debit to Unearned Fees for $1,200. Year 1 = $3,600/12 = $300 per month * 8 = $2,400 Year 2 = $3,600 - $2,400 = $1,200

Two common subgroups for liabilities on a classified balance sheet are:

current liabilities and long-term liabilities.