Financial Accounting Chapter 4 Questions

The following items are taken from the financial statements of Dunagan Company for the year ending December 31, 2011: Accounts Payable......................................... $18,000 Accounts Receivable...................................... 11,000 Accumulated Depreciation - Equipment.............28,000 Advertising Expense.......................................21,000 Cash............................................................15,000 Common Stock............................................. 42,000 Dividends..................................................... 14,000 Depreciation Expense..................................... 12,000 Equipment....................................................210,000 Insurance Expense........................................ 3,000 Note Payable, due 6/30/12.............................. 70,000 Prepaid Insurance (12-month policy)................. 6,000 Rent Expense................................................. 17,000 Retained Earnings (1/1/11).............................. 60,000 Salaries Expense............................................. 32,000 Service Revenue............................................133,000 Supplies.......................................................... 4,000 Supplies Expense.............................................. 6,000 What is the company's net income for the year ending December 31, 2011? A. $42,000 B. $28,000 C. $133,000 D. $12,000

A. $42,000

Which of the following is a temporary account? A. Service Revenue B. Retained Earnings C. Cash D. Common Stock

A. Service Revenue

All of the following are property, plant, and equipment except A. supplies B. buildings C. machinery D. land

A. supplies

Which of the following accounts is not a temporary account? A. Sales B. Accounts Payable C. Dividends D. Advertising Expense

B. Accounts Payable

Each of the following accounts is closed to Income Summary except A. Expenses B. Dividends C. Revenues D. All of these are closed to Income Summary

B. Dividends

Closing entries A. reduce the number of permanent accounts. B. cause the revenue and expense accounts to have zero balances. C. are prepared before the financial statements. D. summarize the activity in every account.

B. cause the revenue and expense accounts to have zero balances.

After closing entries are posted, the balance in the retained earnings account in the ledger will be equal to A. zero. B. the amount of the retained earnings reported on the balance sheet. C. the beginning retained earnings reported on the retained earnings statement. D. the net income for the period.

B. the amount of the retained earnings reported on the balance sheet.

The following items are taken from the financial statements of Dunagan Company for the year ending December 31, 2011: Accounts Payable......................................... $18,000 Accounts Receivable...................................... 11,000 Accumulated Depreciation - Equipment.............28,000 Advertising Expense.......................................21,000 Cash............................................................15,000 Common Stock............................................. 42,000 Dividends..................................................... 14,000 Depreciation Expense..................................... 12,000 Equipment....................................................210,000 Insurance Expense........................................ 3,000 Note Payable, due 6/30/12........................... 70,000 Prepaid Insurance (12-month policy)................. 6,000 Rent Expense................................................. 17,000 Retained Earnings (1/1/11).............................. 60,000 Salaries Expense............................................. 32,000 Service Revenue............................................133,000 Supplies.......................................................... 4,000 Supplies Expense.............................................. 6,000 What are total current liabilities at December 31, 2011? A. $70,000 B. $18,000 C. $88,000 D. $0

C. $88,000

On a classified balance sheet, current assets are customarily listed A. in alphabetical order B. in the order of acquisition C. in the order of liquidity D. with the largest dollar amounts first

C. in the order of liquidity

The balance in the income summary account before it is closed will be equal to A. zero. B. the ending balance in the retained earnings account. C. the beginning balance in the retained earnings account. D. the net income or loss on the income statement.

D. the net income or loss on the income statement.