MGMT 212

Bubbles, Inc. took out a 1-year, 4%, $200,000 loan on May 31, 2020. Interest is due upon maturity of the loan. The loan and interest must be paid back on May 31, 2021. As of December 31, 2020, what amount, if any, should Bubbles, Inc. report for interest payable?

$4,667

Which of the following accounts is listed in a post-closing trial balance?

Accounts Receivable

Which of the following regarding adjusting entries is correct?

Adjusting entries are needed because we use accrual-basis accounting

A trial balance can best be explained as a list of:

All accounts and their balances at a particular date

Which financial statement shows a company's assets and liabilities?

Balance sheet

A company received a bill for newspaper advertising services, $400. The bill will be paid in 10 days. How would the transaction be recorded today?

Debit Advertising Expense $400, credit Accounts Payable $400

Which of the following describes the cost of selling to customers?

Expenses.

A debit to an account balance always results in the balance increasing.

False

Borrowing cash from the bank causes assets to decrease and liabilities to increase.

False

Which of the following transactions causes an increase in total liabilities?

Having employees work in the current month, but not paying them until the following month

Dani's Cat Washing Service receives a request for services from a customer. The date is June 10th. The service is scheduled for June 16, and the entire service is performed on that date. However, the customer pays one week later on June 23. According to the revenue recognition principle, on which date should Dani record service revenue?

June 16 (date of service)

Dani's Cat Washing Service receives a request for services from a customer. The date is June 10th. The service is scheduled for June 16, and the entire service is performed on that date. However, the customer pays one week later on June 23. According to the cash basis accounting, on which date should Dani record service revenue?

June 23 (date of payment)

Which definition best describes financial accounting?

Measuring a company's business activities and communicating thosemeasurements to external parties

The assumption that amounts are reported using a common scale (such as the dollar in the United States) is the:

Monetary Unit Assumption

Which of the following transactions causes a decrease in stockholders'equity?

Paying salary expense for the current month

Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits?

Prepare a trial balance

T Rex Survival Co. purchases one year of insurance on November 1 for $12,000 ($1,000 per month), debiting Prepaid Rent. On December 31, T Rex would record the following year-end adjusting entry:

Rent Expense 2,000 Prepaid Rent 2,000

A company had a credit entry in its Cash account during the period. Which of the following transactions may have given rise to the entry?

Repayment of debt

A classified balance sheet ______.

Shows subtotals for current assets and current liabilities

A list of all account names used to record transactions of a company is referred to as a chart of accounts.

True

Accounting information is used by investors to decide whether to invest in a company's stock.

True

Financing activities are transactions involving external sources of funding.

True

If total liabilities of a company equal $200,000 and total stockholders' equity equals $500,000, then total assets equal $700,000.

True

Investing activities include the purchase and sale oflong-term resources.

True