Principles of Accounting Exam 1 (quiz 1 &2)
In a statement of owner's equity, decreases in Owner, Capital result from ________. A:net losses B:revenues earned C:gains on sale of land D:net income
A:net losses
The account title used for recording a written promise that a customer will pay the business a fixed amount of money and interest by a certain date in the future is ________. A: Prepaid Note B: Notes Receivable C: Accounts Receivable D:Notes Payable
B: Notes Receivable
Which of the following is a liability account? A: Cash B: Unearned Rent C: Prepaid Advertising D: Building
B: Unearned Rent
Which of the following is true of assets? A: Assets include Cash, Merchandise Inventory, and Accounts Payable B: Assets are something of value the business owns or controls C: Assets can be recorded at the market value if acquired at a bargain. D: Assets do not need to provide future benefit to the business.
B:Assets are something of value the business owns or controls
Which of the following accounts increases with a debit? A:Accounts Payable B:Intrest Payable C:Prepaid Rent D:Owner,Capital
C:Prepaid Rent
When is a trial balance usually prepared? A: at the beginning of an accounting period B: after each entry is journalized C: after the financial statements are prepared D: before the financial statements are prepared
D: before the financial statements are prepared
Journalizing a transaction involves ________. A: calculating the balance in an account using journal entries B: preparing a summary of account balances C: posting the account balances in the chart of accounts D: recording the data only in the journal
D: recording the data only in the journal
Fred Jones, the sole owner of a business, withdraws cash for his personal use. How does this transaction affect the accounting equation? A: The assets increase and liabilities decrease. B: The assets decrease and equity increases C: The assets, liabilities, and equity remain the same. D: The assets decrease and equity decreases.
D:The assets decrease and equity decreases.
The T−account is a summary device that is shaped like a capital T with debits posted on the left side of the vertical line and credits posted on the right side of the vertical line True False
True
The heading of a balance sheet will show the date as a specific date, not a period of time. True False
True
balance sheet data at May 31, 2018, and June 30, 2018,follow: May 31, 2018:Total Assets:$144,000,Total Liabilities:$133,000. June 30, 2018:Total Assets:$231,000 Total Liabilities:$166,000 Begin by identifying the accounting equation and the formula expressed by the statement of owner's equity (the "equity equation"): Accounting equation: Equity equation: For each of the following situations with regard to owner's contributions and withdrawals of the business, compute the amount of net income or net loss during June 2018. (Use a minus sign or parentheses for a net loss.) a. The owner contributed $30,000 to the business and made no withdrawals. Net income (loss) is:______ b. The owner made no contributions. The owner withdrew cash of $6,000. Net income (loss) is______ c. The owner made contributions of $12,000 and withdrew cash of $18,000. Net income (loss) is______
Accounting equation: Assets=Liability+ Equity Equity equation: Capital beginning + owner contribution+ Net income or - Net loss - Owner Withdrawal= Capital a. Net income(loss)is $24,000 b. NET income (loss)is$60,000 c. Net income(loss) is$60,000
A business can be organized as a sole proprietorship, partnership, corporation, or limited−liability company (LLC). True False
True
A trial balance is a list of all of the ledger accounts of a company with their balances at a point in time. True False
True
An asset account is increased by a debit. True False
True
An accounts receivable requires the business to pay cash in the future. True False
False
An owner's withdrawals affect the business's net income or net loss and are recorded as an expense. True False
False
Investors primarily use managerial accounting information for decision−making purposes. True False
False
The SEC is a governmental agency that oversees world−wide financial markets and organizations that set accounting standards. True False
False
When a business makes a cash payment, the Cash account is debited. True False
False
AndersonHandyman Services has total assets for the year of $20,700 and total liabilities of $8,160. Requirements 1. Use the accounting equation to solve for equity. 2. If next year's assets increased by $3,700 and equity decreased by $2,700, what would be the amount of total liabilities for Anderson Handyman Services?
Requirement 1. Assets= Liabilities+ Equity Then the company has equity of $12,540 Requirement 2 Then the company has liabilities of 14,560
Accounting starts with economic activities that accountants review and evaluate using critical thinking and judgment to create useful information that helps individuals make good decisions. True False
True
Assets are something of value that the business owns or has control of. True False
True
Elaine's Inflatables earns service revenue by providing party planning services and inflatable playscapes. Elaine's Inflatables is organized as a sole proprietorship and owned by Elaine Gibson. During the past month, Elaine's Inflatables has the following transactions: a.Gibson contributed $10,000 to the business in exchange for capital. b.Purchased equipment for $5,000 on account. c.Paid $400 for office supplies. d.Earned and received $2,500 cash for service revenue. e.Paid $400 for wages to employees. f.Gibsonwithdrew $1,000 cash. g.Earned $1,000 for services provided. The customer has not yet paid. h.Paid $1,000 for rent. i.Received a bill for $250 for the monthly utilities. The bill has not yet been paid. Indicate the effects of the business transactions on the accounting equation for Elaine's Inflatables. Transaction (a) is answered as a guide.
a Increase asset (cash); Increased equity (Gibsbson, capital) b. Increase asset(equipment);Increase liability(accounts payable) c. Decrease asset(cash); Increase asset(office supplies) d. Increase asset(cash);Increase equity(service revenue) e. Decrease asset(cash);Decrease equity(wages expense) f. Decrease asset(cash);Decrease equity(Gibson, withdrawals) g. Increase asset(accounts receivable);Increase equity(service revenue) h. Decrease asset(cash);Decrease equity(rent expense) i. Increase liability(accounts payable);Decrease equity(utilities expense)
Click a Pix Photography works weddings and prom-type parties. The balance of Welch, Capital was $10,000 at December 31, 2017. At December 31, 2018, the business's accounting records show these balances: InsuranceExpense: $12,000 Accounts Receivable: $5,000 Cash: 41,000 Notes Payable: 11,000 Accounts Payable: 9,000 Welch, Capital, Dec. 31, 2018? Advertising Expense: 3,500 Salaries Expense: 26,000 Service Revenue:90,000 Equipment: 49,500term-25 Welch, Withdrawals:14,000 Owner contribution:31,000 Prepare the following financial statements for Click a Pix Photography for the year ended December 31, 2018: a.Income statement.
a. Prepare Click a Pix's income statement