Quiz Questions (accounting) CH. 1-4

A revenue account: is decreased by credits. has a normal balance of a debit. is increased by debits. is increased by credits.

is increased by credits

At December 31, 2022, before any year-end adjustments, Metlock, Inc. Prepaid Insurance account had a balance of $5220. It was determined that $2340 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be: $2340. $2520. $5220. $2880.

$2340

Using the following balance sheet and income statement data, what is the debt to assets ratio? Current assets $27000 Net income$42400 Current liabilities 13400 Stockholders' equity 77200 Average assets 157500 Total liabilities 41400 Total assets 133000 Average common shares outstanding was 14900. 31 percent 58 percent 9 percent 22 percent

31% (pay attention to debt to assets vs assets to debt ratios)

At September 1, 2022, Wildhorse Co. reported Retained Earnings of $456840. During the month, Wildhorse generated revenues of $64800, incurred expenses of $38880, purchased equipment for $16200 and paid dividends of $6480. What is the balance in Retained Earnings at September 30, 2022? $460080 credit $476280 credit $456840 debit $25920 credit

476280 credit

f a company fails to adjust an Unearned Rent Revenue account for revenue that should be recognized, what effect will this have on that month's financial statements?: Assets will be overstated and revenues will be understated. Liabilities will be overstated and revenues will be understated. Assets will be understated and revenues will be understated. Liabilities will be understated and revenues will be understated.

Liabilities will be overstated and revenues will be understated.

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause: an overstatement of expenses and an overstatement of liabilities. an understatement of expenses and an understatement of liabilities. an overstatement of assets and an overstatement of liabilities. net income to be understated.

an understatement of expenses and an understatement of liabilities.

When a company performs a service but has not yet received payment, it: debits Accounts Receivable and credits Service Revenue. debits Service Revenue and credits Accounts Payable. debits Service Revenue and credits Accounts Receivable. makes no entry until cash is received.

debits accounts receivable and credits Service Revenue

Skysong, Inc. purchased a one-year insurance policy in February 2021 for $34440. The insurance policy is in effect from March 2021 through February 2022. If the company neglects to make the proper year-end adjustment for the expired insurance: net income and assets will be overstated by $28700. net income and assets will be overstated by $5740. net income and assets will be understated by $5740. net income and assets will be understated by $28700.

net income and assets will be overstated by $28700. (34440 x 10)/12 = 28700

At September 1, 2017, Five-O Inc. reported retained earnings of $136,000. During the month, Five-O generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the balance in retained earnings at September 30, 2017?: $137,000 credit $136,000 debit $142,000 credit $8,000 credit

$142,000

During February 2022, its first month of operations, the owner of Tamarisk, Inc. invested cash of $104000. Tamarisk had cash sales of $20800 and paid expenses of $36400. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28, 2022? $88400 debit $15600 credit $67600 credit $124800 debit

$88400 debit

Blue Spruce Corp. started the year with $69600 in its Common Stock account and a credit balance in Retained Earnings of $51000. During the year, the company earned net income of $55700, and declared and paid $23200 of dividends. In addition, the company sold additional common stock amounting to $32500. As a result, the balance in retained earnings at the end of the year would be: $83500. $153100. $116000. $185600.

83500

which of the following statements is true: Amounts received from issuing stock are revenues. Amounts paid out as dividends are reported on the income statement. Amounts received from issued stock are reported on the income statement. Amounts paid out as dividends are not expenses.

Amounts paid as dividends are not expenses

Sunland Company employs a 5-day workweek and a September 30 year-end. Normal weekly wages amount to $38160. If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end?: Dr Salaries and Wages Expense $22896Cr Cash $22896 Dr Salaries and Wages Expense $38160Cr Salaries andWages Payable $38160 Dr Salaries and Expense $7632Cr Salaries and Wages Payable $7632 Dr Salaries and Wages Expense $22896Cr Salaries and Wages Payable $22896

Dr Salaries and Wages Expense $22896 Cr Salaries and Wages Payable $22896

Which of the following describes an accrued expense? Incurred and already paid or recorded. Incurred but not yet paid or recorded. Paid and recorded in an asset account after they are used or consumed. Paid and recorded in an asset account before they are used or consumed.

Incurred but not yet paid or recorded

Ending retained earnings for a period is equal to beginning: Retained earnings + Net income - Dividends. Retained earnings - Net income - Dividends. Retained earnings - Net income + Dividends. Retained earnings + Net income + Dividends.

Retained earnings + net income - dividends

A trial balance will not balance if: A trial balance will not balance if the purchase of supplies on account is debited to Supplies and credited to Cash. a correct journal entry is posted twice. a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100.

For the basic accounting equation to stay in balance, each transaction recorded must: affect the same number of asset and liability accounts. affect two or less accounts. always affect exactly two accounts. affect two or more accounts.

affect two or more accounts

An adjusting entry: affects a balance sheet account and an income statement account. affects two income statement accounts. is always a compound entry. affects two balance sheet accounts.

affects a balance sheet account and an income statement account.

If total liabilities increase by $5,000 then: assets and stockholders' equity each increase by $2,500. assets decrease by $5,000. stockholders' equity increase by $5,000. assets increase by $5,000, or stockholders' equity decrease by $5,000.

assets increase by $5,000, or stockholders' equity decrease by $5,000.

Which accounts normally have debit balances? Assets, expenses, and dividends Assets, liabilities, and dividends Assets, expenses, and revenues Assets, expense, and retained earnings

assets, expenses, and dividends

On July 1 the Wildhorse Co. paid $25920 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Wildhorse Co. is: debit Rent Expense, $25920; credit Prepaid Rent, $21600. debit Rent Expense, $4320; credit Prepaid Rent, $4320 debit Rent Expense, $25920; credit Prepaid Rent, $4320. debit Prepaid Rent, $4320; credit Rent Expense, $4320.

debit Rent Expense, $4320; credit Prepaid Rent, $4320

The Skysong, Inc. purchased $6970 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1230 on hand. The adjusting entry that should be made by the company on June 30 is: debit Supplies, $5740; credit Supplies Expense, $5740. debit Supplies, $1230; credit Supplies Expense, $1230. debit Supplies Expense, $5740; credit Supplies, $5740. debit Supplies Expense, $1230; credit Supplies, $1230.

debit Supplies Expense, $5740; credit Supplies, $5740

Adjustments for unearned revenue: increase liabilities and increase revenues. increase assets and increase revenues. decrease liabilities and increase revenues. decrease revenues and decrease assets.

decrease liabilities and increase revenues

Dividends paid: increase expenses. decrease retained earnings. increase assets. decrease revenues.

decrease retained earnings

The retained earnings statement would not show: the ending retained earning balance. revenues and expenses. the retained earnings beginning balance. dividends.

revenues and expenses