Test 1 Financial Acc

The following financial information is from Bronco Company. All debt is due within one year unless stated otherwise. Retained Earnings $66,700 Supplies 38,400 Equipment 73,500 Accounts Receivable 9,200 Deferred Revenue 5,800 Accounts Payable 15,000 Common Stock 23,000 Notes Payable (due in 18 months) 28,000 Interest Payable 6,500 Cash 23,900 What is the amount of current liabilities?

$27,300

Eve's Apples opened for business on January 1, 2018, and paid for two insurance policies effective that date. The liability policy was $72,000 for eighteen-months, and the crop damage policy was $21,600 for a two-year term. What was the balance in Eve's Prepaid Insurance account as of December 31, 2018?

$34,800

DW has an ending retained earnings balance of $52,500. If during the year DW paid dividends of $4,900 and had net income of $22,500, then what was the beginning retained earnings balance?

$34,900

The retained earnings account had a beginning credit balance of $26,350. During the period, the business had a net loss $12,850, and the company paid dividends of $8,500. The ending balance in the retained earnings account is:

$5,000.

The following table contains financial information for Trumpeter Inc. before closing entries: Cash $12,900 Supplies 4,600 Prepaid Rent 3,900 Salary Expense 4,700 Equipment 66,400 Service Revenue 29,800 Miscellaneous Expenses 20,000 Dividends 3,700 Accounts Payable 4,300 Common Stock 67,700 Retained Earnings 14,400 What is Trumpeter's net income?

$5,100

Use the following appropriate amounts to calculate net income: Revenues, $10,400; Liabilities, $4,200; Expenses, $4,800; Assets, $17,200; Dividends, $1,900.

$5,600

The following financial information is from Shovels Construction Company. Accounts payable $14,000 Buildings 88,000 Cash 11,400 Accounts receivable 11,300 Sales tax payable 4,500 Retained earnings 45,800 Supplies 41,200 Notes payable (due in 18 months) 34,000 Interest payable 2,600 Common stock 51,000 What is the amount of current assets, assuming the accounts above reflect normal activity?

$63,900

A company reports the following amounts: Assets = $7,300; Liabilities = $2,800; Stockholders' equity = $4,500; Dividends = $600; Revenues = $6,000; and Expenses = $2,700. What amount is reported for net income?

3,300

The entry to close the expense accounts includes:

A debit to Retained Earnings.

Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n):

Accrued expense.

The financial statement that shows the financial position of a company at a specific point in time is called the:

Balance Sheet.

A company collects $4,000 cash from customers for services previously provided on account.

Cash (Debit 4,000) Accounts receivable (Credit 4,000)

A company receives $7,000 cash in advance from customers for services to be provided next year.

Cash (Debit 7,000) Deferred revenue (Credit 7,000)

Operating cash flows include which of the following?

Cash paid for supplies.

Financing cash flows include which of the following?

Cash received from the issuance of common stock.

Providing services to customers for cash would be recorded with a:

Credit to Service Revenue.

During the year, Cheng Company paid salaries of $22,000. In addition, $8,800 in salaries has accrued by the end of the year but has not been paid. The year-end adjusting entry would include which one of the following?

Credit to salaries payable for $8,800

Childers Service Company provides services to customers totaling $2,400, for which it billed the customers. How would the transaction be recorded?

Debit accounts receivable $2,400, credit service revenue $2,400

Which of the following is considered cash for financial reporting purposes?

Debit card sales. Coins and currency. Checks received from customers. -All of the above.

Summer Leasing received $11,400 for 24 months rent in advance. How should Summer record this transaction?

Debit cash; credit deferred revenue

A company purchases new equipment for $36,000 cash on August 1, 2018. At the time of purchase, the equipment is expected to be used in operations for four years (48 months) and have no resale or scrap value at the end. The company depreciates the equipment evenly over the 48 months ($750/month) Record the adjusting entry for depreciation on December 31, 2018

Depreciation expense (Debit 3,750) Accumulated depreciation (Credit 3,750)

A company pays $2,300 dividends to its stockholders.

Dividends (Debit 2,300) Cash (Credit 2,300)

A company purchases machinery for $20,000 cash.

Equipment (Debit 20,000) Cash (Credit 20,000)

The revenue recognition principle states that companies typically record revenue:

In the period in which we provide goods and services to customers.

Under cash-basis accounting, companies typically record revenue:

In the period in which we received cash from customers for goods and services.

A company purchases one year of flood insurance in advance on May 1, paying $24,000 ($2,000/month). Record the adjusting entry on December 31

Insurance expense (Debit 16,000) Prepaid insurance (Credit 16,000)

A company borrows $28,000 with 8% interest on October 1, 2018. This amount plus interest is due on September 30, 2019. Record the adjusting entry on December 31, 2018.

Interest expense (Debit 560) Interest payable (Credit 560)

Who ultimately is responsible for properly applying GAAP? The company's:

Management

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded?

November 1.

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting?

November 15.

A company purchases office supplies on account for $7,200.

Office supplies (Debit 7,200) Accounts payable (Credit 7,200)

Which of the following transactions decreases stockholders' equity?

Pay salaries for the current period

Which of the following is an example of a prepaid expense?

Rent has been purchased in advance.

Accrued revenue

Revenue is recognized before cash is received.

Which of the following accounts is not listed in a post-closing trial balance?

Service Revenue.

Which of the following accounts normally has a credit balance?

Service Revenue.

At the beginning of the period, a company reports a balance in office supplies of $550. During the period, the company purchases an additional $3,400 of office supplies for cash. By the end of the period, only $1,000 of office supplies remains.

Supplies expense (Debit 2,950) Supplies (Credit 2,950)

Which of the following accounts normally has a debit balance?

Supplies.

The balance in retained earnings represents:

The amount of income earned over the company's life minus the dividends paid to shareholders over the company's life.

Who is ultimately responsible for the establishment and success of a company's internal control system?

The company's top executives.

The net income formula

is calculated by subtracting total expenses from total revenues.

Which of the following represents a resource of the company?

Asset.

All transactions related to a particular item over a period of time are summarized in a(n):

Account.

A company provides services to customers on account, $4,400.

Accounts receivable (Debit 4400) Service revenue (Credit 4400)

Financial statements are prepared from which of the following trial balances?

Adjusted trial balance.

Which of the following equations correctly represents the fundamental accounting equation?

Assets = Liabilities + Stockholders' Equity.

A company issues common stock for $29,000 cash.

Cash (Debit 29,000) Common Stock (Credit 29,000)

Investing cash flows include which of the following?

Cash received from the sale of a used company truck.

A list of all account names used to record transactions of a company is referred to as a:

Chart of accounts.

Expenses represent:

Costs of providing products or services to customers.

Paying dividends to stockholders would be recorded with a:

Debit to Dividends.

The purchase of supplies on account would be recorded with a:

Debit to Supplies.

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting?

December 20

A credit to Cash will:

Decrease assets

A debit to Salaries Expense will:

Decrease stockholders' equity.

Suppose a customer rents a vehicle for four months from Rent-A-Car on October 1, paying $4,600 ($1,150/month). Record Rent-A-Car's adjusting entry on December 31

Deferred revenue (Debit 3,450) Service revenue (Credit 3,450)

Consider the following T-account for Accounts payable. Accounts Payable 10,700 8,100 4,600

Ending Balance 7,200

After transactions are recorded in the journal, they are posted to the:

General Ledger

The term GAAP stands for:

Generally Accepted Accounting Principles.

After the closing entries are posted to the accounts, all temporary accounts:

Have zero balances.

Under accrual-basis accounting, companies typically report expenses:

In the same period as the revenue they help to generate.

In which financial statement does a company report its revenues?

Income Statement.

In which financial statement does a company report its expenses?

Income statement

Financial accounting provides information primarily to:

Investors and creditors.

Transactions are recorded using debits and credits in a(n):

Journal

Amounts owed to creditors are reported as:

Liabilities.

Closing entries are:

Made to transfer the balances of temporary accounts to retained earnings.

Purchasing land with cash would have what effect on the accounting equation?

No effect.

Which of the following transactions decreases total assets?

Pay dividends to stockholders.

A company pays $12,000 to purchase a one-year insurance policy.

Prepaid insurance (Debit 12000) Cash (Credit 12000)

Which of the following transactions increases total assets?

Provide services to customers on account.

Which of the following transactions increases total liabilities?

Purchase office supplies on account.

Suppose a company rents office space for one year, paying $36,000 ($3,000/month) in advance on September 1. Record the adjusting entry on December 31

Rent expense (Debit 12,000) Prepaid rent (Credit 12,000)

A company pays its employees $9,800 every two weeks ($700/day). The current two-week pay period ends on December 26, 2018, and employees are paid $9,800. The next two-week pay period ends on January 9, 2019, and employees will be paid $9,800. Record the adjusting entry on December 31, 2018.

Salaries expense (Debit 3,500) Salaries payable (Credit 3,500)

Effective internal control over cash includes the requirement that:

The person who makes deposits should NOT record the deposits.

Which of the following correctly describes a list of accounts and their balances, showing that debits equal credits?

Trial Balance