ACCNT 1303 Chap. 2
Which financial statement is a representation of the accounting equation?
Balance Sheet
What is the correct order in which to prepare the three financial statements?
Income Statement; Statement of Owner's Equity; Balance Sheet
Owner's equity is alternatively referred to as which of the followng?
Net worth
If the income statement covered a six-month period ending on Nov. 20, 2019, the third line of the income statement heading would read
Six-month Period Ended Nov. 30, 2019
If a business issues a check for $100 to purchase office supplies, what is the effect on the accounting equation?
Total Assets will remain the same
Which of the following is a liability account?
accounts payable
When equipment is purchased on credit?
assets and liabilities increase
Amounts that a business must pay in the future are known as
liabilities
The debts or obligations of a business are known as its ____________________
liabilities
On the income statement, revenues minus expenses equals _____________ for a period of time.
net income or net loss
The account used to record amounts that will be collected from charge account customers in the future is referred to as ____________
Accounts receviable
At the end of the first month of operations for Jackson's Catering Service, the business had the following accounts: Cash, $20,750; Prepaid Rent, $500; Equipment, $7,500 and Accounts Payable $4,000. By the end of the month, Jackson's had earned $32,900 of Revenues, and used $1,870 of Utilities Expenses, $4,150 of Rent Expense and $3,640 of Salaries Expenses. Calculate the net income to be reported by the company for this first month.
Answer: $23,240 Explanation: Revenues $32,900 − Utilities Expense $1,870 − Rent Expense $4,150 − Salaries Expense $3,640 = Net Income $23,240.
At the end of the first month of operations for SloMo Delivery Service, the business had the following accounts: Accounts Receivable, $12,400; Prepaid Insurance, $400; Equipment, $28,300 and Cash, $22,700. On the same date, SloMo owed the following creditors: Simpson Supply Company, $19,100; Allen Office Equipment, $16,600. The total amount of Liabilities is:
Answer: $35,700 Explanation: Liabilities = Simpson Supply Company, $19,100 + Allen Office Equipment, $16,600 = $35,700.
If the following are the only accounts of Jones Supply Company, what is the missing Supplies balance?Cash: $8,000Supplies: ?????Accounts Payable: $4,000John Smith, Capital: $9,000
Answer: $5,000 Explanation: The fundamental accounting equation dictates that assets (cash & supplies) equal liabilities (accounts payable) plus owner's equity (John Smith, capital). Therefore $8,000 + $5,000 = $4,000 + $9,000
If the following are the only accounts of Jones Supply Company, what is the missing Supplies balance?Cash: $9,130Supplies: ?????Accounts Payable: $4,000John Smith, Capital: $10,430
Answer: $5,300 Explanation: The fundamental accounting equation dictates that assets (cash & supplies) equal liabilities (accounts payable) plus owner's equity (John Smith, capital). Therefore $9,130 + $5,300 = $4,000 + $10,430
The Daniel Insurance Agency reported revenues of $30,000 and expenses of $32,460 for the current period. What was the final figure reported on the company's income statement?
Answer: $2,460 net loss Explanation: Revenues ($30,000) minus expenses ($32,460) equals net loss (−$2,460). The calculation would have been categorized as net income if it was a positive amount.
When the owner withdraws cash for personal use
assets decrease and owner's equity decreases
The ___________ reports the changes that have occurred in the owner's financial interest during the reporting period.
statement of owner's equity
Owner's equity is:
the financial interest of the owner of a business
Which of the following is an example of an expense?
the payment of the monthly utility bill
