Accounting 231 Exam 1 PreTest

Extra Credit Question - refer to packet

$866 Net Income

What account is considered an asset?

Accounts Receivable

Expenses paid in advance such as rent and insurance are classified as prepaid expenses. What type of account is prepaid rent?

Assets

What is NOT part of Stockholder's Equity?

Money lent to a business

What is NOT a liability?

Rent Expense

The _____ account tracks a company's cumulative earnings less dividends.

Retained Earnings

What is a trial balance?

a list of all the accounts of a business and their balances; one purpose is to verify that total debits equal total credits

The difference between the original cost of office equipment and accumulated deprecation-office equipment is called:

book value

Revenues, Accounts Receivable, and Common Stock have normal balances of:

credit, debit, and credit, respectively

The _____ keeps a running balance of an individual account.

general ledger

The matching principle in accounting requires the matching of:

revenue earned with the expenses incurred to produce the revenue

A business purchases a computer for cash. What effect does this have on the accounting equation?

there is no change in Total Assets

The total reveunes of $6,700, total expenses of $3,900 and dividends of $900 were recorded in the closing entries. The net income for the month was:

$2,800

Crispy's is famous for their cupcakes. Crispy's Total Assets were $350,000 and Total Liabilities were 135,500. How much was Crispy's Stockholder's Equity?

$214,000

A piece of equipment cost $700 and has a salvage value of $500. If it has a 5-year life, the annual depreciation expense under straight-line depreciation would be:

$40

Given the following T - Account information, what is the balance of the supplies account (refer to packet)?

$475 debit balance

In 2016 Nike's net income was $3.8B. They recorded $32.4B in Revenues and $28.6B in expenses. Their closing entry for 2016 is:

DR Revenue: $32.4B CR Expenses: $26.8B CR Retained Earnings: $3.8B

What is a disadvantage of the corporate form of business?

Double taxation

An example of accounts with normal debit balances would be:

Expenses

The ______ issues pronouncements that are guidelines for accounting practice in the U. S.

FASB

The guidelines that describe the rules of accounting in the U. S. are called:

GAAP

The guidelines that describe the rules of accounting internationally are called:

IFRS

If revenues are recognized and recorded when earned, the company is using the:

accrual basis of accounting

Liabilities are defined as:

amounts owed to lenders or creditors

Annual depreciation on equipment at Charmed, Inc. is $1,800. The adjusting entry to record one month's worth of depreciation would be:

debit Deprecation Expense $150, credit Accumulated Depreciation $150

At the beginning of the period, the Supplies account has a balance of $700. At the end of the period, the balance in the account was $475. The adjusting entry would be:

debit Supplies Expense, $225; credit Supplies, $225

Your company performed a service for a client and charged $10,000 which was paid in cash at the time of service. The journal entry to record this transaction is a:

debit to Cash and a credit to Revenue for $10,000

In December 2016 Trivago had an IPO (initial public offering) in which they received $300m in cash from investors in exchange for Trivago common stock. To record the sale of stock Trivago would record what journal entry?

debit to Cash for $300m and a credit to Common Stock for $300m

Your company purchases office equipment for $1,300 on account from Supplies-for-Less. The journal entry you would record is a:

debit to Office Equipment and a credit to Accounts Payable

Coyote Co. paid $8,000 rent in advance. Coyote Co.'s journal entry would require a:

debit to Prepaid Rent, credit to Cash

Salaries of $1,025 were incurred and paid in cash. The journal entry would include a:

debit to Salaries Expense and a credit to Cash

What happens to Accounts Payable, Taxes Payable, and Notes Payable?

decrease on the debit side, increase on the credit side and are liabilities

Assets are defined as:

economic resources of a company