Accounting chapter 1 and 2

Get in​ Shape, a healthy living​ magazine, collected $ 480,000 in subscription revenue on May 31. Each subscriber will receive an issue of the magazine in each of the next 12​ months, beginning with the June issue. The company uses the accrual method of accounting. What is the balance in the Unearned Revenue account as of December​ 31?

$200,000

On January​ 1, 2015, the Accounts Receivable of​ Linda, Inc. had a debit balance of​ $180,000. During​ January, the company provided services for​ $700,000 on account. The company collected​ $230,000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of​ January?

$650,000

The following Office Supplies account information is available for​ Able, Inc. Beginning balance $ 1,200 Office Supplies expensed 6,000 Ending balance 4,000 From the above​ information, calculate the amount of office supplies purchased.

$8,800

Anthony Delivery Service has a weekly payroll of $ 32,000 . December 31 falls on Tuesday and Anthony will pay its employees the following Monday​ (January 6) for the previous full week. Assume that Anthony has a five day workweek and has an unadjusted balance in Salaries Expense of $ 885,000 . What is the December 31 balance of Salaries Expense after adjusting entries are recorded and​ posted?

$897,800

Which of the following is a characteristic of a corporation

A corporation is owned by stockholders

Which of the following statements is true of accrual basis​ accounting?

Accrual basis accounting is required by Generally Accepted Accounting Principles​ (GAAP).

Regarding a classified balance​ sheet, which of the following statements is​ correct?

Assets are listed in the order of their liquidity.

what is the stockholders equity equation?

Beginning equity + common stock issued + net income or - net loss - dividends = ending equity

Which of the following accounts will be closed by debiting the Income Summary​ account?

Depreciation Expense

Which of the following statements is true of​ expenses?

Expenses decrease​ equity, so an expense​ account's normal balance is a debit balance.

in a corporation, the board of directors is elected by the chairperson of the company T OR F

FALSE

As per the economic entity assumption, an organization and its owners should be seen as the same entity T OR F

False

GAAP refer to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to​ ________

Generally Accepted Accounting Principles

Assume that Global Cleaning Service performed cleaning services for a department store on account for​ $180. How would this transaction affect Global Cleaning​ Service's accounting​ equation?

Increase both assets and equity by​ $180

Regarding the separation of corporate ownership and management, which of the following is a true statement?

Stockholders own the business, but a board of directors appoints corporate officers to manage the business

In a sole proprietorship, the owner is personally liable for the debts of the business. T OR F

TRUE

Which of the following statements is true of a sole proprietorship?

The sole proprietor is personally liable for the liabilities of the business.

Which of the following accounts would be used under the accrual basis of​ accounting, but not under cash basis​ accounting?

Unearned Revenue

York Casting Services started the year with total assets of​ $110,000 and total liabilities of​ $50,000. The revenues and the expenses for the year amounted to​ $140,000 and​ $50,000, respectively. During the​ year, the company did not issue any common​ stock, but it distributed dividends of​ $70,000. Calculate the amount of increase or decrease in​ stockholders' equity for the year.

a $20,000 increase

definition of account

a detailed record of all decreases and increases that have occurred in a particular asset, liability, or equity during a period

define compound journal entry

a journal entry that is characterized by having multiple debts and or credits

define chart of accounts

a list of all accounts with their account numbers

define trial balance

a list of all accounts with their balances at some point in time

define journal

a record of transactions in date order

An adjusting entry that credits Salaries Payable is an example of​ a(n) ________.

accrued expense

The financial statements are prepared from the​ ________.

adjusted trial balance

asset

an economic resource that is expected to be of benefit in the future

accounting equation

assets= liabilities +assets

Which of the following accounts decreases with a​ credit?

cash

The entries that transfer the​ revenue, expense, and dividends balances to the Retained Earnings account to prepare the​ company's books for the next period are called​ ________.

closing entries

The taxable income of a sole proprietorship is​ ________.

combined with the personal income of the proprietor

Dogwood, Inc. earned revenues of $ 10,000 and incurred expenses of $ 7,500. The company declared and paid cash dividends of $ 1,000. What is the balance in the Income Summary account prior to closing net income or loss to the Retained Earnings​ account?

credit balances of $2,500

Classic​ Artists' Services signed a contract with a maintenance service company to maintain a building that Classic will use for office purposes. The contract states that the work will begin work on February 1 and end on May 31. Classic​ Artists' will pay the maintenance service company $ 8,000 at the end of May. It accrues Maintenance Expense at the end of every month. What is the balance in the Accounts Payable account for amounts owed to the maintenance service company at the end of​ March?

credit balances of $4,000

Assets that are expected to be converted to​ cash, sold, or used up during the next 12​ months, or within the​ business's normal operating cycle if the cycle is longer than a​ year, are called​ ________ assets.

current

Salaries​ Payable, Interest​ Payable, and Unearned Revenue are examples of​ ________

current liabilities

For each of the users of accounting​ information, identify whether the user is an external decision maker​ (E) or an internal decision maker​ (I):

customer (E) company manager (I) internal revenue service (E) lender (E) investor (E) controller (I) cost accountant (I) SEC (E)

liability

debts owe to creditors

cahs dividends of $1,000 paid to stockholders

decrease asset: cash decrease equity: dividends

paid $1,000 for rent

decrease asset: cash decrease equity: rent expense

paid $400 wages to employees

decrease asset: cash decrease equity: wages expense

paid $400 for office supplies

decrease asset: cash increase asset: office supplies

expense

decreases in equity that occur in the course of selling goods or services

Corporations pay their own income tax on corporate income. Stockholders pay personal income tax on the dividends received from corporations. This is an example of ________.

double taxation

Corporations pay their own income tax on corporate income. Stockholders pay personal income tax on the dividends received from corporations. This is an example of​ ________.

double taxation

net loss

excess of total expenses over total revenue

net income

excess of total revenue over total expenses

Which of the following organizations is responsible for the creation and governance of accounting standards in the United​ States?

financial accounting standards board

Revenues and expenses are transferred to the​ ________ account before their final transfer into the Retained Earnings account.

income summary

earned $1,000 for services provided. customer has not paid yet

increase asset: accounts receivable increase equity: service revenue

earned and received $2,500 cash for service revenue

increase asset: cash decrease equity: service revenue

Purchased equipment for $ 5,000 on account.

increase asset: equipment increase liability: accounts payable

Investors contributed $ 10,000 to the corporation in exchange for common stock

increase assset: cash increase equity: common stock

received a bill for $ 250 for the monthly utilities. The bill has not yet been paid.

increase liability: accounts payable decrease equity: utilities expense

identify if this would be recorded as debit or credit

increase to accounts receivable (DR) decrease to unearned revenue (DR) decrease to cash (CR) increase to interest expense (DR) increase to salaries payable (CR) decrease to prepaid rent (CR) increase to common stock (CR) increase in notes recieveable (DR) decrease to accounts payable (DR) increase in interest revenue (CR)

revenue

increases in equity that occur over the course of selling goods or services

Managerial accounting provides information to​ ________.

internal decision makers

Transactions are first record in a​ ________.

journal

Which of the following is a measure of how quickly an item can be converted to​ cash?

liquidity

The accounting principle that ensures all expenses are recorded during the period when they are incurred and offsets those expenses against the revenues of the period is called the​ ________ principle.

matching

In a limited−liability company, the ________

members pay income tax on their share of earnings

Adjusting entries are needed to correctly measure the​ ________

net income (loss) on the income statement

Which of the following accounts decreases with a​ debit?

notes payable

identify as asset, liability, or equity

notes receivable (A) common stock (E) prepaid insurance (A) notes payable (L) rent revenue (E) taxes payable (L) rent expense (E) furniture (A) dividends (E) unearned revenue (L)

An account that is not closed at the end of the period is called​ a(n) _______

permanent account

Members of a Limited−liability company (LLC) are not

personally liable for the debts of the business

statement of cash flows

reports on a businesses cash receipts and cash payments during a period

balance sheet

reports on an entity's assets, liabilities, and stockholders equity as of a specific date

income statement

reports on an entity's revenues, expenses, and net income or loss for the period

statement of retained earnings

reports on how a company retained earnings balanced changed from the beginning to the end of a period

define normal balance

side of an account where increases are recorded

Which of the following is a major reason why corporate ownership is popular in the United​ States?

stockholders have limited liability for the debts of the corporation.

he company records furniture at its cost of​ $9,000, not its market value of​ $13,000

the cost principle

Michael's personal assets are not recorded on the​ company's balance​ sheet_________________

the economic entity asumption

Michael expects the company to remain in operations for the foreseeable​ future

the going concern assumption

define debit

the left side of the T account

he company records its financial statements in U.S.​ dollars:________

the monetary unit assumption

define ledger

the record holding of all the accounts of a business, the changes in those accounts, and their balance

define credit

the right side of the T account

Which of the following statements is true of a sole​ proprietorship?

the sole proprietor is personally liable for the liabilities of the business

define posting

transferring amounts from the journal to ledger

Posting a transaction means​ _______

transferring data from the journal to the ledger

Mutual agency of the owners is not present in a corporation as it is in a partnership T OR F

true

If a company is using accrual basis​ accounting, when should it record​ revenue?

when services are​ performed, even though cash may be received at a later date