Accounting Principles 1

A company is considering purchasing a parcel of land that was originally acquired by the seller for $91,000. While the land is currently offered for sale at $162,000, it is considered by the purchaser as easily being worth $152,000, and is finally purchased for $149,000. The land should be recorded in the purchaser's book's at

$149,000

In its first year of operations, Grace Company reports the following: Revenue of $60,000 ($52,000 cash received from customers); Expenses of $35,000 ($31,000 cash paid toward expenses). Net Income under the Accrual basis of accounting is

$25,000 (60,000 - 35,000 = ?)

On May 31 of the current year, the assets and liabilities of Riser, Incorporated are as follows: Cash $20,500; Accounts Receivable $7,250; Supplies $650; Equipment $12,000; Accounts Payable $9,300. What is the amount of Equity as of May 31 of the current year?

$31,100 (Assets - Liabilities = ?)

If equity is $428,000 and liabilities are $202,000, then Assets equal

$630,000

Fragment Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. Fragment collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry entry made on December 31 would be

A Debit to Unearned Revenue and a Credit to Rent Revenue for $2,400

Which of the following statements is True?

A post-closing trial balance should include only permanent accounts

A Credit is used to record a Decrease in which of the following accounts?

Accounts Receivable

Identify the account below that is classified as an asset in a company's chart of accounts

Accounts Receivable

Adjusting Entries:

Affect Both Income Statement and Balance Sheet Accounts

The accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the

Business Entity Assumption

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n)

Contra Account

A company receives $10,500 cash for preforming landscaping services. Which of the following general journal entries will the company make to record this transaction?

Debit Cash $10,500; Credit Landscaping Revenue $10,500

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method, and only prepares adjustments at year-end. The adjusting entry needed to record annual depreciation is:

Debit Depreciation Expense $15,000; Credit Accumulated Depreciation $15,000

Prior to recording adjusting entries, the Office Supplies account had a $379 Debt balance. A physical count of the supplies showed $104 of unused supplies available. The required adjusting entry is

Debit Office Supplies Expense $275 and Credit Office Supplies $275

Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,700 in dividends during the current year. The entry to close the dividends account at the end of the year is:

Debit Retained Earnings $5,700; Credit Dividends $5,700

A company purchased $20,100 of equipment on credit. The journal entry to record this transaction consists of a

Debit to Equipment for $20,100; Credit to Accounts Payable for $20,100

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

Expense Recognition (Matching) Principle

A business's source documents:

Identify and describe transactions and events entering the accounting system

The temporary account used only for the closing process that contains a credit for total revenues (and gains) and a debit for total expenses (and losses) is the

Income Summary Account

A Debit:

Is the Left side of a T-account

Unearned Revenues are

Liabilities recorded when customers pay in advance for products or services

When expenses exceed revenues, the result is called

Net Loss

If a company uses $1,500 of its cash to purchase supplies, the effect on the accounting equation would be

One Asset increases $1,500 and another Asset decreases $1,500, cause no effect

The primary objective of financial accounting is to

Provide accounting information that serves external users

If Dallas Company billed a client for $10,000 of consulting work completed, the accounts receivable assets increases by $10,000 and

Revenue Increases $10,000

An example of an investing activity on a statement of cash flows is

Selling Inventory