ACCT 222 CHP 1-4

During its first year of operation, Cade Company experienced the following events. (1) Issued common stock for $7,000 cash. (2) Earned $5,000 of cash revenue. (3) Paid $3,000 of cash expenses. (4) Paid cash dividends amounting to $1,000. After closing on December 31, the balance in the retained earning account would be $2,000. $1,000. zero. $8,000.

$1,000

Kelly Company's unadjusted bank balance on May 31 is $9,500. An analysis of the bank statement revealed $1,400 of deposits in transit and $900 of outstanding checks. In addition, the bank statement showed a $200 NSF check. Based on this information, Kelly's true cash balance is $9,000. $9,800. $10,000. $10,200.

$10,000.

At the end of Year 1, Voss Company had $6,000 of inventory. During the Year 2 the following events occurred: (1) Voss Company purchased $30,000 of inventory with cash. (2) Sold $20,000 of inventory for $28,000 cash to customers. (3) At the end of the year, a physical count of the inventory, it found only $16,000 of inventory on hand. What would Voss Company report for cost of goods sold on the Year 2 income statement? $30,000 $21,000 $20,000 None of the above is correct

$20,000

Sales on account amounted to $80,000. Sales returns were $2,000 and sales discounts were $1,000. Cost of goods sold amounted to $45,000. Based on this information the amount of gross margin was $33,000. $48,000. $42,000. $32,000.

$32,000

Kilgore Company experienced the following events during its first accounting period. (1) Issued common stock for $5,000 cash. (2) Earned $3,000 of cash revenue. (3) Paid a $4,000 cash to purchase land. (4) Paid cash dividends amounting to $400. (5) Paid $2,200 of cash expenses. Based on this information, the amount of cash flow from investing activities appearing on the statement of cash flows is $5,000 inflow. $1,800 inflow. $4,000 outflow. $400 outflow

$4,000 outflow.

The balance sheet presents - an explanation of the changes in the beginning and ending balances of stockholders' equity. - a comparison of the benefits and the sacrifices a company experiences from its operations. - information in three categories including operating, investing, and financial activities. - a list of a company's assets and the sources of those assets.

a list of a company's assets and the sources of those assets.

Pen Paint Company's unadjusted book balance at September 30 is $6,900. The Company's bank statement reveals bank service charges of $50. Two credit memos are included in the bank statement: one for $700 which represents a collection of an account receivable that the bank made for Pen Paint and one for $100 which represents the amount of interest that Pen Paint had earned on its interest-bearing checking account in June. Finally, a comparison of the Company's records with the bank statement revealed $500 of deposits in transit and $300 of outstanding checks. Based on this information, Pen Paint's true cash balance is $7,850. $7,650. $7,700. None of the answers is correct.

$7,650.

Escrow Company's multistep income statement shows cost of goods sold of $60,000, a gross margin of $42,000, operating income of $12,000 and a $20,000 loss on the sale of land. Based on this information, the net income or (net loss) amounted to $12,000. ($20,000). ($8,000). None of the answers is correct.

($8,000)

Which of the following is an accurate definition of the term asset? An obligation to creditors A resource that will be used to produce revenue A transfer of wealth from the business to its owners A sacrifice incurred from operating the business

A resource that will be used to produce revenue

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable for the inventory purchased in Event 1. (4) Sold inventory purchased in Event 1 for $5,000 to customers on account. At the end of the first accounting period what would be reported on the Income Statement for net income? A) $1,000. B) $4,000. C) $5,000. D) zero.

A) $1000

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account under terms 1/10/n30. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable within the discount period for the inventory purchased in Event 1. Immediately after the three events have been recognized, the balance in the inventory account is A) $3,960. B) $4,000. C) $5,000. D) zero.

A) $3,960

Keisha Dress Shops experienced the following events during its third accounting period. (1) Sold merchandise that cost $92,000 for $140,000 cash. (2) Paid $30,000 of operating expenses. (3) Paid a $4,000 cash dividend. Based on this information, the amount of the gross margin is A) $48,000. B) $18,000. C) $14,000. D) None of the answers is correct.

A) $48,000

At the end of Year 1, Voss Company had $6,000 of inventory. During Year 2 the following events occurred: (1) Voss Company purchased $30,000 of inventory with cash. (2) Sold $20,000 of inventory for $28,000 cash to customers. (3) At the end of the year, a physical count of the inventory, it found only $15,000 of inventory on hand. What would Voss Company report for net income on the Year 2 Income Statement? A) $7,000 B) $8,000 C) $28,000 D) None of the above is correct

A) $7,000

Smith Company sold inventory that cost $5,000 for $9,000 cash. Freight cost was $600 paid in cash. The freight terms were FOB shipping point. Based on this information, A) gross margin would be $4,000. B) net income would be $3,400. C) gross margin would be $3,400. D) None of the answers are correct.

A) gross margin would be $4,000.

If a company recognizes $5,000 of accrued salary expense on December 31, Year 1, on January 1, Year 2 there will be a zero balance in the Accrued Salaries Expense account. on January 1, Year 2 there will be a $5,000 balance in the Accrued Salaries Payable account. the December 31, Year 1 expense recognition will not affect the cash account. All of the answer are correct.

All of the answers are correct

When a company earns revenue on account the asset account, accounts receivable, increases. A revenue account increases. liabilities are not affected. All of the answers are correct.

All of the answers are correct

Liabilities represent obligations to repay debts. may increase when assets increase. have priority in business liquidations. All of the answers are qualities of liabilities.

All of the answers are qualities of liabilities.

To determine the true cash balance - add bank collections of depositors' accounts receivable to the unadjusted book balance. - subtract bank service charges from the unadjusted book balance. - add interest earned from bank to the unadjusted book balance. - All of the answers describe adjustments that must be made to the unadjusted book balance in order to determine the true cash balance.

All of the answers describe adjustments that must be made to the unadjusted book balance in order to determine the true cash balance.

Which of the following is an internal control procedure designed to protect cash receipts? Record cash collections immediately. Provide customers with receipts. Deposit cash collections immediately. All of the answers described internal control procedures designed to protect cash receipts.

All of the answers described internal control procedures designed to protect cash receipts.

Which of the following is not a source of assets? Creditors Investors Operations All the answers represent sources of assets.

All the answers represent sources of assets.

Which of the following would require an adjusting entry during the accounting cycle? a cash sale a cash expenditure accrued expenses all the above

accrued expenses

To determine the true cash balance - add deposits in transit to and subtract outstanding checks from the unadjusted bank balance. - subtract deposits in transit from and add outstanding checks to the unadjusted bank balance. - add deposits in transit and outstanding checks to the unadjusted bank balance. - subtract deposits in transit and outstanding checks from the unadjusted bank balance.

add deposits in transit to and subtract outstanding checks from the unadjusted bank balance.

Rex Company's bank statement shows a $200 NSF check. To determine the true cash balance the - amount of the NSF check must be added to the unadjusted bank balance. - amount of the NSF check must be subtracted from the unadjusted book balance. - amount of the NSF check must be added to the unadjusted book balance. - amount of the NSF check must be subtracted from the unadjusted bank balance.

amount of the NSF check must be subtracted from the unadjusted book balance.

On December 1, Year 3 Walton Company paid $3,600 cash for office space to be used during the coming year. This event is an asset source transaction. an asset use transaction. an asset exchange transaction. a claims exchange transaction.

an asset exchange transaction.

Crowe Company collected $18,000 in advance for services to be performed in the future. This event is an asset source transaction. an asset use transaction. an asset exchange transaction. a claims exchange transaction.

an asset source transaction

On December 1, Year 3 Walton Company paid $3,600 cash for office space to be used during the coming year. This transaction was recorded as an asset exchange transaction. Based on this information, the year-end adjusting entry to recognize rent expense is an asset source transaction. an asset use transaction. an asset exchange transaction. a claims exchange transaction.

an asset use transaction.

The statement of changes in stockholders' equity presents - an explanation of the changes in the beginning and ending balances of stockholders' equity. - a comparison of the benefits and the sacrifices a company experiences from its operations. - information in three categories including operating, investing, and financial activities. - a list of a company's assets and the sources of those assets.

an explanation of the changes in the beginning and ending balances of stockholders' equity.

Instead of using cash to pay bills, many companies pay with checks because - checks cannot be stolen. - checks are always written for exact amounts. - checks facilitate the separation of duties associated with cash payments. - checks can be written on any day the week.

checks facilitate the separation of duties associated with cash payments.

Which term describes a distribution of the Company's assets back to the owners of the business? liability dividend retained earnings common stock

dividend

The gross margin percentage is determined by dividing net sales by the gross margin. dividing the gross margin by the net sales. dividing the gross margin by the cost of goods sold. dividing the cost of goods sold by the gross margin.

dividing the gross margin by the net sales.

An accrual - exists when a company pays cash at the time the associated expense is recognized. - exists when a company pays cash before recognizing the associated expense. - exists when a company pays cash after recognizing the associated expense.

exists when a company pays cash after recognizing the associated expense.

A deferral - exists when a company pays cash at the time the associated expense is recognized. - exists when a company pays cash before recognizing the associated expense. Correct - exists when a company pays cash after recognizing the associated expense.

exists when a company pays cash before recognizing the associated expense.

Accrued revenue - exists when a company receives cash after recognizing the associated revenue. - exists when a company receives cash before recognizing the associated revenue. - exists when a company receives cash at the time the associated revenue is recognized.

exists when a company receives cash after recognizing the associated revenue.

Deferred revenue - exists when a company receives cash after recognizing the associated revenue. - exists when a company receives cash before recognizing the associated revenue. - exists when a company receives cash at the time the associated revenue is recognized.

exists when a company receives cash before recognizing the associated revenue.

A bank statement is presented from the customer's point of view. Therefore, a customer deposit reduces the bank's liabilities. These statements are true false

false

Information in temporary accounts is transferred to the common stock account at the end of an accounting period. This statement is true false

false

The amount of net income shown on a multi-step income statement will differ from the amount of net income shown on a single-step income statement. true false

false

The implementation of an effective internal control system eliminates the possibility of fraud. This statement is true false

false

When a company purchases supplies on account cash flow from investing activities decreases. total assets decrease. expenses increase. liabilities increase.

liabilities increase.

If total assets increase, then - liabilities must decrease and retained earnings must increase. - common stock must increase and retained earnings must decrease. - liabilities, common stock, or retained earnings must increase. - liabilities, common stock, or retained earnings must decrease.

liabilities, common stock, or retained earnings must increase.

Unearned revenue - occurs when a Company has earned a benefit but has not yet been paid. - results in an increase in stockholder's equity. - occurs when a Company receives a benefit from a customer but have not yet earned that benefit. - Both occurs when a Company has earned a benefit but has not yet been paid and results in an increase in stockholder's equity.

occurs when a Company receives a benefit from a customer but have not yet earned that benefit.

Revenue - consist of all the sacrifices made by a business during an accounting period. - represents all the benefits earned during an accounting period. - results in a decrease to stockholders' equity - none of the above

represents all the benefits earned during an accounting period.

The matching principle states that all assets must equal liabilities plus equity revenues should be recorded in the same period as the related expenses all revenues must equal expenses net income on the income statement should match cash flow from operating activities

revenues should be recorded in the same period as the related expenses

Alpha Company's December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings. The company experienced the following event during Year 2. (1) On March 1, paid $1,200 to purchase insurance coverage for one year beginning immediately. Based on this information alone, - the Year 2 balance sheet would show $200 of prepaid insurance. Correct - the Year 2 balance sheet would show $1,000 of insurance expense. - the Year 2 income statement would show $1,000 of prepaid insurance. - the Year 2 income statement would show $200 of insurance expense.

the Year 2 balance sheet would show $200 of prepaid insurance.

Alpha Company's December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings. The company experienced the following event during Year 2. (1) On March 1, paid $1,200 to purchase insurance coverage for one year beginning immediately. Based on this information alone, - the Year 2 statement of cash flows would show $1,000 outflow to purchase insurance. - the Year 3 statement of cash flows would show zero outflow to purchase insurance. Correct - the Year 3 income statement would show $1,000 of insurance expense. - the Year 2 income statement would show $200 of insurance expense.

the Year 3 statement of cash flows would show zero outflow to purchase insurance.

The closing process normally occurs at during the accounting cycle. at five year intervals. the end of an accounting cycle. at the beginning of an accounting cycle.

the end of an accounting cycle.

Watt Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $6,000 cash from the issue of common stock. Borrowed $3,000 cash from the state bank. Earned $4,000 of cash revenue. Paid $2,000 cash expenses. The company was liquidated at the end of Year 1. Based on this information the stockholders would receive $6,000. the stockholders would receive $8,000. the creditor (the bank) would receive $2,000. the creditor (the bank) would receive $6,000.

the stockholders would receive $8,000.

Ellen Elder and her brother, Buster started Elder Company when they each invested $600 in the company. After the investments there will be? one reporting entity. two reporting entities. three reporting entities. four reporting entities.

three reporting entities.

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the restaurant on first day of the year. This statement includes how many reporting entities? one reporting entity. two reporting entities. three reporting entities. four reporting entities.

three reporting entities.

Cash is difficult to protect because it is easy to transfer and its ownership difficult to prove. These statements are true false

true

Wilson Company used a check to pay Smith Company for services provided by Smith. Smith deposited Wilson's check in its account with the State Bank. When Smith's most recent bank statement was examined,the company's accountant noticed that the Wilson check had been classified as an NSF (not sufficient funds) check. The NSF check was shown as a debit on Smith's bank statement. was shown as a credit on Smith's bank statement. was not shown on Smith's bank statement. was reported only in the footnotes to Smith's bank statement.

was shown as a debit on Smith's bank statement.

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account under terms 1/10/n30. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable within the discount period for the inventory purchased in Event 1. Based on this information, which of the following shows how paying off the account payable account (Event 3) will affect the Company's financial statements?

Assets (3,960) = liab (3,960) + equity (NA) rev (NA) - exp (NA = Net inc (NA) cash flow (3,960) OA

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account under terms 1/10/n30. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable within the discount period for the inventory purchased in Event 1. Based on this information, which of the following shows how the recognition of the cash discount (Event 1) will affect the Company's financial statements?

Assets (40) = liab (40) + equity (NA) rev (NA) - exp (NA = Net inc (NA) cash flow (NA)

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account. (2) Returned $50 of the inventory purchased in Event 1. (3) Sold the inventory for $6,000 cash. Based on this information, which of the following shows how the recognition of the return will affect the Company's financial statements?

Assets (50) = liab (50) + equity (NA) rev (NA) - exp (NA = Net inc (NA) cash flow (NA)

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory for cash. (2) Returned $100 of the inventory purchased in Event 1. Based on this information, which of the following shows how the recognition of the return will affect the Company's financial statements?

Assets (NA) = liab (NA) + equity (NA) rev (NA) - exp (NA = Net inc (NA) cash flow 100 OA

Which of the following is an accurate depiction of the accounting equation? Assets = Liabilities + Common Stock + Retained Earnings Assets = Liabilities + Common Stock − Expenses Assets = Liabilities + Retained Earnings − Dividends Assets = Liabilities + Common Stock + Dividends

Assets = Liabilities + Common Stock + Retained Earnings

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account under terms 1/10/n30. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable for the inventory purchased in Event 1. If the Company pays the account payable after the discount period has expired, how much cash will be required to settle the liability? A) $3,960. B) $4,000. C) $5,000. D) zero.

B) $4,000

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable for the inventory purchased in Event 1. Immediately after the three events have been recognized, the balance in the inventory account is A) $1,000. B) $4,000. C) $5,000. D) zero.

B) $4,000

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable for the inventory purchased in Event 1. (4) Sold inventory purchased in Event 1 for $5,000 to customers on account. At the end of the first accounting period what would be reported for Net Operating Cash Flow on the Statement of Cash Flows? A) $1,000 B) $(4,000) C) $(5,000) D) zero.

B) (4,000)

Product costs are expensed when they are incurred. This statement is A) true B) false

B) false

Smith Co. purchased inventory for $5,000 on account with the freight terms FOB destination. Smith Co. then sold the inventory to customers for $8,000 cash with freight terms FOB shipping point. In both cases, the freight carrier charged $600 for shipping. Based on this information A) gross margin would be $2,400. B) net income would be $3,000. C) net income would be $1,800. D) None of the answers are correct.

B) net income would be $3,000.

Smith Company sold inventory that cost $5,000 for $9,000 cash. Freight cost was $600 paid in cash. The freight terms were FOB destination. Based on this information, A) gross margin would be $3,400. B) net income would be $3,400. C) net income would be $4,000. D) None of the answers are correct.

B) net income would be $3,400.

Mary Company collected cash from an account receivable. The recognition of the cash collection will affect which of the following financial statements? Income statement and the balance sheet Income statement and the statement of cash flows Balance sheet and the statement of cash flows Statement of changes in stockholders' equity

Balance sheet and the statement of cash flows

Paying cash to purchase inventory is A) an asset source transaction. B) an asset use transaction. C) an asset exchange transaction. D) a claims exchange transaction.

C) an asset exchange transaction.

When a merchandising company sells inventory it will A) recognize only an expense. B) recognize only revenue. C) recognize revenue and expense. D) not recognize revenue or expense.

C) recognize revenue and expense.

When a merchandising company pays cash to purchase inventory A) the amount of total assets increases. B) the amount of expenses increases. C) the amount of total assets decreases. D) None of the answers is correct.

D) None of the answers is correct

The bank statement for Franklin Company showed a $4,000 credit. Which of the following could have caused this credit? Franklin Company wrote a check. Franklin Company made a deposit. Franklin Company paid bills with cash. Franklin Company collected cash that was not deposited.

Franklin Company made a deposit.

Which of the following is not a commonly accepted internal control activity? Hiring only college graduates Separation of duties Requiring employee absences Using prenumbered documents

Hiring only college graduates

Yang Company recognized accrued salary expense. The recognition will affect which of the following financial statements? Income statement and the balance sheet Statement of cash flows Income statement Balance sheet

Income statement and the balance sheet

On May 1 of Year 1 Matthew Company paid $2,400 cash for an insurance policy that would protect the company for one year. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense and the cash flow from operating activities shown on the Year 1 financial statements would be

Insurance Expense $1,600 Cash flow ($2,400

Which of the following statements is true? - Checks that a company has written are shown as credits on a bank statement. - Deposits will be shown as debits on a bank statement. - Interest revenue will be shown as a credit on a bank statement. - Bank services charges are not shown on a bank statement.

Interest revenue will be shown as a credit on a bank statement.

Internal control is a process designed to ensure - reliable financial reporting. - effective and efficient operations. - compliance with applicable laws and regulations. - Internal control is designed to ensure all of the items described in the answers.

Internal control is designed to ensure all of the items described in the answers.

Which of the following events experienced by a department store would be presented in the operating section of a multistep income statement? Inventory sold for less than its cost Equipment sold for more than its cost Land sold for less than its cost All of the above are reported within operating income.

Inventory sold for less than its cost

Which of the following is not an internal control procedure designed to safeguard cash? - Keep cash in locations that are accessible by multiple employees - Record receipts of cash in the company's accounting system immediately - Provide customers with prenumbered receipts - Deposit cash in external financial institutions immediately

Keep cash in locations that are accessible by multiple employees

At the end of Year 1 Bowers Company had $6,000 of assets, $2,000 of liabilities, $3,000 of common stock, and $1,000 of retained earnings. During Year 2 Bowers experienced the following events. (1) Borrowed $4,000 cash. (2) Earned $5,000 of cash revenue. (3) Paid $3,000 of cash expenses. (4) Paid $7,000 cash to purchase land Based on this information, the amount of net income, cash flow from investing activities, and total liabilities appearing on the Year 2 financial statements is

Net Income Cash Flow from IA Liabilities $2,000 ($7,000) $6,000

Which of following is the best measure of performance for an accounting period? Assets Expenses Equity Net income

Net income

Assume in Year 1, a company signs a contract worth $50,000 to perform services in Year 2. This transaction will affect which of the following financial statements in Year 1? Income statement Balance sheet and income statement Income statement, balance sheet, and statement of cash flows No affect on all statements

No affect on all statements

Which of the following accounts would be closed at the end of an accounting period? Accounts receivable Land Account payable None of the accounts listed would be closed at the end of an accounting period.

None of the accounts listed would be closed at the end of an accounting period.

Paying cash to settle a salaries payable obligation will affect which section of the statement of cash flows? Operating activities Investing activities Noncash activities Financing activities

Operating activities

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the Company on first day of the year. Which of the follow appropriately reflects the cash transactions between these reporting entities? John Hamilton Sauce-It-Up Stone Creek Bank A.$50,000 increase $450,000 increase $500,000 decrease B.$500,000 increase $450,000 increase $500,000 decrease C.$500,000 decrease $500,000 increase $500,000 decrease D.$450,000 increase $50,000 increase $500,000 decrease

Option A

Assets NA= Liab. NA+Equity NA Rev.NA−Exp.NA =Net Inc. Cash Flow: NA OA Which of the following events could have caused these effects? Paid cash to reduce supplies payable Recognized supplies expense Purchased supplies on account Paid cash to purchase supplies

Paid cash to purchase supplies

Which term describes assets generated through operations that have been reinvested into the business? liability dividend common stock retained earnings

Retained earnings

Which of the accounts is closed at the end of an accounting period? Common Stock Retained Earnings Land Revenue

Revenue

On May 1 of Year 1 Matthew Company collected $2,400 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of service revenue and the cash flow from operating activities shown on the Year 1 financial statements would be

Service Revenue $1,600 Cash flow $2,400

Guadalupe, Inc. provided $5,000 of services in Year 1 but did not collect cash from its customers until Year 2. Select the correct answer from the following options assuming Guadalupe used accrual accounting. The Company will recognize $5,000 of revenue and $5,000 of cash flow from operations in Year 1. The Company will recognize $5,000 of revenue in Year 1 and $5,000 of cash flow from operations in Year 2. The Company will recognize $5,000 of cash flow from operations in Year 1 and $5,000 of revenue in Year 2. The Company will recognize zero of revenue in Year 1 and $5,000 of cash flow from operations in Year 2.

The Company will recognize $5,000 of revenue in Year 1 and $5,000 of cash flow from operations in Year 2.

Brown Company's December 31, Year 1 balance sheet showed $1,800 cash, $200 accounts payable, $600 common stock, and $1,000 retained earnings. The company experienced the following events during year 2. (1) On April 1, Year 2 the company paid $1,800 cash to rent office space for the coming year starting immediately. (2) Earned $1,700 cash revenue. (3) Paid a $300 cash dividend. Based on this information, the company would report - a $1,700 net cash outflow from operating activities on the Year 2 statement of cash flows. - a $1,050 balance in retained earnings on the Year 2 balance sheet. - $1,350 balance in a prepaid rent account on the Year 2 balance sheet. - All of the answers are correct.

a $1,050 balance in retained earnings on the Year 2 balance sheet.

Crowe Company collected $18,000 in advance for services to be performed in the future. The year-end adjusting entry necessary to recognize the portion of the revenue that was earned during the year is an asset source transaction. an asset exchange transaction. a claims exchange transaction. an asset use transaction.

a claims exchange transaction.

The income statement presents - an explanation of the changes in the beginning and ending balances of stockholders' equity. - a comparison of the benefits and the sacrifices a company experiences from its operations. - information in three categories including operating, investing, and financial activities. - a list of a company's assets and the sources of those assets.

a comparison of the benefits and the sacrifices a company experiences from its operations.