BA 3302 ch.2
Which of the following shows how the adjustment to recognize the portion of prepaid rent that has been used affects a company's financial statements?
assets= - lib= NA eq= - rev= NA exp= + net inc= - CF= NA
Knoll Company started Year 2 with a $500 in cash, $500 in supplies, and $1,000 in common stock accounts. During Year 2 the company experienced the following events. (1) Paid $400 cash to purchase supplies. (2) Physical count revealed $100 of supplies on hand at the end of Year 2. Based on this information the amount of supplies expense reported on the Year 2 income statement is
$800
The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the balance sheet?
1 2 4 7 8 11 14
Sanka Company's Year 1 balance sheet showed $1,700 cash, $5,200 supplies, $2,300 accounts payable, $4,000 common stock, and $600 retained earnings. The company experienced the following events during Year 2. (1) Purchased $14,000 of supplies on account (2) Earned $19,000 cash revenue (3) Paid $14,200 cash to reduce accounts payable created in Event 1 above (4) Paid a $1,000 cash dividend. (5) Physical count revealed $4,900 of supplies on hand at the end of Year 2 Based on this information, the Year 2 after closing balance in retained earnings is
4300
The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the income statement?
5 9 10
The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above are temporary accounts?
5, 9, 10, 12
Lawyers Inc. accepted a $12,000 retainer for which the company agreed to provide services in the future. Recognizing this event would
all answers are correct
When a company earns revenue on account
all of the answers are correct
On December 1, Year 3 Walton Company paid $3,600 cash for office space to be used during the coming year. This event is
asset exchange transaction
Styles Company paid cash to purchase supplies. This event is
asset exchange transaction
Crowe Company collected $18,000 in advance for services to be performed in the future. This event is
asset source transaction
During its Year 2 accounting cycle Styles Company had $4,000 of supplies available for use. A year-end physical count of supplies found $300 of supplies on hand. Based on this information, the year-end adjusting entry necessary to recognize supplies expense is
asset use 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
asset use transaction
AAA Consulting Services collected cash for services to be provided in the future. Recognizing this event would cause the company's
assets and liabilities to increase
Which of the following shows how the event "collected cash for services to be rendered in the future" affects a company's financial statements?
assets= + lib= + eq= NA rev= NA exp= NA net inc= NA CF= +OA
Which of the following shows how recognizing revenue on account will affect a company's financial statements?
assets= + lib= NA eq= + rev= + exp= NA net inc= + CF= NA
Which of the following shows how paying off an accrued liability such as salaries payable will affect a company's financial statements?
assets= - lib= - eq= NA rev= NA exp= NA net inc= NA CF= - OA
Fowler 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 October 1, collected $1,200 in advance for an agreement to provide office space for one year beginning immediately. Based on this information alone,
the Year 3 income statement would show $900 of rent revenue
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 3 statement of cash flows would show zero outflow to purchase insurance.
The accounts receivable account appears on
the balance sheet
On December 31, Year 3 Snack, Inc. adjusted its records to recognize $5,000 of accrued salaries. Based on this information alone
the balance sheet at the beginning of Year 4 would show $5,000 of accrued salaries payable.
If a company recognizes accrued salary expense
the employees have completed work but have not been paid.
When a company collects cash from accounts receivable,
total assets are not affected
When a company pays cash to reduce accounts payable
total assets decrease
When a company pays cash to purchase supplies
total assets is not affected
Delta Company started Year 2 with a $1,700 in cash, $700 in supplies, and $2,400 in common stock accounts. During Year 2 the company experienced the following events. (1) Paid $1,600 cash to purchase supplies. (2) Physical count revealed $400 of supplies on hand at the end of Year 2. Based on this information the year-end adjusting entry to recognize supplies expense would cause
total stockholders equity decrease by $1900
A company using accrual accounting may report revenue on the income statement even if it does not collect cash. This statement is
true
A cost may be recorded as an expense or as an asset purchase. This statement is
true
Unearned revenue is a liability account that normally needs to be adjusted at the end of an accounting cycle. This statement is
true
On October 1 of Year 1 Zeta Company collected $1,200 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 revenue appearing on the Year 1 income statement would be
$300
On August 1 of Year 1 Presco Enterprises paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense appearing on the Year 1 income statement would be
$500
Sanka Company's Year 1 balance sheet showed $1,700 cash, $5,200 supplies, $2,300 accounts payable, $4,000 common stock, and $600 retained earnings. The company experienced the following events during Year 2. (1) Purchased $14,000 of supplies on account (2) Earned $19,000 cash revenue (3) Paid $14,200 cash to reduce accounts payable created in Event 1 above (4) Paid a $1,000 cash dividend. (5) Physical count revealed $4,900 of supplies on hand at the end of Year 2 Based on this information, the Year 2 before closing balance in retained earnings is
$600
On October 1 of Year 1 Lesikar Company paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31. Based on this information, the amount of prepaid insurance appearing on the Year 1 balance sheet would be
$900
On November 1 of Year 1 Falloch, Inc. paid $2,400 cash for a contract allowing the company to use office space for one year. The company's fiscal closing date is December 31. Based on this information, the amount of cash flow from operating activities appearing on the Year 1 statement of cash flows would be
(2400)
The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the statement of changes in stockholders' equity?
11 12 14
The following items were drawn from a company's accounting records: (1) Accounts receivable (2) Accounts payable (3) Cash paid to purchase land (4) Supplies (5) Supplies expense (6) Cash collected for service to be provided in the future (7) Unearned revenue (8) Prepaid rent (9) Earned revenue (10) Accrued salaries expense (11) Common stock (12) Dividends (13) Cash paid for prepaid rent (14) Retained earnings Which of the items listed above appear on the statement of cash flows?
3 6 13
Which of the following is not an asset source transaction?
Collected cash from accounts receivable.
Which of the following accounts 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.
Which of the following statements is false?
Prepaid insurance is shown on the income statement.
Kim Company recorded a claims exchange transaction that had the following effects on its financial statements: Which of the following adjustments could have caused these effects?
Recognized a portion of unearned revenue as earned revenue.
Knopp Company experienced an event that had the following effects on its financial statements.
Recognized accrued salary expense
Kim Company recorded an asset use transaction that had the following effects on its financial statements: Which of the following adjustments could have caused these effects?
Recognized expense associated with prepaid insurance.
Which of the following most accurately depicts the steps in an accounting cycle?
Record transaction data → Adjust accounts → Prepare Statements → Close temporary accounts.
During Year 1 Xing Enterprises experienced the following events. (1) Earned $4,000 of revenue on account. (2) Incurred $3,500 of expenses on account. Based on this information the amount of total assets, net income, and cash flow from operating activities appearing on the year 1 financial statements is
TA= $4000 NI= $500 CF= zero
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 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 $1,050 balance in retained earnings on the Year 2 balance sheet.
GreyCo and Sons earns $6,900 of revenue on account in Year 1. Cash collections of receivables amount to $6,300 in Year 1 with the remainder being collected in Year 2. Based on this information alone the company's financial statements would show
a balance of $600 in accounts receivable at the beginning of Year 2.
Which of the following shows how adjusting the accounts to recognize supplies expense will affect a company's financial statements?
assets= - lib= NA eq= - rev= NA exp= + net inc= - CF= NA
During Year 1, Pang Enterprises experienced the following events. (1) Earned $4,000 of revenue on account. (2) Collected $3,500 cash from accounts receivable. The remainder of the receivable was collected in Year 2. Based on this information, the amount of accounts receivable, net income, and cash flow from operating activities appearing on the Year 2 financial statements is
acct rec= zero net inc= zero CF= $500
When a company incurs accrued expenses
al answers are correct
Hector Company's December 31, Year 1 balance sheet showed $900 cash, $600 supplies, $500 accounts payable, $400 common stock, and $600 retained earnings. The company experienced the following events during year 2. (1) Purchased $1,200 of supplies on account. (2) Earned $1,800 cash revenue. (3) Paid $1,100 cash to reduce accounts payable created in Event 1 above. (4) Physical count revealed $200 of supplies on hand at the end of Year 2. Based on this information, the company would report
all answers are correct
On September 1 Christopher Company collected $1,200 for an agreement to provide insurance coverage that protects its client for a one year term starting immediately. On December 31 the company adjusted the accounts to show the portion of the insurance that had been provided. Which of the following shows how the adjustment will affect the company's financial records?
assets= NA lib= (400) eq= 400 rev= 400 exp= NA net inc= 400 CF= NA
Which of the following shows how recognizing accrued expense will affect a company's financial statements?
assets= NA lib= + eq= - rev= NA exp= + net inc= - CF= NA
Which of the following shows how the adjusting entry to recognize services provided to a client who paid for the services prior to the work being performed?
assets= NA lib= - eq= + rev= + exp= NA net inc= + CF= NA
Which of the following shows how collecting cash from accounts receivable will affect a company's financial statements?
assets= NA lib= NA eq= NA rev= NA exp= NA net inc= NA CF= + OA
Which of the following shows how paying cash to purchase supplies will affect a company's financial statements?
assets= NA lib= NA eq= NA rev= NA exp= NA net inc= NA CF= - OA
Which of the following shows how the event "paying cash for an insurance policy that protects the company for some future time period" affects a company's financial statements?
assets= NA lib= NA eq= NA rev= NA exp= NA net inc= NA CF= - OA
The closing process normally occurs at
at the end of an accounting cycle
A prepaid rent account appears of which on the following financial statements?
balance sheet
The accounts payable account appears on
balance sheet
The unearned revenue account appears of which of the following financial statements?
balance sheet
A deferral
both statements
Adams Company adjusted its records to recognized accrued salary expense at the end of its Year 1 accounting period. The recognition is
claims exchange transaction
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
claims exchange transaction
All permanent accounts are adjusted at the end of an accounting period. This statement is
false
Normally a company closes its books and then adjusts its records to update the account balances before preparing the financial statements. This statement is
false
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 exp= 1600 cash flow= (2400)
Recognizing an expense may cause
liabilities to increase
Stannous Company earns $2,000 of revenue on account in Year 1. Cash collections of receivables amount to $1,800 in Year 1 with the remainder being collected in Year 2. Based on accrual accounting the company's financial statements would show
net income of $2,000 in Year 1.
Baltimore Company paid cash to purchase insurance that would protect the company during the coming year. The recognition of this event would
not affect total assets or equity
Bookmyer Company experienced a business event that affected its financial statements as indicated below.
paid cash to purchase supplies
On June 1 of Year 1 Doe Company paid $1,800 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 alone, the amount of prepaid insurance and insurance expense shown on the Year 2 financial statements would be
prepaid in= zero in exp= 750
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
serv rev= 1600 cf= 2400
Which of the following accounts would most likely need to be adjusted at the end of an accounting cycle?
supplies
If a company recognizes $5,000 of accrued salary expense on December 31, Year 1,
the December 31, Year 1 expense recognition will not affect the cash account.
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.
On June 1 of Year 1 Zoe Company collected $1,800 cash for medical 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 unearned revenue and service revenue shown on the Year 1 financial statements would be
unearned rev= 750 serv rev= 1050
On August 1 of Year 1 Accounting Associates collected $1,200 cash for consulting 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 unearned revenue appearing on the Year 2 balance sheet would be
zero