Chapter 1 & 2

Determine the net income of a company for which the following information is available for the month of September. Service revenue - $300,000 Rent expense - $48,000 Utilities expense - $3,200 Salaries expense - $81,000

$167,800

The following transactions occurred during July: 1. Received $900 cash for services provided to a customer during July. 2. Issued common stock for $2,200 cash. 3. Received $750 from a customer in partial payment of his account receivable which arose from sales in June. 4. Provided services to a customer on credit, $375. 5. Borrowed $6,000 from the bank by signing a promissory note. 6. Received $1,250 cash from a customer for services to be performed next year. What was the amount of revenue for July?

$3,275

At the beginning of the current year, Snell Co. total assets were $248,000 and its total liabilities were $174,200. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in equity during the year and total assets at the end of the year were $260,000. The company's debt ratio at the end of the current year is:

67%

Cage Company had net income of $160 million and average total assets of $2,000 million. Its return on assets (ROA) is:

8%

a corporation is:

A business legally separate from its owners.

A company's ledger is:

A record containing all accounts and their balances used by the company.

A record of the increased and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

Account

A debit is used to record an increase in all of the following accounts except:

Accounts Payable

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

Accounts Receivable

The accounting process begins with:

Analysis of business transactions and source documents.

Resources a company owns or controls that are expected to yield future benefits are:

Assets

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Assets $30,000 decrease; liabilities $30,000 decrease

Prepaid accounts (also called prepaid expenses) are generally:

Assets that represent prepayments of future expenses

Which financial statement reports an organization's financial position at a single point in time?

Balance sheet

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank). Which of the following are two of the important provisions of Dodd-Frank?

Clawback and whistleblower

The right side of a T-account is a(n):

Credit

A law firm collected $1,800 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?

Debit Cash $1,800; credit Unearned Legal Fees Revenue $1,800

Edison Consulting received a $300 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:

Debit to Utilities Expense for $300

Which of the following is not one of the four steps of processing transactions? A) Record journal entry B) Analyze transactions using the accounting equation C) Identify transactions and source documents D) Ensure assets are equal to liabilities E) Post entry to ledger

Ensure assets are equal to liabilities

A sole proprietorship is a business with multiple owners. (T/F)

False

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed. (T/F)

False

The issuance of common stock always decrease equity. (T/F)

False

The purchase of land and buildings will generally be recorded in the same ledger account. (T/F)

False

The debt ratio of Braun is 0.9 and the debt ratio of Kemp is 1.0. Based on this information, an investor can conclude:

Kemp has the exact same dollar amount of total liabilities and total assets

The process of transferring general journal entry information to the ledger is called:

Posting

Technology:

Reduces the time, effort and cost of recordkeeping

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

Revenue recognition principle

The rule that (1) requires revenue to be recognized when goods or services are provided to customers and (2) at the amount expected to be received from the customer is called the:

Revenue recognition principle

The basic financial statements include all of the following except: A) Balance Sheet B) Income Statement C) Statement of Retained Earnings D) Statement of Cash Flows E) Statement of Changes in Assets

Statement of Changes in Assets:

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Statement of cash flows

A general journal provides a place for recording all of the following except:

The names of the accounts involved

The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

The total of the Debit column of the trail balance will exceed of the total of the Credit column by $9,400

A balance sheet lists:

The types and amounts of assets, liabilities, and equity of a business as of a specific date

Risk is:

The uncertainty about the return we will earn

A partnership is a business owned by two or more people.

True

Expenses always decrease equity. (T/F)

True

If a company is highly leveraged, this means that is has relatively high risk of not being able to repay its debt. (T/F)

True

The Sarbanes-Oxley Act (SOX) requires documentation and verification of internal controls. It also emphasizes effective internal controls. (T/F)

True

Unearned revenues are classified as liabilities. (T/F)

True

When expenses exceed revenues, the result is called:

net loss