ACC-250 Chapters 1-2

Jackson Electric Services Company incurred​ $800 as a repair expense and paid for it in cash. The company is a sole proprietorship. This transaction will​ ________. A. decrease the liabilities of the business B. increase the assets of the business C. increase the liabilities of the business D. decrease the​ owner's equity

Decrease the owner's equity

Accounting starts with economic activities that accountants review and evaluate using critical thinking and judgment to create useful information that helps individuals make good decisions. True False

True

An account that normally has a debit balance may occasionally have a credit balance. True False

True

The​ owner's claim to the assets of a business is called​ owner's equity. True False

True

When a business collects​ cash, the Cash account is debited. True False

True

Spring Company has assets and equity that amount to​ $260,000 and​ $70,000, respectively. Liabilities total​ ________. A. ​$330,000 B. ​$70,000 C. $190,000 D. $260,000

$190,000

Which of the following accounts decreases with a​ credit? A. Owner, Capital B. Unearned Revenue C. Cash D. Accounts Payable

Cash

John Tilden contributes cash to his business in exchange for capital. John is the sole proprietor. The two accounts involved in this transaction are​ ________. A. Tilden, Capital, and Accounts Payable B. Accounts Payable and Cash C. Cash and​ Tilden, Capital D. ​Tilden, Capital, and Accounts Receivable

Cash and Tilden, Capital

Which of the following statements is true of​ revenues? A. Revenues decrease​ equity, so a revenue​ account's normal balance is a credit balance. B. Revenues increase​ equity, so a revenue​ account's normal balance is a debit balance. C. Revenues increase​ equity, so a revenue​ account's normal balance is a credit balance. D. Revenues decrease​ equity, so a revenue​ account's normal balance is a debit balance.

Revenues increase equity, so a revenue account's normal balance is a credit balance

Regent Plumbing Company provides plumbing services. The company is a sole proprietorship. Selected transactions of Regent Plumbing Company are described as​ follows: ​a) Sharon​ Regent, the​ owner, contributed​ $6,000 cash in exchange for capital. ​b) Paid​ $4,000 cash for equipment to be used for plumbing repairs. ​c) Borrowed​ $10,000 from a local bank and deposited the money in the checking account. ​d) Paid​ $700 rent for the year. ​e) Paid​ $200 cash for plumbing supplies to be used next year. ​f) I completed a plumbing repair project for a local lawyer and received​ $3,000 cash. Calculate the net income. Assume plumbing supplies of​ $200 are left at the end of the accounting period. A. ​$2,300 B. $2,800 C. $500 D. $3,000

$2,300

The following are the current​ month's balances for ABC Financial Services Company before preparing the trial balance. Accounts Payable $8,000 Revenue $3,000 Cash 5 comma 0005,000 Expenses 16 comma 50016,500 Furniture 13 comma 00013,000 Accounts Receivable 14 comma 00014,000 ​Miller, Capital ​? Notes Payable 7 comma 5007,500 What amount should be shown for​ Miller, Capital on the trial​ balance? A. $32,000 B. $30,000 C. $54,000 D. 500

$30,000

Following is a list of account balances of Lincoln Lawn Services as of December​ 31, after the first year of operations. Accounts Receivable $7,000 Accounts Payable $6,000 Salaries Expense $6,000 Repairs Expense $900 Truck $8,000 Equipment $11,000 Notes Payable $26,000 Cash $8,000 Supplies Expense $11,000 Service Revenue $​26,000 Gasoline Expense $7,500 Salaries Payable $1,200 Calculate the net income. A. $33,500 B. $600 C. $1,000 D. $32,500

$600

Assume Metro Company had a net income of $ 2,500 for the year ending December 2018. Its beginning and ending total assets were $ 33,500 and $20, 500 respectively. Calculate​ Metro's return on assets​ (ROA). (Round your percentage answer to two decimal​ places.) A. 7.46​% B. 12.2​% C. 4.63​% D. 9.26%

9.26%

Which of the following statements is true of a trial​ balance? A. A trial balance is the first step in the accounting cycle. B. A trial balance is a list of all accounts with their balances. C. A trial balance is also known as a balance sheet. D. A trial balance is also known as the chart of accounts.

A trial balance is a list of all accounts with their balances

A business performs services for a customer for​ $26,000 on account. Which of the following accounts is​ debited? A. Accounts Payable B. Service Revenue C. Accounts Receivable D. Cash

Accounts Receivable

Westwood Supply Services received​ $1,000 cash from a​ customer; the amount was owed to the business from the previous month. Which of the following accounts will decrease as a result of this​ transaction? A. Accounts Payable B. Cash C. Revenue D. Accounts Receivable

Accounts Receivable

Which of the following is the final step in the journalizing and posting​ process? A. Determining whether each account has increased or decreased. B. Posting the accounts to the ledger. C. Determining whether the accounting equation is in balance. D. Identifying each account affected and its type.

Determining whether the accounting equation is in balance

Stuart Allen Company manufactures computer hardware. The president of the company bought a new car as a gift for his daughter and paid for it using cash from the business. Since the company paid for the​ car, it was recorded in its books as an asset. Which of the following concepts or principles of accounting did the company​ violate? A. economic entity assumption B. cost principle C. monetary unit assumption D. going concern assumption

Economic entity assumption

Critical thinking and judgment skills are not necessary for accountants because technology has made the activities routine. True False

False

Equity decreases with expenses and revenues. True False

False

Managerial accounting focuses on information needed by​ lenders, customers, and the federal government. True False

False

The trial balance is one of the basic financial statements that is issued to external users of the business. True False

False

Van Jones is the owner of a sole proprietorship. Van took​ $5,000 from the business for personal use. Which of the following accounts is​ debited? A. Jones, Dividends B. Jones, Withdrawals C. ​Jones, Capital D. Cash

Jones, Withdrawals

Jason Ford has been the sole owner of a bicycle sales and repair shop for several years. Which of the following business types would limit​ Jason's personal liability exposure to the​ entity's debts? A. limited−liability company B. sole proprietorship C. partnership D. Any of the above.

Limited - liability

Which of the following appears on both the income statement and statement of​ owner's equity? A. Owner, Withdrawals B. Total revenues C. Owner, Capital, ending balance D. Net income

Net income

A business purchases​ $500 of office supplies on account. What is the effect on the accounting​ equation? A. Office Supplies increase and Accounts Payable increase B. Office Supplies increase and Accounts Payable decrease C. Office Supplies increase and Cash decreases D. Total assets increase and total liabilities decrease

Office Supplies increase and Accounts Payable increase

Which of the following is classified as an asset​ account? A. Prepaid Insurance B. Unearned Revenue C. Notes Payable D. Owner, Withdrawals

Prepaid Insurance

Balancing errors can be detected by computing the difference between total debits and total credits on the trial balance. True False

True

The first step in the journalizing and posting process is to​ ________. A. decide whether each account increases or decreases B. post the journal entry to the ledger C. identify the accounts involved and the account type D. record the transaction in the journal

identify the accounts involved and the account type

Accounts Payable is​ a(n) ________ account and has a normal​ ________ balance. A. asset; credit B. liability; debit C. liability; credit D. ​asset; debit

liability; credit