Accounting 201

When Copper pays its employees $5,000 on January 1, 2021, how much would be recorded as salaries expense?

$1,000

Finney company began the year w retained earnings of $100,000. During 2022 the company issues $80,000 of common stock for cash. The company recorded revenues of $740,000 and expenses of $640,000 and paid dividends of $40,000. What was finneys net income for 2022

$100,000

At May 1, barclays inc reported cash account balance of $1000. During the month, the total of the debit entrues to the cash account amounted to $2000 and the total of the credit entries to the cash account amounted to $1800. At the end of may, barclays cash account has a

$1200 debit balance subtract 3800-2000

If Cal Corporation had net income for the year ended December 31, 2020 of $46,000, what would be the balance of Retained Earnings on December 31, 2020? beginning RE (110,000+46,000-15,000)

$141,000.

^use previous numbers What is wangs 2021 net income using cash basis accounting

$1600

For 2022, kuhl co reported net income of $36,000, net sales of $400,000 and average shares outstanding of 16,000. No preferred dividends were paid. Earnings per share is

$2.25

At the beginning of the year, January 1, 2020, DTO Inc. had a balance in retained earnings of $500. DTO had net income for the year of $300, and had an ending balance in retained earnings of $600. What is the amount of dividends paid by DTO during 2020?

$200. 500-300

On a classified balance sheet on December 31, 2020, the amount of Total Assets would be: cash, acc rec, inv, prepaid, land, building, equpt, current pay)

$203,000.

What is the Net Equipment that should be shown on a classified balance sheet at December 31, 2020? 60,000-28,000

$36,000. take gross ppe add capital expenses and subtract depreciation

At the beginning of the year, January 1, 2020, XYZ Inc. has a balance in retained earnings of $120,000. XYZ had net income for the year of $300,000, issued additional common stock of $100,000, and paid dividends of $50,000. What is the ending balance of retained earnings at December 31, 2020?

$370,000. 120,000+300,000+50,000-100,000

Cash-$14,000 Prepaid ins.-$700 Acc rec- $3500 Acc pay- $2800 Notes pay- $4200 Common stock- $5400 Dividends-$700 Revenues-$29000 Expenses-$17500 What amount did barnes company trial balance show as total credits

$41,400 acc pay+notes pay+ common stock+ revenue

What is the net income for the year ended December 31, 2020?

$46,000. rev-exp

$500,000 hensen company began the year w retained earnings of $380,000. During the year, the company recorded revenues of $500,000, expenses of $380,000 and paid dividends of 40,000. What was Hensens retained earnings balance at the end of the year

$460,000

What are the total liabilities as of December 31, 2020? accounts payable

$52,000.

Below are the general ledger balances of Watson Corporation on June 30, 2020 in alphabetical order: Accounts payable$4,000 Rent expense$ 8,000 Accounts receivable 7,000 Retained earnings 10,000 Cash 4,000 Salaries expense 16,000 Common Stock 6,000 Service revenue 34,000 Equipment 19,000 What is the total balance of each column of the trial balance for Watson corporation at June 30, 2020?

$54,000.

Earnings per share (EPS) is computed as follows:EPS = (Net income - Preferred Stock dividends)/Weighted average of common stock shares outstandingIf Smith Corporation had net income of $1,000,000 in 2020 and had common stock of 100,000 shares at January 1, 2020 and issued an additional 60,000 shares on October 1, 2020, what would Smith's EPS be for 2020?

$7.69.

Cash10,000 Accounts receivable 25,000Inventory 30,000Prepaid insurance 5,000Land 25,000Building 100,000Accumulated depreciation - building 28,000Equipment 60,000Accumulated depreciation - equipment 24,000Accounts payable 20,000Notes payable (current $8,000; long-term $24,000) 32,000Common stock 10,000Retained earnings, beginning of year, January 1, 2020 110,000Dividends 15,000Service revenues 160,000Salaries and wages expense 70,000Property tax expense 12,000Supplies expense 18,000Depreciation expense 14,000_____ 384,000 384,0006. What is the amount of current assets at December 31, 2020? (cash, ac rev, inv, prepaid)

$70,000. 10,000+ 25,000+ 30,000 + 5,000

Using the information in Question 4 above, after the October 10 entry was posted into the general ledger accounts, what is the balance in the Accounts Receivable account on October 10?

$8,500.

Sales of $10,800 in 2021 Collected $4800 for services to be performed in 2022 Paid $2600 in cash for salaries in 2021 Paid $600 for an insurance policy that begins in 2022 What is wangs 2021 net income using accrual accounting

$8200 10,800-2600

For Buffet Corporation above, after the proper adjusting entry on December 31, 2020, what is the balance in the Prepaid Insurance account?

$9,500.

At Feb 1, 2022, the balance in Goebel incs supplies account was $3500. During Feb, Goebel purchased supplies of $3000 and used supplies of $4000. At the end of Feb, the balance in the supplies account should be

2500 debit

Trial balance equals $3748. After closing entries, how much is the total for the post closing trial balance. (SubtractService revenue $159)

3635

The journal for accounting purposes provides;

A chronological record of transactions.

Which of the following accounts is NOT closed at the end of the year?

Accounts payable.

Aggie Inc. provides consulting services. Aggie signed a contract on November 1, 2020 to provide services for a client for $10,000 per month for 18 months. The consulting services will begin on November 1, 2020 and Aggie will send monthly invoices at the end of each month. Aggie sent an invoice for $10,000 to the client on December 3, 2020 for the month of November and the amount was paid by the client on December 9. Services were provided in December, 2020 but the invoice was not prepared for the month of December until January 3, 2021. What adjusting entry, if any, should Aggie make on December 31, 2020?

Accounts receivable10,000 Service Revenue10,000

Depriciation is the process of

Allocating the cost of an assrt to the periods in which its used

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

An understatement of expenses and an understatement of liabilities

The usual sequence of steps in the process of recording of transactions is:

Analyze transaction, journalize, post to the ledger.

The usual sequence of steps in the transaction recording process is

Analyze, journalize, post to ledger

Which statement below regarding closing entries is NOT correct?

Asset and liability accounts are closed at the end of the year.

If a company fails to adjust for accrued revenues

Assetd will be understated and revenues will be understated

The basic accounting equation is:

Assets = Liabilities + Stockholders' Equity.

If a company fails to record service revenue performed on account (i.e., accounts receivable), then:

Assets on the balance sheet will be understated.

XYZ Company purchases equipment for $50,000, paying $10,000 in cash and borrowing $40,000 from the bank as a note payable due in six months. What are the NET results to accounts?

Assets will increase by $40,000, liabilities will increase by $40,000.

Which of the following financial statements is concerned w the company at a point in time

Balance sheet

Which of the following is generally not classified as a current liability

Bonds payable

Earnest & Olde (E&O) is a CPA firm. On October 1, 2020, E&O sent invoices in the amount of $18,500 to clients for which accounting services had been provided. E&O made the following journal entry on October 1, 2020:Accounts Receivable18, 500Service Revenue18,500On October 10, E&O received checks from some of the clients in the amount of $10,000. The journal entry to be made by E&O on October 10 is:

Cash10,000(debit) Accounts Receivable 10,000(credit)

Accumulated depriciation is a

Contra asset account

Which form of organization has the attributes of 1) limited liability for owners of the organization, and 2) ease of raising capital?

Corporation

If service for $175 had been performed but not billed, the adjusting entry to record this would include a

Credit to service rev for 175

Which of the following statements is correct regarding current assets?

Current assets are listed on the Balance Sheet in the order of liquidity.

Current assets divided by current liabilities is known as

Current ratio

ACC Corporation was formed on June 1, 2015 and uses a calendar year (January 1 through December 31) for its financial statements. For the calendar year ending December 31, 2020, ABC's Income Statement would show:

Dated "for the year ended December 31, 2020".

The harris company purchased equipment for $15000 on Jan1. It is estimated that annual depriciation on the computer will be $3000. If the financial statements are prepared on December 31, the company shohld make the following adjusting entry

Debit dep. exp $3000 and credit accumulated dep for $3000

Baden industries borrows 20,000 at 7% interest for 6 months. What is the appropriate accrue interest if baden empooys a dec 31,2022 fiscal year

Debit interest expense 350 and credit interest payable for 350

On July 1, the fisher store paid $24000 to acme realty for 6 months rent beginning july1. Prepaid rent was debited for the full amount. If financial statements are prepared on july 31, the adjusting entry to be made by fisher is

Debit rent expense $4000 credit prepaid rent $4000 *get 4000 by dividing 24000/6

Merando industries employs a five day workweek and a sept 30 year end. Normal weekly wages amount to $36000. If sept 30 ends on a wednesday, what is the appropriate journal entry at fiscal year end

Debit salaries and wages expense for 21,600 and credit salaries and wages payable for 21,600

Greese company purchased office supplies for $7000 and debited supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Debit supplies expense $4500 credit supplies $4500 7000-2500

When a company performs a service but has not yet received a payment, it

Debits acc receivable and credits service rev

The effect of declaring and paying a cash dividend will:

Decrease retained earnings.

The payment of a liability

Decreases assets and liabilities

A dividend paid in cash

Decreases assets and stockholders equity

Which of the following is NOT a principal type of business activity

Delivering

Gold Corporation purchases equipment on July 1, 2020 for $24,000. The equipment has an estimated useful life of 5 years and is depreciated using the straight-line method. What is the correct adjusting entry for depreciation for the year ended December 31, 2020?

Depreciation expense2,400 Accumulated depreciation2,400

A current asset is

Expected to be converted to cash or used in the business within one year or one operating cycle, whichever is longer

A current asset is:

Expected to be converted to cash or used in the business within one year.

The expense rec principal matches

Expenses w revenues

Borrowing money is an example of

Financing activity

On a classified balance sheet, companies usually list current assets

In the order in which they are expected to be converted into cash

Debits

Increase assets and decrease liabilties

The Haggin Company performed and completed a service for a customer and sent an invoice to the customer for $7,200. What is the effect of this transaction?

Increase in current assets and to service revenue.

Buffet Corporation purchased an insurance policy on its office building on August 1, 2020. The policy is for a term of two years and the total premium paid on August 1 for the two-year policy was $12,000. The entry on August 1 was to debit the asset account Prepaid Insurance and credit cash for $12,000. What adjusting entry should be made on December 31, 2020 assuming no adjusting entry has been made prior to December 31, 2020?

Insurance expense2,500 prepaid insurance2,500

Which of the following is NOT one of the three forms of business organization

Investors

A ledger

Is a collection of the entire group of accounts maintained by a company

An accumulated depriciation account

Is a contra asset account

The Statement of Retained Earnings begins with the beginning balance. To arrive at the ending balance, which of the following statements is correct?

Is computed by adding net income and deducting dividends.

A business organized as a corporation

Is owned by stockholders

The purchase of an asset for cash

Leaves total assets unchanged

Debts and obligations of a business are referred to as

Liabilities

Unearned revenue is classified as a

Liability account

Which of the following describes the classification and normal balance of the unearned rent revenue

Liability, credit

When Richards Corporation in the question above pays the loan back plus the interest, what journal entry would be made on May 1, 2021? (numbers omitted)

Note payable Interest expense Interest payable Cash

Slider Corporation had office supplies (asset account) on hand at January 1, 2020 of $3,000 and during the 2020 year, the corporation purchased $17,000 of additional office supplies. Bullet had $2,000 of office supplies on hand at December 31, 2020. No adjusting journal entry has been made prior to December 31, 2020. What should be the adjusting entry on December 31, 2020?

Office supplies expense18,000 Office supplies18,000

Prepaid expenses are

Paid and recorded in an asset account before they are used or consumed/paid

Ratios that measure the income or operating success of a company for a given period of time are

Profitability ratios

Buildings are classified on the balance sheet as

Property, plant, and equipment

An adjusted trial balance

Proves the equality of the total debit and credit balances of ledger accounts after adjustments have been made

Ending retained earning for a period is equal to beginning

Retained earnings + net income - dividends

Which statement below regarding the Statement of Retained Earnings is incorrect?

Retained earnings reflects the amount of cash the corporation has at the current time.

Which of the following is a true statement?

Revenues and expenses are closed to the income summary

Which statement below regarding the Balance Sheet is incorrect?

Revenues and expenses are shown on the Balance Sheet.

Net income results when

Revenues>expenses

Copper Inc has a daily payroll of $1,000, or $5,000 per week. Employees are paid every Friday for the week (Monday through Friday). December 31, 2020 falls on Thursday. What adjusting journal entry should Copper make on December 31, 2020 with regard to the salaries earned by the employees in 2020 that have not been paid?

Salaries expense4,000 Salaries payable4,000

Which account will have a zero balance after closing entries have been journalized and posted

Service revenue

There are two overall methods of accounting, cash basis and accrual basis. Three of the transactions below describe the accrual basis of accounting. Which transaction below is not connected with the accrual basis of accounting?

Service revenues are recognized when cash payments are received from customers, not necessarily when the services are performed.

The four primary financial statements are interrelated. Which statement below is incorrect regarding the interrelationship of financial statements?

Statement of Cash Flows is related to the Balance Sheet.

Four types of financial statements are required to be in accordance with generally accepted accounting principles (GAAP) for purposes of financial reporting. Which statement below is not one of the four required statements?

Statement of Liabilities.

Which of the following is an incorrect statement regarding the Income Statement?

The Income Statement shows results of operations at a specific point in time.

All companies maintain a general ledger. Which of the following statements is incorrect regarding ledger accounts and the general ledger?

The general ledger contains only asset, liability, and stockholders' equity accounts.

A trial balance proves

The mathematical equality of debits and credits after the posting process

A trial balance proves:

The mathematical equality of debits and credits after the posting process.

Which statement below is incorrect regarding depreciation and accumulated depreciation?

The purpose of depreciation is to adjust the asset to its fair market value at the balance sheet date.

Which of the following error would be detectable from the trial balance?

The sale of a building for $600,000 cash that was recorded with a debit to the Building account and a $600,000 debit to the Cash account.

Bullet Corporation is a consulting firm and on September 18, 2020 received a payment of $48,000 for services to be performed over the next 4 months beginning October 1, 2020. The services will be performed evenly over the next four months. The entry made by Bullet on September 18 was:Cash48,000 Unearned service revenue48,000 No adjusting entries have been made prior to December 31, 2020. What adjusting entry should be made on December 31, 2020?

Unearned service revenue36,000 Service revenue36,000

The revenue recognition principle dictates that revenues should be recognized in the accounting records

When the performance obligation is satisfied

assets

cash, accounts receivable, inventory, supplies, prepaid insurance

Clark Corporation purchased equipment at a cost of $10,000 on January 1, 2016. The equipment has an estimated useful life of 10 years. Journal entries for depreciation were properly made for the four years 2016-2019. After the depreciation is recorded and posted for the year ended December 31, 2020, what are the balances for Depreciation Expense and Accumulated Depreciation?

depr exp- 1,000 acc dep-5,000

The terms Current Ratio and Working Capital have different meanings. Which statement below regarding these terms is incorrect?

he Current Ratio is current liabilities divided by current assets.

Richards Corporation borrowed $105,000 on November 1, 2020 at 4% annual interest rate, due date May 1, 2021. The principal balance of the note plus interest for all six months is due on May 1, 2021. Richards makes its adjusting entries on December 31, 2020, none have been made earlier in the year. What adjusting entry would Richards Corporation make at December 31, 2020?

interest expense700 Interest payable 700

services to be performed in the future. The journal entry made on August 1, 2020 was:Cash20,000 Unearned Service Revenue 20,000 What type of account is Unearned Service Revenue?

liability