Accounting Exam 1

1. The balance sheet a. reports the assets, liabilities, and stockholders' equity of a company. b. reports cumulative earnings that have not been distributed to stockholders. c. reports the amount of profit distributed to owners during the period. reports the amount of revenues earned and expenses incurred during the period

a

. A company pays wages every two weeks. Wages amount to $100 a day. On March 31, the company pays wages for the two weeks ending March 24. At the end of the month, the related adjusting journal entry made on March 31 (after workers have worked another week, but will not be paid until April) will include a a. debit to Wages Payable for $700 and a credit to Cash for $700. b. debit to Wage Expense for $700 and a credit to Wages Payable for $700. c. debit to Wages Payable for $700 and a credit to Wages Expense for $700. d. debit to Retained Earnings for $700 and a credit to Wages Payable for $700.

b

1. Receiving cash from a customer to pay for a previously recorded account receivable will: a. increase total assets. b. have no effect on total assets. c. decrease liabilities. d. increase stockholder's equity

b

If an expense has been incurred but will be paid later, then: a. nothing is recorded on the financial statements. b. a liability account is created or increased and an expense is recorded. c. an asset account is decreased or eliminated and an expense is recorded. d. a revenue and an expense are recorded.

b

On June 30, a company purchased 1 year of insurance coverage which started immediately, paying cash of $2,400. The company's year end is 12/31. Choose the true statement. a. On June 30, cash would be debited for $2,400. b. On the Income Statement for the year, insurance expense will be $1,200. c. On the Balance Sheet at the end of the year, prepaid insurance will be $2,400. d. On the Balance Sheet at the end of the year, prepaid insurance will be a non-current asset.

b

a. Received $800 cash for services rendered during July. b. Received $5,000 from issuance of stock to investors. c. Received $400 from a customer in payment of accounts receivable from the prior month. d. Billed customers for services performed in July, $3,500. e. Borrowed $2,500 from the bank, giving a promissory note in exchange. f. Received $1,000 from a customer for services to be performed next year. What is the amount of Revenue for July? a. $5,300 b. $5,700 c. $4,300 d. $7,200

c

1. The Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat. Which account would Texas Wholesale use to report the amount owed to it? a. Cash b. Accounts Payable c. Notes Payable d. Accounts Receivable e. Notes Receivable

d

1. Which of the following is an investing activity on the statement of cash flows? a. Selling stock to stockholders b. Receiving a loan from a bank c. Receiving cash from customers d. Buying machinery and equipment

d

1. Which of the following will result in an increase in revenue? a. Borrowing $10,000 from a bank b. Stockholders investing $10,000 in a company c. Selling concert tickets for $10,000 four months before the performance d. Performing lawn services e. All of the above.

d

1. Which of the following statements is true? a. The statement of cash flows reports revenues earned and expenses incurred by the company. b. Accounts payable and notes payable are reported on the income statement. c. The three basic elements of the balance sheet are assets, revenues, and expenses. d. Retained Earnings is part of the stockholders' equity section of the balance sheet.

d

1. A company was formed with $61,900 cash contributed by its owners in exchange for common stock. The company borrowed $31,900 from a bank. The company purchased $11,900 of inventory and paid cash for it. The company also purchased $71,900 of equipment by paying $10,000 in cash and issuing a note for the remainder. What is the amount of the total liabilities to be reported on the balance sheet? a. $93,800 b. $61,900 c. $0 d. $81,900

a

1. Beeb & Company was recently formed with a $6,400 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,400 from a local bank, purchased $1,140 of supplies on account, and also purchased $6,400 of equipment by paying $2,140 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are: a. $15,200. b. $9,800. c. $12,800. d. $11,940.

a

1. Which of the following statements is false? a. The payment of the principal on a bank loan is a financing activity. b. Contributed Capital and Retained Earnings are examples of liabilities. c. The purpose of the statement of retained earnings is to report how the profits of a company have been distributed to stockholders or retained in the business. d. The stockholders' equity of a company is the difference between assets and liabilities. e. None of the above is false; all are true statements.

b

2. In January 2017, a new consulting firm recorded the following transactions: ● Issued stock to investors for $20,000 cash. ● Purchased $5,000 of equipment, paying 20% in cash and giving a promissory note for the balance. ● Received $9,000 in cash for consulting services performed in January. ● Bought $1,500 of supplies on account; all of the supplies were used in January. ● Provided consulting services for clients and billed them $16,000. ● Paid $750 toward the supplies purchased above. ● Paid $3,000 to employees for work performed in January. ● Received a bill for rent and utilities for January of $3,400. What the amount of total expense to be reported on the Income Statement for the month of January? a. $3,750 b. $7,900 c. $8,150 d. $4,750

b

8. Gumbo Shrimp, Inc. started the month of June with supplies on hand of $2,000. It purchased $800 of supplies. At the end of June, $1,300 of supplies were left. What adjusting journal entry should be made on June 30? a. Debit Supplies Expense for $1,300 and credit Supplies for $1,300 b. Debit Supplies Expense for $1,500 and credit Supplies for $1,500 c. Debit Supplies for $800 and credit Cash for $800 d. Debit Supplies for $700 and credit Supplies Expense for $700 e. Debit Supplies for $1,300 and credit Supplies Expense for $1,300

b

1. A chart of accounts is a: a. list of daily transactions showing the accounts debited and credited for each transaction. b. summary of each account's activity and its ending balance. c. list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named. d. list of each account and its balance at a point in time.

c

1. During May, Sea the World Cruises, Inc. collected $1,000 cash from a customer for services to be provided during June. Which of the following statements about this transaction is correct? a. $1,000 of revenue should be recorded in May. b. $500 of revenue should be recorded in May and $500 in June. c. $1,000 of revenue should be recorded in June. No revenue should be recorded for these events because they relate only to the balance sheet.

c

1. During its first year of operations, a company entered into the following transactions: - Borrowed $5,110 from the bank by signing a promissory note. - Issued stock to owners for $11,100. - Purchased $1,110 of supplies on account. - Paid $510 to suppliers as payment on account for the supplies purchased What is the amount of total assets at the end of the year? a. $17,320 b. $5,710 c. $16,810

c

1. How is net income calculated? a. Revenues - Expenses - Dividends paid b. Revenues - Expenses + Dividends paid c. Revenues - Expenses d. Assets - Liabilities e. Cash received - Cash paid

c

1. If an apartment leasing company receives the rent for January 2016 from a tenant in December 2015, this will be reported by the leasing company as: a. revenue in 2015. b. an expense in 2015. c. a liability in 2015. stockholders' equity in 2015.

c

1. On September 30, ABC Co. received a bill for $2,200 for running a newspaper ad in September. The bill will be paid in October. Which of the following statements is correct for September? a. Revenues are decreased by $2,200. b. Liabilities are decreased by $2,200. c. Expenses are increased by $2,200. Assets are increased by $2,200.

c

1. Typical steps needed before a business can start selling goods and/or services to customers include: a. only financing activities. b. only investing activities. c. financing and investing activities. d. operating and investing activities.

c

1. What is the effect of the December 31 adjusting entry to record $400 of revenues earned but not yet collected? a. Cash should be decreased by $400 and Sales Revenue should be increased by $400. b. Unearned Revenue should be increased by $400 and Sales Revenue should be decreased by $400. c. Accounts Receivable should be increased by $400 and Sales Revenue should be increased by $400. Accounts Receivable should be increased by $400 and Unearned Revenue should be increased by $400.

c

1. Which account will appear on the balance sheet? a. Supplies Expense b. Sales Revenue c. Common Stock d. Dividends e. None of the above

c

1. Which one of the following accounts will appear on an income statement? a. Dividends b. Notes Payable c. Rent Expense d. Cash e. All of the above.

c

. The adjusting entry to estimate depreciation expense for a period: a. Increases assets and decreases liabilities b. Decreases assets and increases equity c. Decreases assets and increases liabilities d. Decreases assets and decreases equity e. Results in no change in assets, liabilities, or equity.

d

1. A credit is used to record: a. An increase in an expense account. b. A decrease in an unearned revenue account. c. A decrease in a revenue account. d. A decrease in an asset account. A decrease in an equity account.

d

1. Receiving cash from a customer to pay for a previously recorded account receivable will: a. decrease liabilities. b. increase total assets. c. increase stockholder's equity. d. have no effect on total assets.

d

1. The Metropolitan Bakery paid $14,500 in advance for six months of rent. Which of the following records this transaction? a. dr Cash and cr Unearned Rent for $14,500 b. dr Rent Expense and cr Cash for $14,500 c. dr Cash and cr Prepaid Rent for $14,500 dr Prepaid Rent and cr Cash for $14,500

d

1. What is the effect on the balance sheet if a company purchases equipment using cash? a. No effect on total assets; Decrease total liabilities; Increase total stockholders' equity b. Increase total assets; Increase total liabilities; Increase total stockholders' equity c. Decrease total assets; No effect on total liabilities; Increase total stockholders' equity d. No effect on total assets; No effect on total liabilities; No effect on total stockholders' equity

d