Accounting exam 1
Littleton, Inc., began the year with total assets of $354,000 and liabilities of $224,000. During the year, the business earned revenue of $206,000 and incurred expenses of $96,000. The stockholders received cash dividends of $48,000 and no additional stock has been issues. How much is stockholders' equity at year-end?
$192,000
Suppose Akter Corporation has Furniture totaling $316,000, Cash of $36,000, and a $128,000 Note Payable. In addition, the business has Accounts Payable of $104,000 and Accounts Receivable of $86,000. How much is Akter's stockholders' equity?
$206,000 A=L+E; A-L=E
Unearned revenue is always
A liability
Ch. 2 What is the detailed record of all increases and decreases that have occurred in a specific individual assets, liability, or equity during a specific period?
Account
Blue Dog Boutique is famous for fashion collars and other high-end pet supplies. At the end of a recent year, Blue Dog's total assets added up to $48,000,000, and liabilities were $32,000,000. How much was Blue Dog's equity?
Assets= Liabilities + Equity Equity= $48,000,000-$32,000,000 = $16,000,000
The Bravo Company performed services for a customer, earning $12,000 of service revenue on account. Which journal entry records the collection of the $12,000 cash received when the customer subsequently pays the invoice?
Cash debit 12,000, accounts receivable credit 12,000
Which accounting principle or assumption states that acquired assets and services should be recorded at the actual amount paid?
Cost principle
Refer to question 5 above. Which of the following will be included in the journal entry when Go Outdoors Monthly provides a magazine to the client each month?
Credit to subscription revenue of $5
Go Outdoors Monthly gains a client who prepays $60 for a package of one magazine per month for twelve months. Go Outdoors Monthly collects the $60 in advance and will provide the magazines throughout the next year. Which of the following will be included in the journal entry when Go Outdoors Monthly records receipt of this $60 prepayment?
Credit to unearned revenue of $60
Assume that the weekly payroll of Happy Hiking, Inc., is $2,000. The end of the year, December 31, falls on Tuesday. Happy Hiking will pay its employees on Friday for the full week. What adjusting entry will Happy Hiking make on Tuesday, December 31? (Use five days as a full workweek.)
Daily amount = weekly amount / 5 days = $2,000 per 5-day week / 5 days = $400 per day Amount accrued = $400 x 2 days = $800
A company has $144,000 in liabilities and $196,000 in equity. What is the debt ratio?
Debt ratio = total liabilities/total assets* = $144,000 / $340,000 = 42.4% *total assets = liabilities + equity = $144,000 + $196,000 = $340,000
Jerry Lopez is a stockholder of Genesis Corporation. In exchange for additional shares of common stock, Lopez provided Genesis Corporation with $150,000 of computer equipment. The journal entry to record this transaction as follows:
Equipment debit 150,000, common stock credit 150,000
What is the impact on the financial statements of an adjusting entry for deferred expense is not made?
Expenses understated
Ch 1. Which of the following organizations oversees the creation and governance of accounting standards in the United States?
Financial Accounting Standards Board (FASB)
Assume Blue Dog Boutique purchased office supplies on account for $85,000. How would this transaction affect Blue Dog's accounting equation?
Increase assets and liabilities by $85,000
A contra account
Is paired with its related account in the chart of accounts and related financial statement.
Which of the following is a collection of all the accounts, the changes in those accounts, and their balances?
Ledger
Takagi Printing, Inc., erroneously recorded a purchase of equipment on account by debiting Equipment and crediting Cash. What will be an effect of this error on the trial balance?
Liabilities understated
Which of the following best describes the role of the Public Company Accounting Oversight Board (PCAOB)?
Monitors the work of independent accountants who audit public companies
Last year, Accounting Service Company (ASC) sold services on account for $150,000 and incurred expenses totaling $96,000. At the end of the year, the balance for Accounts Receivable was $20,000, and the balance for Accounts Payable was $16,000. What was ASC's net income or net loss for the year?
Net income (Loss) = Revenues- Expenses = $150,000-$96,000=$54,000
The unadjusted trial balance shows a $4,400 balance for the Office Supplies account. At the end of the period, the office manager determines that the value of supplies on hand is $1,600. What adjusting entry will be made?
Office supplies balance before adjustment - office supplies used = office supplies on hand $4,400 - office supplies used = $1,600 Office supplies used = $2,800
Blue Dog Boutique reported net income for $1,800,000 on the 20XX income statement. The company reported beginning total assets of $16,000,000 and ending total assets of $20,000,000 on the 20XX balance sheet. What is Blue Dog's return on assets for 20XX?
Return on assets=net income / average total assets =$1,800,000 / [($16,000,000+$20,000,000) / 2] = $1,800,000 / $18,000,000 = 10.00%
Cohen Company billed a customer for $7,600 of services provided on account. This transaction appears in T-accounts as follows:
Service revenue credit $7,600, accounts receivable debit $7,600
The ultimate control of the corporation rests with the
Stockholders
Which of the following statements is correct?
Unearned revenue is increased with a credit
Ch 3. When should a company record earned revenue under accrual accounting?
When services are rendered
The matching principle requires that
expenses are recorded when they are incurred during a period
The adjustment for accrued revenues
increases an asset with a debit and increases a revenue with a credit
Which of the following is a characteristic of a limited-liability company?
indefinite life
The income statement reports the
results of operations for a specific period