acct 201 exam 1

Been There Used Furniture began operations on January 1, current year, with an initial investment of $100,000 from each of its five stockholders. During the year, the company had net income of $200,000 and paid dividends of $50,000. ​ Calculate the retained earnings balance at December 31, current year

$150,000

A landscaping company operates five days per week with a daily payroll of $16,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, March 31. The company records all accruals on a monthly basis. What is the amount of Wages Expense recorded on the next payday, Saturday, April 3?

32,000

Carver Memorial Gardens purchased supplies for $14,500 during the year. On January 1, the supplies on hand were $1,000. On December 31, the supplies on hand were $3,500. Determine the amount of supplies expense for the year.

12,000

Cozy Corporation purchased supplies at a cost of $15,000 during the year. As of January 1, supplies on hand were $5,000. On December 31, the supplies on hand were $2,000. Calculate the supplies expense for the year.

18,000

External users of financial information

rely on the financial statements to help make informed decisions.

Which of the following places the steps in preparing a worksheet in the correct order? 1: Adjusted trial balance 4: Income statement 2: Adjustments 5: Retained earnings 3: Balance sheet 6: Unadjusted trial balance ​

6, 2, 1, 4, 5, and 3

A local medical clinic operates five days per week with a daily payroll of $100,000. Employees are paid every Tuesday for the prior week's work (Monday through Friday). The last day of the month is Tuesday, April 30. What effect does the accrual on April 30 have on the clinic's net income?

A decrease by $200,000

Which one of the following steps in the accounting cycle is completed only at the end of an accounting period?

Adjustments are recorded

A company rented office space to a tenant on January 1 and received a total of $90,000 for the first nine months of rent. The amount was recorded as Rent Collected in Advance when received. Adjustments are recorded only at the end of every quarter. What effect does the adjustment on March 31 have on the company's net income for the quarter ending March 31?

An increase by $30,000

Which of the following best describes the term "current assets"?

Assets expected to be converted into cash within one year or one operating cycle, whichever is longer

What effect does "recognizing accrued interest revenue at the end of the accounting period" have on the accounting equation?

Assets increase and Stockholders' equity increases.

Which one of the following is not a proper method of recognizing assets as expenses in a particular accounting period?

Customers' account balances in accounts receivable are assigned to expense in the period in which each customer pays.

Which of the following groups of accounts represents temporary accounts?

Dividends, Depreciation, and Supplies Expenses

Which of the following statements is true?

Evidence used to record transactions affecting a business entity comes from source documents.

A company forgot to record four adjustments during the current year. Which one of the following omissions of adjustments will understate assets?

Interest on monies loaned out has not yet been recorded.

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for the insurance company?

Liabilities decrease and Stockholders' equity increases.

Failure to record the earned portion of unearned revenue would result in

Net income being understated.

Which of the following statements is false regarding the use of source documents?

Stock certificates provide evidence of being a creditor of the company.

Failure to record dividends paid would result in

Stockholders' equity being overstated

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Stockholders' equity increases.

Which of the following statements is true?

The posting of an amount recorded in the general ledger can be verified by referring to the account number listed in the posting reference column on that line in the general journal

Hypnosis Institute received payments from customers who had been billed earlier for services provided. What effect does this transaction have on the accounting equation?

There is no effect on the accounting equation, as one asset account increases while another asset account decreases.

Expenses should be matched against revenue

in the same period as the revenue that they helped generate.

The term for the process of recording business events in a book of original entry is

journalizing

Hunsinger Enterprises purchases many small pieces of office furniture, such as trash cans, that cost less than $100 each. The company accounts for these items as expenses when acquired rather than reporting them as property, plant, and equipment on its balance sheet. The company's accountant states that no accounting principle has been violated. The justification for expensing these furniture items is based on cost versus benefit considerations as well as the accounting constraint of

materiality.

A consulting firm provided services last month and billed its client. This month, the company received payment from the customer. What impact does this month's transaction have on the firm's working capital?

no net effect

The correct term for the entry made on the left side of a T-account is

debit

When a firm borrows money, one effect on the accounting equation is a(n)

increase in assets.

Credit entries are used to

increase liability accounts.

You are a potential creditor and are concerned that a particular company you are ready to give a loan to might have too much debt. Which financial statement would provide you the information needed in order to evaluate your concern?

the Balance Sheet

Which statement summarizes the results of the company's operations?

the Income Statement

The principle of conservatism is concerned with

the avoidance of overstating assets or income in the preparation of financial statements.

A question frequently asked by investors is "How much debt does this company have?" Which financial statement answers this question?

the classified balance sheet