ACCT 201 MIDTERM

An asset is an amount ______, while a liability is an amount ______. 1. owned; owed 2. owed; owned

1

Lawn & Order borrowed cash from a bank by issuing a $10,000 promissory note. The effect on Lawn & Order's accounting equation is as follows: 1. Assets and liabilities increase 2. Assets and shareholders' equity increase 3. Assets and liabilities decrease 4. Assets and shareholders' equity decrease

1

Indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity. -1 Paid a $100 dividend to its shareholders. -2 Repaid a $5,000 loan to the bank (creditor). -3 Paid $500 to its employees. A. Operating Activity B. Investing Activity C. Financing Activity

1. C 2. C 3. A

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity. 1. Land 2. Accounts Payable 3. Stock A. Asset B. Liability C. Shareholders' Equity

1. A 2. B 3. C

Indicate the financial statement where you would expect to find each line item: 1. Advertising Expense 2. Cash Paid for Advertising 3. Prepaid Advertising A. Income Statement B. Statement of Shareholders' Equity C. Statement of Cash Flows D. Balance Sheet

1. A 2. C 3. D

Indicate the financial statement where you would expect to find each line item: 1. Salaries Expense 2. Salaries Paid to Employees 3. Salaries Payable A. Income Statement B. Statement of Shareholders' Equity C. Statement of Cash Flows D. Balance Sheet

1. A 2. C 3. D

Match each item below with the appropriate description using each one only once. 1. Income Statement 2. Statement of Shareholders' Equity 3. Statement of Cash Flows 4. Balance Sheet 5. Notes (or footnotes) A. Reports additional information needed to better understand the financial statements B. Reports a summary of all revenues minus all expenses during a period C. Reports the changes that took place in the amount of the owners' investment during a period D. Reports a summary of cash collected and cash paid during a period E. Reports the assets, liabilities and shareholders' equity of a company at a specific point in time

1. B 2. C 3. D 4. E 5. A

On February 20, Wursthaus, Inc., paid for $500 of the sausages purchased on account on January 21. Show the effect of this transaction on the accounting equation below. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." 1. Assets 2. Liabilities 3. Shareholders' Equity A. 500 Accounts Payable B. 500 Inventory Expense C. (500) Accounts Payable D. 500 Cash E. (500) Cash F. (500) Inventory Expense G. 0 No Effect H. (500) Cost of Goods Sold I. 500 Inventory

1. E 2. C 3. G

On January 1 of its first month of business, Bags Bunny, Inc., paid $6,000 for six months rent beginning in January. How much will be reported as Rent Expense on its income statement for the month ended January 31?

1000

A company owns an economic resource that will provide it with future benefits. This economic resource is ______. 1. retained earnings 2. an asset 3. a liability 4. an expense 5. net income 6. revenue

2

An end-of-period adjusting entry that decreases Deferred Revenue most likely will ______. 1. increase an asset 2. increase revenue 3. increase a liability 4. increase an expense

2

During its first month of business, Purses, Inc., purchased 5 purse(s) at $50 each and sold 1 purses for $80 each. Purses' Inventory balance on the balance sheet at the end of the month equals $______.

200

During December, Acme, Inc., performed and billed its customers $27,000 for services on account of which it collected $9,000. How much revenue should Acme record in December?

27000

What is the effect on total shareholders' equity when a company purchases a cash register for a cash payment of $1,200? 1. Increase 2. Decrease 3. No effect

3

If a company's total assets equals $60,000 and its shareholders' equity equals $30,000, then its liabilities must equal $______.

30000

Depreciating a long-term asset, such as Equipment, over its useful life records the ______. (Select all that apply.) 1. giving an IOU called Accumulated Depreciation 2. use of Cash 3. getting of Cash 4. giving up some of the asset's usefulness, Accumulated Depreciation 5. getting use of or service from an asset, Depreciation Expense 6. getting service, Accumulated Depreciation

4, 5

Thistle Do Nicely had $100 of supplies on May 1. During May, it purchased $500 of supplies on account. It paid $150 of the $500 it owed for its supplies. At May 31, Thistle Do Nicely only had $45 of supplies left. Supplies on the balance sheet equals ______.

45

Wok On Water, Inc.'s employees had worked during its first month of May and earned $6,000. Wok on Water had paid $1,000 of the amount owed. How much will be reported as Wages Expense on its May income statement?

6000

Jim's Jungle Gyms reported the following information in its year ended December 31 financials: Net Income $ 13,000 Sales Revenue 76,000 Retained Earnings - beginning balance 20,000 Dividends 3,000 What were the company's total Expenses for the current year?

63000

During the year, A Salt & Buttery, Inc., had revenue of $77,000 of which $8,000 was collected from customers. It also had expenses of $26,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals $______

77000-26000= 5100

Purses, Inc., sold 3 purse(s) that cost $40 each to its customers for a price of $70 each. The Gross Profit amount on the income statement will equal $______.

90

Nim Com Soup, Inc., purchased land at a cost of $9,000 five years ago. Currently, the land is estimated to be worth $29,000. At what amount should the land be reported on Nim Com Soups' balance sheet at year end?

9000

Indicate the financial statement where you would expect to find each line item: 1. Cost of Goods Sold 2. Cash Paid for Merchandise 3. Inventory 4. Accounts Payable A. Income Statement B. Statement of Shareholders' Equity C. Statement of Cash Flows D. Balance Sheet

A C D D

The income statement reports the ______. A. cash collected and cash paid during the period B. revenues minus expenses for the accounting period C. economic resources, obligations, and net worth D. changes that occurred in shareholders' equity during the accounting period

B

Hard Wok Cafe repays a $1,000 loan. This transaction ______. A. is a financing activity B. causes total liabilities to decrease C. causes total assets to decrease D. all of these are correct E. none of these is correct

D

Indiana Bones, Inc., paid $15 for the interest it owes for the month and the $3,000 principal. Show the effect of this transaction on total Assets, Liabilities and/or Shareholders' Equity and the account titles. If no effect, select "$0 No Effect". 1. Assets 2. Liabilities 3. Shareholders' Equity A. $(3,000) Notes Payable B. $15 Cash C. $(3,000) Cash D. $(3,015) Cash E. $3,015 Interest Expense F. $(15) Interest Expense G. $(3,015) Notes Payable

D, A, F

Wok 'n Roll began business by issuing $4,000 of stock to its owners in exchange for cash. Record the effect of this entry on total Assets, Liabilities and/or Shareholders' Equity and the account titles. If no effect, select "$0 No Effect". 1. Assets 2. Liabilities 3. Shareholders' Equity A. $4,000 Net Income B. $4,000 Notes Payable C. $4,000 Sales Revenue D. $4,000 Cash E. $4,000 Stock F. $0 No Effect G. $(4,000) Stock H. $(4,000) Cash I. $4,000 Dividend

D, F, E

Calculate the missing Net Income Sales Revenue $1,500 Cost of Goods Sold ? Gross Profit 600 Operating Expenses 100 Operating Income ? Interest Expense 10 Net Income ?

SALES REV- COGS= GROSS PROFIT 1500-X=600 X=900 GROSS PROFIT-OPERATING EXPENSE= OPERATING INCOME 600-100= 500 OPERATING INCOME-INTEREST EXPENSE= NI 500-10= 490 NI=490

Determine the missing Land balance. Cash $10,000 Supplies 14,000 Inventory 10,000 Land Buildings, Net of Accumulated Depreciation 24,000 Total Assets Notes Payable $28,000 Stock 47,000 Retained Earnings 15,000 Total Liabilities & Shareholders' Equity $90,000

cash+supplies+inventory+buildings = x 90000-x= 32000