ACG 3024 Chapter 2 Quiz

Which of the following correctly states the proper order of the accounting cycle?

Record transactions, adjust accounts, prepare statements, close temporary accounts.

Revenue on account amounted to $5,000. Cash collections of accounts receivable amounted to $3,050. Expenses for the period were $2,600. The company paid dividends of $700. Net income for the period was

Revenue $5,000 − Expenses $2,600 = $2,400 Net Income

The following accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash $4,000 Accounts receivable $3,400 Dividends $2,000 Common stock $3,900 Land $3,200 Revenue $3,200 Accounts payable $1,800 Expense $2,200 The amount of net income shown on Carolina's Year 1 income statement would amount to:

$1,000. $3,200 revenue − $2,200 expenses = $1,000

Sheldon Company began Year 1 with $900 in its supplies account. During the year, the company purchased $2,600 of supplies on account. The company paid $1,800 on accounts payable by year end. At the end of Year 1, Sheldon counted $1,300 of supplies on hand. Sheldon's financial statements for Year 1 would show:

$1,300 of supplies; $2,200 of supplies expense

Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $6,800 of common stock to stockholders. Provided $3,100 of services on account. Paid $1,800 cash for operating expenses. Collected $2,300 of cash from accounts receivable. Paid a $140 cash dividend to stockholders. The amount of net income recognized on Nelson Company's Year 1 income statement is:

$1,300. $3,100 revenue − $1,800 expenses = $1,300 net income

Jason Company paid $5,700 for one year's rent in advance beginning on October 1, Year 1. Jason's Year 1 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

$1,425; $5,700

The following accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash $4,000 Accounts receivable $3,400 Dividends $2,000 Common stock $3,900 Land $3,200 Revenue $3,200 Accounts payable $1,800 Expense $2,200 Total assets on Carolina's December 31, Year 1 balance sheet would amount to:

$10,600. $4,000 cash + $3,200 land + $3,400 accounts receivable = $10,600 total assets

Prior to closing, Syracuse Company's accounting records showed the following balances: Retained earnings $16,800 Service revenue 21,750 Interest revenue 1,800 Salaries expense 12,300 Operating expense 3,450 Interest expense 900 Dividends 2,700 After closing, Syracuse's retained earnings balance would be

$21,000. $16,800 + $21,750 + $1,800 − $12,300 − $3,450 − $900 − $2,700 = $21,000

Warren Enterprises had the following events during Year 1: The business issued $28,000 of common stock to its stockholders. The business purchased land for $20,000 cash. Services were provided to customers for $24,000 cash. Services were provided to customers for $13,000 on account. The company borrowed $24,000 from the bank. Operating expenses of $20,000 were incurred and paid in cash. Salary expense of $1,600 was accrued. A dividend of $12,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, the amount of retained earnings as of December 31, Year 1 would be:

$3,400 $0 beginning balance + $37,000 revenue − $21,600 expenses − $12,000 dividends = $3,400 ending balance

Prior to closing, Syracuse Company's accounting records showed the following balances: Retained earnings $6,050 Service revenue 7,550 Interest revenue 750 Salaries expense 4,400 Operating expense 1,300 Interest expense 450 Dividends 1,050 After closing, Syracuse's retained earnings balance would be

$6,050 + $7,550 + $750 − $4,400 − $1,300 − $450 − $1,050 = $7,150

Gomez Company collected $18,600 on September 1, Year 1 from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1? How much would it report as cash flows from operating activities for Year 1?

$6,200; $18,600

Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $12,000 of common stock to stockholders. Provided $4,600 of services on account. Paid $3,200 cash for operating expenses. Collected $3,800 of cash from accounts receivable. Paid a $200 cash dividend to stockholders. The amount of net cash flow from operating activities shown on Nelson Company's Year 1 statement of cash flows is

$600. $3,800 cash collected from revenue − $3,200 cash paid for expenses = $600 cash flow from operating activities

The following account balances were drawn from the financial statements of Grayson Company: Cash $5,200 Accounts payable $1,650 Accounts receivable $2,300 Common stock ? Land $8,800 Retained earnings, Jan.1 $3,500 Revenue $10,300 Expenses $7,650 Based on the above information, what is the balance of Common Stock for Grayson Company?

Assets ($5,200 + $2,300 + $8,800) = Liabilities ($1,650) + Equity; Equity = $14,650; $14,650 = Common Stock + Retained Earnings ($3,500 + $10,300 − $7,650); $14,650 = Common Stock + $6,150; Common Stock = $8,500

Duluth Co. collected a $6,000 cash advance from a customer on November 1, Year 1 for work to be performed over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's Year 1 financial statements?

Decrease liabilities and increase revenues.

On December 31, Year 1, Gaskins Co. owed $4,500 in salaries to employees who had worked during December but would be paid in January. If the year-end adjustment is properly recorded on December 31, Year 1, what will be the effect of this accrual on the following items for Gaskins? Net Income; Cash Flow from Operating Activities a. No effect; No effect b. Decrease; No effect c. Increase; Decrease d. No effect; Decrease

Option B

Which of the following accounts would not appear on a balance sheet?

Service Revenue.

The matching concept refers to the "matching" of:

expenses and revenues.

The balance in a revenue account at the beginning of an accounting period will always be

zero.