BACC 2103 Exam #1 Ch's 1-4

Received deposits from customers for advertising services to be performed in 2022, $2,500.

Debit Cash and credit Deferred Revenue for $2,500

Which of the following is not an expense?

Dividends

What is the balance in the Cash account at December 31, 2021?

Ending Cash balance = Beginning Cash balance + Receipts of payments on account + Receipts of deposits − Payments on account − Cash paid for operating expenses incurred = $46,638 + $11,900 + $3,500 − $5,250 − $43,950 = $12,838

Which of the following statements about the Dividends account is correct?

It reduces Retained Earnings.

What is the amount of total revenue to be reported on the income statement for the month of January?

The income statement would report the revenues earned of $45,000 ($16,200 + $28,800).

A company purchased equipment for use in the business at a cost of $16,500, one-fifth was paid in cash, and the company signed a note for the balance. The journal entry to record this transaction will include a:

debit to Notes Payable of $13,200

Current liabilities are expected to be:

fulfilled within one year.

For the current year, the Sales Revenue account of Hamilton, Incorporated has a credit balance of $532,440 at year-end. After the closing entries have been posted, the account will:

have a zero balance.

Internal users of financial data include:

management.

Blue Fin started the current year with assets of $707,000, liabilities of $353,500 and common stock of $207,000. During the current year, assets increased by $407,000, liabilities decreased by $53,500 and common stock increased by $282,000. There was no payment of dividends to owners during the year. Based on this information, what was the amount of Blue Fin's retained earnings at the beginning of the year?

$146,500

During its first year of operations, Puffin, Incorporated reported Sales Revenue of $388,300 but only collected $308,500 in cash from customers. At the end of the year, Accounts Receivable equals:

$79,800 (didnt collect entire amount yet)

Assets totaled $24,950 and liabilities totaled $8,570 at the beginning of the year. During the year, assets decreased by $3,570 and liabilities increased by $2,870.What is the amount of stockholders' equity at the end of the year?

$9,940

A. Calculate the net income for Green Thumb, Incorporated for Year 3. B. Prepare a statement of retained earnings for Green Thumb, Incorporated for Year 3. Assume the company had retained earnings of $163,300 as of January 1, Year 3, and paid out $46,130 in dividends during Year 3.

A. Net income = Revenues − Expense AND B. Add net income and less dividends

which of the following is not correct?

Assets = Liabilities - Stockholder's Equity

Which of the following statements about normal account balances is correct?

Assets have debit balances and liabilities have credit balances

How is ending cash balance ( statement of cash flows) calculated?

Beginning cash + cash flow operations + cash flow financing + cash flow from investing

Which of the following statements about revenues and expenses is correct?

Credits increase revenues and decrease expenses.

The unadjusted trial balance is a key starting point for the adjustment process. Which of the following accounts is likely to be directly affected by an adjusting entry?

Deferred Revenue

When a company postpones reporting revenue until it fulfills its promise represented by a gift card, it will record:

Deferred Revenue

Which of the following accounts would be classified as a current liability on a classified balance sheet?

Deferred Revenue

Parker, Incorporated had a beginning balance in its Retained Earnings account of $386,000. During the year, the company declared and paid a $4,780 dividend and, at the end of the year, it reported Retained Earnings of $400,660. The company's net income for the year was:

Ending retained earnings = Beginning retained earnings + Net income − Dividends Net income = Ending retained earnings + Dividends − Beginning retained earnings= $400,660+ $4,780 − $386,000= $19,440

First Corporation had Retained Earnings at the end of December 31, 2022 of $453,000. During 2023, the company had net income of $173,000 and declared dividends of $20,300. The amount of Retained Earnings reported on the balance sheet as of December 31, 2023 will be:

Ending retained earnings = Beginning retained earnings + Net income − Dividends= $453,000 + $173,000 − $20,300 = $605,700

What is the total of the credit balance accounts?

Liabilities and stockholders' equity are the credit balance accounts. So for this specific problem it would be $119,120

What was the net profit margin?

Net profit margin = Net Income ÷ Sales Revenue = $24,300 ÷ $45,000 = 0.54 = 54.0%

Grizzly Company enters into the following transactions: Stockholders contribute $11,900 cash to a company in exchange for common stock. The company purchases $5,950 of new equipment in exchange for its promise to pay $5,950 at the end of next month. The company pays $3,190 to suppliers on account

Required: A. Show the effect of these transactions on the basic accounting equation. B. Prepare the journal entries that would be used to record the transactions.

The unadjusted trial balance of Sketch Star Makers Incorporated, prepared as of December 31, 2022, includes the following account balances. All of the accounts listed have normal balances The following information is also available: A) After a count of supplies, there were $1,000 worth of supplies remaining on hand at December 31, 2022. B) An insurance policy, purchased on January 1, 2022, covers four years but has not yet been adjusted. C) The equipment depreciates at a rate of $1,600 per year; no depreciation has been recorded for 2022. D) One half (or 50%) of the amount recorded as Deferred Revenue remains deferred as of December 31, 2022. E) The amount of unpaid but owing salaries and wages at December 31, 2022 is $2,600.

Required: Prepare the required adjustments for the company as of December 31, 2022. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Which of the following would not be reported as an asset on the balance sheet?

Retained Earnings

How will a company's current ratio be affected when the company receives $20,000 from owners and issues common stock to them?

The current ratio will increase because current assets increase.

What is the main goal of GAAP?

To ensure that the financial information produced by companies is useful to existing and potential investors and other parties in decision making.

How are ending retained earnings aka (statement of retained earnings) calculated?

beginning retained earnings + net income - dividends

stockholders equity includes what?

common stock + retained earnings.

The requirement that transactions be recorded at their exchange price at the transaction date is called the:

cost principle

Net income refers to the:

difference between what was earned and the costs incurred during a period.

When a deferral adjustment is made to a liability account, that liability becomes a(n):

revenue

retained earnings includes what?

revenues - expenses - dividends = it

How is net income calculated?

revenues minus expenses

What is the minimum number of accounts that must be involved in any transaction?

two

The expense recognition principle indicates:

when costs are recognized as expenses on the income statement.