Chapter 2 quiz

Amounts that a business must pay in the future are known as A.) accounts receivable. B.) accounts payable. C.) capital. D.) expenses.

B.) accounts payable.

At the end of its first year of operations, Shapiro's Consulting Services reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The owner's total investment for this first year was $5,000. Calculate the ending balance to be reported on the Statement of Owner's Equity in the Owner's Capital account. A.) $30,000 B.) $25,000 C.) $20,000 D.) $5,000

A.) $30,000

Identify the account below that is classified as an asset account and would appear on the left side of the accounting equation. A.) Accounts Receivable. B.) Owner's Capital. C.) Accounts Payable. D.) Revenue.

A.) Accounts Receivable.

Given the options below, identify the correct accounting equation formula. A.) Assets = Liabilities + Owner's Equity B.) Liabilities = Assets + Owner's Equity C.) Assets + Liabilities = Owner's Equity D.) Assets + Owner's Equity = Liabilities

A.) Assets = Liabilities + Owner's Equity

Which financial statement is reported as of a specific date? A.) Balance Sheet Statement of Owner's Equity Income Statement Statement of Changes in Financial Position

A.) Balance Sheet

The rent paid for future months is a(n) A.) asset. B.) liability. C.) expense. D.) revenue.

A.) asset.

When equipment is purchased on credit, A.) assets and liabilities increase. B.) assets increase and liabilities decrease. C.) assets and owner's equity increase. D.) assets and expenses increase.

A.) assets and liabilities increase.

The Statement of Owner's Equity is calculated as follows: A.) beginning capital + net income - withdrawals + additional investments = ending capital B.) beginning capital + net loss + withdrawals + additional investments = ending capital C.) beginning capital + net loss - withdrawals + additional investments = ending capital D.) beginning capital + net income + withdrawals + additional investments = ending capital

A.) beginning capital + net income - withdrawals + additional investments = ending capital

Assets and liabilities are reported on A.) the balance sheet. B.) the income statement. C.) the statement of owner's equity. D.) both the balance sheet and the income statement.

A.) the balance sheet.

A net loss results A.) when expenses are greater than revenue. B.) when assets are greater than liabilities. C.) when revenue is greater than expenses. D.) when expenses are greater than assets.

A.) when expenses are greater than revenue.

Choose the option below that reflects the correct order in which to prepare the three financial statements A.) Balance Sheet; Income Statement; Statement of Owner's Equity. B.) Income Statement; Statement of Owner's Equity; Balance Sheet. C.) Income Statement; Balance Sheet; Statement of Owner's Equity. D.) Statement of Owner's Equity; Balance Sheet; Income Statement.

B.) Income Statement; Statement of Owner's Equity; Balance Sheet.

Identify the type of accounts that would appear on a firm's income statement A.) assets and liabilities. B.) revenues and expenses. C.) assets and revenues. D.) liabilities and expenses.

B.) revenues and expenses.

The financial statement that is prepared first is A.) up to the accountant. B.) the income statement. C.) the balance sheet. D.) the statement of owner's equity.

B.) the income statement.

At the end of the first month of operations for Jackson's Catering Service, the business had the following accounts: Cash, $19,000; Prepaid Rent, $500; Equipment, $5,000 and Accounts Payable $2,000. By the end of the month, Jackson's had earned $20,000 of Revenues, $1,000 of Utilities Expenses and $1,500 of Salaries Expenses. Calculate the net income to be reported by the company for this first month. A.) $20,000 B.) $19,000 C.) $17,500 D.) $12,000

C.) $17,500

The statement of financial position is another term for which financial statement? A.) Income Statement B.) Statement of Owner's Equity C.) Balance Sheet D.) Trial Balance

C.) Balance Sheet

If a business issued a check for $1,000 to pay for two-months rent in advance, analyze the effect on the firms' assets, liabilities and owner's equity. A.) Cash will increase B.) Accounts Payable will decrease C.) Prepaid Rent will increase D.) Owner's Capital will increase

C.) Prepaid Rent will increase

If the income statement covered a six-month period ending on November 30, 2013, the third line of the income statement heading would read A.) Month Ended November 30, 2013. B.) November 30, 2013. C.) Six-month Period Ended November 30, 2013 D.) Month of November, 2013.

C.) Six-month Period Ended November 30, 2013

When the owner withdraws cash for personal use, A.) assets decrease and expenses increase. B.) assets decrease and owner's equity increases. C.) assets decrease and owner's equity decreases. D.) owner's equity decreases and revenue decreases.

C.) assets decrease and owner's equity decreases.

If a business receives $5,000 on account from clients who owed money for services previously billed, identify the effect on the accounting equation A.) assets decrease and liabilities increase. B.) liabilities decrease and owner's equity decreases. C.) assets remain the same and owner's equity remains the same. D.) owner's equity increases and revenue increases.

C.) assets remain the same and owner's equity remains the same.

The owner's investment or equity in a business is called A.) cash. B.) drawing. C.) capital. D.) accounts payable.

C.) capital.

The income statement shows A.) the financial position of a business on a specific date. B.) revenue and owner's equity. C.) the results of operations for a period of time. D.) the total value of the business.

C.) the results of operations for a period of time.

When the owner invests cash in a business, assets and revenue increase. A.) assets increase and owner's equity decreases. B.) liabilities decrease and owner's equity increases. C.) assets and owner's equity increase. D.) assets and owner's equity increase.

D.) assets and owner's equity increase.

The balance sheet shows A.) the results of business operations. B.) all revenues and expenses. C.) the amount of net income or loss. D.) the financial position of a business at a given time.

D.) the financial position of a business at a given time.