Exam 1 Acc 101

Investing Activities:

involve purchasing/selling long-term assets and investments in marketable securities (investments in stocks and bonds of other companies);

On October 31, Shoe Fly declares and pays a dividend to its shareholders of $400. The dividend ______ by $400.

reduces assets reduces Retained Earnings on the statement of shareholders' equity

Statement of Cash Flows -

reports the change in the company's cash during the year;

Indicate the financial statement where you would expect to find each line item:

Accounts Receivable Correct D. Balance Sheet Cash Collected from Customers Correct C. Statement of Cash Flows Sales Correct A. Income Statement Unearned Revenue Correct D. Balance Sheet

When a company is owed for sales made to customers on credit, the asset called ______.

Accounts Receivable will be reported on the balance sheet

Which report is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

Adjusted trial balance

On February 12, Wursthaus, Inc., sold 600 sausages @ $10.00 each on account. The sausages cost $6.00 each. Show the effect of both the sale and the cost of the sale on the accounting equation below:

Assets Correct A. 6,000 Accounts Receivable; (3,600) Inventory Liabilities Correct G. 0 No Effect Shareholders' Equity Correct H. 6,000 Sales; (3,600) Cost of Goods Sold

In March, Florist Gump, Inc., collected $6,000 of its accounts receivable from February sales. Show the effect on the accounting equation below:

Assets Correct A. 6,000 Cash; (6,000) Accounts Receivable Liabilities Correct C. 0 No Effect Shareholders' Equity Correct C. 0 No Effect

February 1: Wursthaus, Inc., paid $600 cash for three months of insurance coverage that begins February 1.

Assets Correct A. 600 Prepaid Insurance; (600) Cash Correct D. 0 No Effect Shareholders' Equity Correct D. 0 No Effect

When Pizza Company sells three $100 gift cards at the beginning of the month, it should record a $300 debit to ______ and a $300 credit to ______.

Cash; Unearned Revenue

Which of the following have normal credit balances? (Select all that apply.)

Common Stock Notes Payable Accounts Payable

Cycle Path, Inc., sold 100 bikes to its customers at $400 each. The bikes cost $250. The entry to record this sale includes a ______. (Select all that apply.)

Correct 40,000 Sales Revenue 40,000 Cash (25,000) Inventory 25,000 inventory

The adjusting entry to record depreciation on equipment includes a ______. (Select all that apply.)

Correct debit to Depreciation Expense Correct credit to Accumulated Depreciation

Which of the following transactions will increase an asset and increase shareholders' equity?

Performing a service on account for a customer.

Indicate the financial statement where you would expect to find each line item:

Prepaid Insurance Correct D. Balance Sheet t Insurance Expense Correct A. Income Statement Cash Paid for Insurance Correct C. Statement of Cash Flows

When a company pays cash in advance for rent that is to be used over the next two years, the company records a debit to ______ and a credit to ______.

Prepaid Rent; Cash

Which of these would be captured and reported in an accounting system? (Select all that apply.)

Purchase of equipment on account Financing activities Investing activities

Indicate the financial statement where you would expect to find each line item:

Wages Expense Correct A. Income Statement Wages Paid to Employees Correct C. Statement of Cash Flows Wages Payable Correct D. Balance Sheet

Indicate whether the account is an Asset, Liability or Shareholders' Equity account:

Wages Payable Correct A. Liability Wages Expense Correct B. Shareholders' Equity Prepaid Insurance Correct C. Asset

Assets 8,000 Cash (4,800) Cost of Goods Sold The $8,000 is the price x quantity or $10 x 800. The $4,800 is the cost x quantity or $6 x 800. Liabilities 0 Shareholders' Equity 8,000 Revenue (4,800) Inventory

Wursthaus, Inc., sold 800 of its sausages that cost $6 each to customers for $8,000 cash.

Using the amounts from the adjusted trial above, what do the total assets equal on the balance sheet?

asset=(accounts receivable+cash+equipment+inventory+prepaid insurance)-accumulated depreciation

Offsets, Inc., purchased land for $100,000 by issuing an $80,000 note and paying the remainder with cash. What is the net effect of this transaction for each column in the accounting equation? Select "No effect" if the column is unaffected by the transaction.

assets and liabilities increase by 80,000, shareholder's equity has no effect

Suage, Inc., paid $6,000 cash for 1,000 sausages at $6 each.

assets: 6,000 inventory (6,000) cash liability=common stock=no effect Retained earnings=no effect

The adjusted trial balance should be prepared ______ the financial statements are prepared in order to prove the ______ of the debits and credits.

before; equality

Reliable information means information ______.

can be verified, is accurate and truthful

The main goal of an accounting system is to ______.

capture information about a business so that it can be reported to decision makers

The statement of cash flows reports the ______.

cash collected and cash paid during the period

The statement of shareholders' equity reports the ______.

changes that occurred in shareholders' equity during the accounting period

A company paid $500 for supplies that it purchased last month. The decrease in liabilities would be recorded with a ______ to Supplies Payable.

debit

Which of the following adjusting entries represent accruals that adjust for amounts earned or incurred that are owed? (Select all that apply.)

debit Accounts Receivable and credit Revenue debit Wages Expense and credit Wages Payable

An attorney performs services of $900 for a client and receives $100 cash with the remainder on account. The journal entry for this transaction would ______.

debit Cash and Accounts Receivable; credit Service Revenue

Which of the following adjusting entries represent deferral adjustments that adjust for amounts expired or used during the period? (Select all that apply.)

debit Insurance Expense and credit Prepaid Insurance debit Supplies Expense and credit Supplies

Which of the following adjusting entries represent deferral adjustments that adjust for amounts expired or used during the period? (Select all that apply.)

debit Insurance Expense and credit Prepaid Insurance debit Supplies Expense and credit Supplies

Record the entry to close revenues for the period by selecting the correct accounts from below. (Select all that apply.)

debit Revenues credit Retained Earnings

The main goal of both U.S. GAAP and IFRS is to ______.

ensure that companies produce useful information for capital providers

A(n) ______ is a cost of doing business that is necessary to earn ______.

expense; revenue

True or false: An exchange of a promise to deliver an asset in the future for a promise to pay in the future is a transaction.

false

True or false: An exchange of promises is a transaction that affects the accounting equation.

false

Depreciating a long-term asset, such as Equipment, over its useful life records the ______. (Select all that apply.)

getting use of or service from an asset, Depreciation Expense giving up some of the asset's usefulness, Accumulated Depreciation

Each transaction ______. (Select all that apply.)

has at least two effects on the accounting equation may affect either assets, liabilities, and/or shareholders' equity

Dividends are ______. (Select all that apply.)

not an expense incurred to earn revenue company profits that are paid to shareholders

On May 1, Lord of the Fries, Inc., hires an employee to begin work next month. On May 1, Lord of the Fries will ______.

not record anything

Which of the following accounts are liabilities? (Select all that apply.)

notes payable, wages payable, accounts payable, taxes payable, supplies payable

The cost of a long-term asset, such as Equipment, is expensed ______.

over its useful life

Cash-basis accounting may distort net income when a company ______. (Select all that apply.)

pays for expenses in a later accounting period than when the resources are used collects cash in advance of providing services to customers makes credit sales

Journals are used to ______.

record transactions chronologically

Statement of Shareholders' Equity -

reports the changes in the owners' investment in the company (instead of a statement of shareholders' equity, some companies will include a statement of retained earnings) during the year;

Balance Sheet -

reports the company's economic resources (assets), obligations (liabilities), and owners' equity (shareholders' equity) at a point in time (the end of the year).

Income Statement -

reports the results of the company's operations during the year;

Profits earned by a company that have not been paid to shareholders are called ______ Earnings.

retained

The income statement reports the ______.

revenues minus expenses for the accounting period

Dewey, Cheatum and Howe, LLC, is a legal firm and a ______.

service firm

Indiana Bones, Inc., purchased $400 of supplies on account during May. Indiana bones paid $150 of the $400 it owed for its supplies. At May 31, Indiana Bones had $100 of supplies left. Which of the following statements is true about the May financial statements? Cash Paid for Supplies on the ______.

statement of cash flows will equal $(150)

On July 19, Lettuce Eat Company ordered $100 of supplies, promising to pay for them in August. The supplies were delivered to Lettuce Eat on July 21 and Lettuce Eat paid $100 for them on August 10. The journal entry that Lettuce Eat made on August 10 would include a debit to ______.

supplies payable

Match the financial statement that reports each of the following.

supplies-balance sheet supplies expense-income statement cash paid for supplies-statement of cash flows

The adjusting entry to record revenue earned but not yet billed to customers includes a debit to ______.

Accounts Receivable

If a company credited Revenues, the debit may have been to ______. (Select all that apply.)

Accounts Receivable Cash Unearned Revenue

Identify the normal balance of each account below.

Accounts Receivable Correct A. debit Accounts Payable Correct B. credit Salary Expense Correct A. debit Dividends Correct A. debit Equipment Correct A. debit Depreciation Expense Correct A. debit Salary Payable Correct B. credit Supplies Correct A. debit t Supplies Expense Correct A. debit sales: credit common stock: credit

Cycle Path, Inc., sold 100 bikes to its customers at $400 each. The bikes cost $250. The entry to record this sale includes a ______. (Select all that apply.)

(25,000) Cost of Goods Sold 40,000 Sales Revenue40,000 Cash(25,000) Inventory

If a company's total assets equals $60,000 and its shareholders' equity equals $40,000, then its liabilities must equal $______.

20,000

Florist Grump, Inc., had beginning retained earnings of $162,000. During the year, Florist Grump had net income of $73,000 and declared and paid dividends of $17,000. What will be shown for ending retained earnings on Florist Grump's year-end balance sheet? DO NOT INCLUDE $ IN ANSWER

218,000

Over Armour, Inc., sold 5 shirts that cost $6 each to its customer for $10 each. Over Armour should record a total of $______ as an expense for the cost of the goods sold.

30

Whistler Company had retained earnings of $449,000 at the end of Year 1. During Year 2, Whistler had net income of $107,000. Retained earnings were $418,000 at December 31, Year 2. The amount of dividends for Year 2 must have been:

318,000

The contra-asset account, ______, is used to record depreciation on equipment.

Accumulated Depreciation

Wursthaus, Inc., paid its employee, Tom, $400 for the work he performed in January.

Asset Correct B. (400) Cash Correct D. 0 No Effect Common Stock Correct D. 0 No Effect Retained Earnings Correct E. (400) Wage Expens

Cap & Trade, Inc., paid $1,000 to its employees for the work they performed during the month.

Assets Correct C. (1,000) Cash liabilities Correct G. 0 No Effect retained earnings Correct B. (1,000) Wages Expense

common stock=

Assets-Liabilities-retained earnings

Burrows, Inc. issue a note payable to the bank at the beginning of the month. Show the effect of the entry to record the amount of interest it owes on the note at the end of the month. (The interest is not going to be paid until later.)

Assets-no effect liabilities=increase shareholder's equity=decrease

Cap & Trade, Inc., paid a $20 cash dividend to its owners.

Assets: (2) cash Liabilities no effect common stock no effect retained earnings (2) dividends

Morris Lest, Inc., obtained a bid of $3,000 from a supplier for equipment. Show the effect of the entry below.

Assets: no change Liabilities: no change Shareholder's Equity: no change

Which of the following is the accounting equation?

Assets=Liabilities+Shareholders' Equity

Miss Take, the company bookkeeper, recorded the $1,000 purchase of inventory by decreasing Cash and decreasing Shareholders' Equity. What is the effect of this error on the accounting equation?

Assets=too low Liabilities=no effect Shareholder's equity=too low

Which financial statement reports the long-term assets owned?

Balance Sheet

Which is violated if the owner pays for his son's college using company cash and reports it as a company expense?

Economic Entity Assumption

Match each item with the appropriate description.

General Ledger System=Includes the accounting part of the integrated information system. ERP=Includes both financial and non-financial information for all areas of the business. Managerial Accounting=Uses accounting information for internal reporting.

Which of these events would not be recorded as transactions in an accounting system? (Select all that apply.)

Hiring an employee. Ordering supplies to be delivered and paid for in the future.

Which financial statement reports the amount of resources used during the period?

Income Statement

A financial statement heading states that it was prepared: "For the Year Ended December 31". What types of financial statements could this be?

Income Statement Statement of Shareholders' Equity Statement of Cash Flows

If a company borrows money by issuing a note payable at the beginning of the accounting period, as a result, it will report ________.

Interest Expense on the income statement

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity.

Inventory-asset Bonds payable-liability accounts payable-liability

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity.

Inventory: Asset Bonds payable: Liability Accounts payable: Liability

Indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity.

Issued $10,000 of common stock. Correct C. Financing Activity Purchased $1,000 of inventory. Correct A. Operating Activity Purchased land for $1,000. Correct B. Investing Activity

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity.

Land Correct A. Asset Accounts Payable Correct B. Liability Common Stock Correct C. Shareholders' Equity

Match the definition with each element of the accounting equation.

Question Correct Match Selected Match Assets Correct B. Economic resources that will provide future benefit. Liabilities Correct A. Creditors' claims to economic resources. Shareholder's Equity Correct C. Owners' claims to economic resources. Revenues Correct D. Amounts earned by selling goods and services. . Expenses Correct E. Amounts used to generate profits.

The governmental agency that monitors the stock market and the financial reporting of firms that trade in the market is the ______.

Securities and Exchange Commission (SEC)

Which business organization's owner has unlimited liability?

Sole proprietorship

Which of the following is a characteristic of a sole proprietorship?

The owner is personally responsible for the debts of the business, even if the debts are more than the owner has invested in the business.

What is the effect on total liabilities when a company buys land in exchange for a 20-year note payable?

Total liabilities will increase.

Cash Paid for Supplies

during the period.

Melon-Cauli Grocers, Inc. had a $10,000 balance in Accounts Payable at the beginning of the month. During the month, it made $60,000 of purchases on account due within one month and paid $40,000 of the amounts owed. The Accounts Payable balance at the end of the month has a ______ balance.

$30,000 credit

Eel Electronics paid $4,000 of the $5,000 its employees had earned during the period. Eel Electronics should report Wages Expense of ______ on the income statement and Wages Payable of ______ on the balance sheet prepared in accordance with generally accepted accounting principles.

$5,000; $1,000

A company started the year with $400 of supplies. During the year, the company purchased additional supplies costing $1,600 on account of which it paid $600 later in the year. There were $800 of supplies on hand at the end of the year. An adjusted trial balance prepared at the end of the year will show a Supplies with a ______ balance.

$800 debit

Select all accounts that are closed at the end of an accounting period.

. Depreciation Expense . Dividend Wages Expense Revenues

Given the Inventory T-account, match the correct description with each number. For the beginning (1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. Beginning Balance 2. Blank 3. Purchases on Account 4.Sale of Inventory 5. Correct G. Ending Balance 6.Correct A. Blank

Given the Unearned Revenue T-account, match the correct description with each number. For the beginning (1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. Blank 2. Beginning Balance 3. Revenues Earned 4. Collections in Advance from Customers 5. Blank 6. Ending Balance

Using the information in the Accounts Receivable ledger account shown below: Accounts Revieveable: 100, 900, 700, 300

1. Cash Collected from Customers on the Statement of Cash Flows equals [a]. 700 2. Sales on the Income Statement equals [b]. 900 3. The amount not yet collected on the Balance Sheet equals [c]. 300

Given the Accounts Payable T-account, match the correct description with each number. For the beginning (1. or 2.) and ending balances (5. or 6.), select "Blank" for the side that is opposite the account's normal balance.

1. Correct A. Blank 2. Correct B. Beginning Balance 3. Correct C. Payments to Merchandisers 4.Correct E. Purchases on Account 5.Correct A. Blank 6.Correct G. Ending Balance

On October 31, Year 1, Pitts' Pits, Inc., paid $55,000 for a 5-month insurance policy beginning on that date. Insurance Expense for the year ended December 31, Year 1 equals ______.

=55,000/5*2 months used=22,000

Given the Prepaid Rent T-account, match the correct description with each number. For the beginning(1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1.Correct B. Beginning Balance 2.Correct A. Blank 3.Correct D. Payments in Advance 4.Correct C. Rent Used 5.Correct G. Ending Balance 6.Correct A. Blank

Given the Accounts Receivable T-account, match the correct description with each number. For the beginning (1. or 2.) and ending balances (5. or 6.), select "Blank" for the side that is opposite the account's normal balance.

1.Correct B. Beginning Balance 2.Correct A. Blank 3.Correct D. Sales on Account 4.Correct F. Collections from Customers 5.Correct G. Ending Balance 6. Correct A. Blank

Curl Up & Dye, Inc. began Year 2 with $300 of supplies. It purchased $510 of supplies on account during the year. It paid $380 of the amount it owed for its supplies during the year. At December 31, Year 2, it only had $160 of supplies left. Supplies on the Balance Sheet at December 31, Year 2 equals ______.

160

Curl Up & Dye, Inc. began May with $200 of supplies. It purchased $590 of supplies on account during May. It paid $400 of the amount it owed for its supplies in May. At May 31, it only had $170 of supplies left. Supplies Expense for the month ended May 31 equals ______.

170=590+200-x->x=620

List the steps of the accounting cycle in chronological order.

1st Record entries in the journal 2nd Post entries to the general ledger 3rd Prepare the unadjusted trial balance 4th Record and post adjusting entries 5th Prepare the adjusted trial balance 6th Prepare the financial statements 7th Record and post the closing entries 8th Prepare the post-closing trial balance

How many of the following accounts have a normal debit balance and are found on the income statement? Accounts Receivable Accumulated Depreciation Wages Expense Wages Payable Depreciation Expense Sales Revenue

2

Budget Company just bought a piece of land for $25,000. What a deal! The land next door was sold last month for $30,000. Budget immediately put the land back on the market for $31,000, but so far hasn't had any offers. This land would appear on Budget's Company's balance sheet at a value of ______.

25,000

On December 1, Morris Lest, Inc., borrowed $29,000 by issuing a 6-month note at 12%. Interest Payable at December 31 equals ______.

290=29,000/12*.12

How many of the following accounts have a normal credit balance?

3

How many of the following accounts have a normal debit balance? Accounts Receivable Unearned Revenue Wages Expense Wages Payable Depreciation Expense Sales Revenue

3

Using the information found in the financial statements for the month ended May 31 and the Accounts Receivable T-account, determine its May 31 balance found on the balance sheet. Assume all sales are on account. Balance Sheet at April 30: Accounts Receivable = $2,000 Statement of Cash Flows: Cash Collected from Customers on the Statement of Cash Flows = $6,000 Income Statement: Sales = $7,000 Balance Sheet at May 31: Accounts Receivable = ______?

3,000=7,000+2,000-6,000

During December, Acme, Inc., performed and billed its customers $31,000 for services on account of which it collected $2,000. How much revenue should Acme record in December?

31,000

The Sweet Dairy Air, Inc. began May with $100 of supplies. It purchased $820 of supplies on account during May. It paid $350 of the amount it owed for its supplies in May. At May 31, it only had $360 of supplies left. Supplies on the Balance Sheet at May 31 equals ______.

360

How many of the following line items are on the Balance Sheet? Supplies Expense Retained Earnings Notes Payable Depreciation Expense Accumulated Depreciation Interest Expense

3: Supplies Expense - IS, Depreciation Expense - IS, Interest Expense - IS

Eel Electronics bought equipment for $4,000. Normally the equipment would have cost $4,500, but the supplier gave Eel a special discount. Eel's balance sheet should report equipment of ______.

4,000

If a company's total assets equals $50,000 and its stockholders' equity equals $10,000, how much are the creditors' claims to the company's assets?

40,000

Accounts Payable 400 Accounts Receivable 350 Accumulated Depreciation 4,000 Cash 600 Cost of Goods Sold 3,000 Common Stock 4,000 Depreciation Expense 400 Dividends 100 Equipment 10,000 Interest Expense 400 Interest Payable 100 Inventory 500 Notes Payable 1,600 Sales 5,000 How many of the above accounts are closed at the end of the accounting period?

5

In its first month of business, Eel Electronics sold $5,000 of goods to customers of which $3,000 has been collected. Using accrual accounting, Eel Electronics should report revenues of ______.

5,000 The income statement reports the amount earned, Revenue, $5,000. The statement of cash flows reports the amount of Cash Collected from Customers, $3,000, which often differs from the amount earned. Accounts Receivable of $2,000 on the balance sheet reports the timing difference, the amount earned but not yet collected.

Kincaid Company's Retained Earnings balance on january 1 was $6,000. During the current year, Kincaid earned $6,400 in revenues and incurred $4,200 in expenses. Kincaid paid $2,500 in dividends, all in cash. After the closing entries are made, Kincaid's Retained Earnings balance on December 31 will be ______.

5,700

Wok On Water, Inc.'s employees had worked during its first month of May and earned $5,000. Wok on Water had paid $3,000 of the amount owed. How much will be reported as Wages Expense on its May income statement?

5000

Land is purchased at a cost of $6,000. At year end, based on appraised values, the land's value increased to $25,000. At what amount should the land be reported on the year-end balance sheet? DO NOT INCLUDE $ IN ANSWER

6,000

Wok On Water, Inc.'s employees had worked during the first month of May and earned $8,000. Wok on Water had paid $2,000 of the amount owed. How much will be reported as Wages Payable on its May 31 balance sheet?

6,000

At December 31, Year 1, Sea the World Cruises, Inc.'s assets were $60,000 and liabilities were $40,000. At December 31, Year 2, its assets are $130,000 and liabilities are $50,000. During the year, it did not issue new stock, and it declared and paid $100 dividend. Calculate net income for Year 2.

60,100

Jurassic Pork, Inc., had $100 of supplies on May 1. It purchased $800 of supplies on account during May. Jurassic Pork paid $300 of the $800 it owed for its supplies. At May 31, Jurassic Pork only had $150 of supplies left. Supplies Expense on the May 31 income statement will equal ______.

750 Purchased $800 of supplies on account: got Supplies (+A) and gave a promise to pay, Supplies Payable (+L) for $800. Paid $300 of amounts owed: reduced its Supplies Payable (-L) and Cash (-A) for $300. Adjusting entry to record the supplies used: reduced Supplies (-A) and increase Supplies Expense (-SE) by $750 (= $100 Beginning Supplies + $800 Purchases - $150 Ending Supplies). Income statement reports $750 Supplies Expense (supplies used); Statement of cash flows reports $(300) Cash Paid for Supplies; Balance sheet reports $150 Supplies (purchased but not yet used) and $500 Supplies Payable (purchased on account that is still owed)

Curl Up & Dye, Inc. began May with $200 of supplies. It purchased $860 of supplies on account during May. It paid $330 of the amount it owed for its supplies in May. At May 31, it only had $200 of supplies left. Supplies Expense for the month ended May 31 equals ______.

860

Assume Year 1 is the company's first year of business and there were no dividends in Year 1 or Year 2. After determining the missing amounts ($______) in the above financial statements, calculate and type in the December 31, Year 2 Retained Earnings 1.$_________.

9200, follow screen shot ugh

On December 31, Year 1, Cash had a balance of $100,000. During year 2, there were $1,100,000 debits and $950,000 credits posted to Cash. The December 31, Year 2, balance must equal $______. Do not include a $ in your answer.

=1,100,000-950,000+100,000=250,000

On January 1 of its first month of business, Juan in a Million, Inc., paid $11,000 for four months rent beginning in January. How much will be reported as Prepaid Rent on its balance sheet at January 31?

=11000-11000/4

On January 1 of its first month of business, Bags Bunny, Inc., paid $170,000 for four years of rent in advance beginning in January of Year 1. How much will be reported as Rent Expense on its income statement for the year ended December 31, Year 1?

=170,000/4

On January 1 of its first month of business, Bags Bunny, Inc., paid $21,000 for eight months rent beginning in January. How much will be reported as Prepaid Rent on its balance sheet at January 31?

=21000-21000/8=18,375

On December 1, Morris Lest, Inc., borrowed $23,000 by issuing a 9-month note at 6%. Interest Payable at December 31 equals ______.

=23,000*1/12*.06=115

Use the following information for Equitable, Inc., for the year ended December 31, Year 2. Assume no new common stock was issued during the year. Revenue for the year ended, December 31, Year 2 $42,000 Expenses for the year ended, December 31, Year 2 15,000 Total Assets at December 31, Year 1 35,000 Total Assets at December 31, Year 2 60,000 Total Shareholders' Equity at December 31, Year 1 25,000 Dividends for the year ended December 31, Year 2 7,000 What is total Shareholders' Equity at December 31, Year 2?

=25,000+42,000-15,000-7,000+0=45,000

In its first month of business, Brewed Awakenings, Inc., collected $34,000 from customers in advance during May. During May, it performed $6,000 of services. What is the balance of the Unearned Revenue account at the end of the month?

=34,000-6,000=28,000

On November 1, Year 1, Pitts' Pits, Inc., paid $35,000 for a 5-month insurance policy beginning on that date. Prepaid Insurance at December 31, Year 1 equals ______.

=35,000-35,000/5*2=21,000

On January 1, Year 1, The Sweet Dairy Air, Inc., paid $36,000 for a 3-year advertising campaign beginning on that date and runs the same number of advertisements each month. Prepaid Advertising at December 31, Year 1 equals ______.

=36,000-36,000/3=24,000

On January 1 of its first month of business, Juan in a Million, Inc., paid $37,000 for four months rent beginning in January. How much will be reported as Rent Expense on its income statement for the month ended January 31?

=37,000-37000/4

Lox, Stock & Bagel, Inc. bought machinery at a cost of $395,000 on January 1, Year 1. It plans to dispose of the machinery after 10 years of use. Depreciation Expense for the year ended December 31, Year 2 equals ______.

=395,000/10

On November 1, Nim Com Soup, Inc., borrowed $40,000 by issuing a 3-month note at 9%. Interest Payable at December 31, equals ______.

=40,000*2/12*.09=600

On December 31, Year 1, Accounts Payable had a balance of $10,000. During Year 2, there were $500,000 purchases on account and $490,000 payments of Accounts Payable. The December 31, Year 2, balance must equal $______. Do not include a $ in your answer.

=500,000-490,000+10,000=20,000

Curl Up & Dye, Inc. began May with $200 of supplies. It purchased $530 of supplies on account during May. It paid $330 of the amount it owed for its supplies in May. At May 31, it only had $330 of supplies left. Supplies Expense for the month ended May 31 equals ______.

=530+200-330=400

Lox, Stock & Bagel, Inc. bought machinery at a cost of $591,000 on January 1. If its salvage value is $0 (i.e., it plans to not sell the machinery when it is done using it) and its useful life is 10 years, Depreciation Expense for the year ended December 31, Year 1 equals ______.

=59,100/10

John Dear, Inc. bought machinery at a cost of $680,000 on January 1, Year 1. Assuming its salvage value is $0 (i.e., it plans to dispose of the machinery and not try to sell it) and its useful life is 10 years, Accumulated Depreciation at December 31, Year 2 equals ______.

=680,000/10*2=136,000

On January 1 of its first month of business, Bags Bunny, Inc., paid $74,000 for eight months rent beginning in January. How much will be reported as Rent Expense on its income statement for the month ended January 31?

=74,000/8

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 $31,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals ______.

=77,000-31,000

The Sweet Dairy Air, Inc., had $180 of prepaid advertising at the beginning of the year. During the year, Sweet Dairy Air, Inc., paid in advance $890 for advertising. At the end of the year, $270 of prepaid advertising remained. Advertising Expense for the year ended equals ______.

=890+180-270=800

Accounts Payable 300 Accounts Receivable 350 Accumulated Depreciation 4,000 Cash 700 Cost of Goods Sold 3,000 Common Stock 4,000 Depreciation Expense 300 Dividends 100 Equipment 10,000 Insurance Expense 50 Interest Expense 400 Interest Payable 100 Inventory 500 Notes Payable 1,600 Prepaid Insurance 300 Retained Earnings (credit balance) 700 Sales 5,000 After preparing an unadjusted trial balance using the accounts above, what would the total debit column equal on the unadjusted trial balance

=accounts receivable+cash+cost of goods sold+depreciation expense+dividends+equipment+insurance expense+interest expense+inventory+prepaid insurance

After preparing an unadjusted trial balance using the accounts above, what would the total debit column equal on the unadjusted trial balance? Accounts Payable 400 Accounts Receivable 350 Accumulated Depreciation 4,000 Cash 500 Cost of Goods Sold 3,000 Common Stock 4,000 Depreciation Expense 400 Dividends 100 Equipment 10,000 Insurance Expense 50 Interest Expense 400 Interest Payable 100 Inventory 500 Notes Payable 1,600 Prepaid Insurance 300 Retained Earnings (credit balance) 500 Sales 5,000

=accounts reveivable+cash+cost of goods sold+depreciation expense+dividends+equipment+insurance expense+interest expense+ inventory+prepaid insurance=15,600

Using the amounts from above, what does Retained Earnings equal on the post-closing trial balance? Accounts Payable 200 Accounts Receivable 350 Accumulated Depreciation 4,000 Cash 500 Cost of Goods Sold 3,000 Common Stock 4,000 Depreciation Expense 200 Dividends 100 Equipment 10,000 Insurance Expense 50 Interest Expense 400 Interest Payable 100 Inventory 500 Notes Payable 1,600 Prepaid Insurance 300 Retained Earnings 500 Sales 5,000

=beginning retained earnings+(revenues(sales)-expenses(cost of goods, depreciation expense, insurance and interest expense)-dividends=500+(5000-3000-200-50-400)-100=1,750

Jim's Jungle Gyms reported the following information in its year ended December 31 financials: Net Income $ 36,000 Sales Revenue 67,000 Retained Earnings - beginning balance 24,000 Dividends 2,000

=revenue-net income=67,000-36000=31,000

Which statement is false?

A trial balance is the same as a balance sheet.

Squid Roe, Inc., purchased $500 of supplies with cash.

Account Title a) supplies c) cash Debit b) 500 Credit d) 500

On May 1, its first month of business, Squid Roe, Inc., recorded the receipt of $800 in advance from customers for services to be performed over the next four months starting May 1.

Account Title a) unearned revenue c) sales revenue Debit b) 200 Credit d) 200

Doolittle & Dalley, Inc., collected $400 owed from customers for services previously recorded.

Account title a) cash c) accounts receivable debit b) 400 credit d)400

Record the adjusting entry to show that $300 of supplies were used during the month. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

Account title a) supplies expense c) supplies debit b) 300 credit d)300

Which of the following are true statements about the qualitative characteristics of accounting information? (Select all that apply)

Accounting information should be relevant and free from bias. Both GAAP and IFRS require the same qualitative characteristics of accounting information.

In May, Rec Rooms, Inc., collected $8,000 owed by customers for services performed in April. Show the effect of this collection on the accounting equation.

Assets Correct A. 8,000 Cash; (8,000) Accounts Receivable Incorrect B. Liabilities Correct B. 0 No Effect Shareholders' Equity Correct B. 0 No Effect

Record the entry for the $400 payment of the wages that were incurred and recorded in the prior accounting period.

Assets Correct C. (400) Cash Liabilities Correct B. (400) Wages Payable Shareholders' Equity Correct A. 0 No Effect

Hot Diggity Dog, Inc., paid $10 of May's interest on the note payable, plus it paid off the $2,000 note payable.

Assets Correct F. (2,010) Cash Correct D. (2,000) Note Payable Correct G. 0 No Effect Retained Earnings Correct E. (10) Interest Expense

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.

Assets Correct F. (500) Cash Liabilities Correct I. (500) Accounts Payable Shareholder's Equity Correct H. 0 No Effect

Indiana Bones, Inc., paid $15 for the interest it owes for the month and the $3,000 principal.

Assets Correct G. (3,015) Cash Liabilities Correct B. (3,000) Notes Payable Shareholder's Equity Correct F. (15) Interest Expense

Miss Take, the company bookkeeper, recorded the $5,000 issuance of stock as an increase to Cash and Notes Payable. What is the effect of this error on the accounting equation?

Assets Correct B. Liabilities C. Too High Shareholders' Equity A. Too Low

Wursthaus, Inc., sold 800 of its sausages that cost $6 each to customers for $8,000 cash.

Assets Correct B. 8,000 Cash; (4,800) Inventory Liabilities: Correct J. 0 No Effect Common Stock Correct J. 0 No Effect Retained Earnings Correct H. 8,000 Sales; (4,800) Cost of Goods Sold

Which accounts are increased by debits?

Assets, expenses and dividends

Which of the following have normal debit balances? (Select all that apply.)

Cash Supplies equipment

Which item would be reported as a cash flow from investing activities?

Cash paid to buy equipment

Squid Roe, Inc., purchased equipment that cost $20,000 by issuing a $15,000 promissory note and paying the remainder in cash. The effect on the accounting equation is ______. (Select all that apply.)

Cash, an asset, is decreased by $5,000. Notes Payable, a liability is increased by $15,000. Equipment, an asset, is increased by $20,000.Cash, an asset, is decreased by $5,000.

On May 1, the bank said it may lend money to Nim Com Soup, Inc. The amount will depend on Nim Com Soup's income statement for the month of May. Since the bank did not specify, Nim Com Soup did not follow generally accepted accounting principles (GAAP). It reported net income for the month ended May 31 of $80,000. The revenue included $1,000 of cash collected in advance from customers for services to be performed in June. The revenue also included a $12,000 increase in the value of its land. The expenses excluded $3,000 it owed for services it received in May. What is Nim Com Soup's GAAP Net Income?

Correct 64,000 ± 0% =80,000-12000-1000-3000

Which of the following statements concerning GAAP and IFRS is true? A. GAAP and IFRS are being converged into one global set of standards. B. IFRS are rules-based principles. C. Both are concepts-based rules. D. GAAP are concepts-based principles.

CorrectA. GAAP and IFRS are being converged into one global set of standards.

Indicate whether the account is an Asset, Liability or Shareholders' Equity account:

Cost of Goods Sold Correct C. Shareholders' Equity Rent Expense Correct C. Shareholders' Equity Prepaid Rent Correct A. Asset

Select all accounts that are closed at the end of an accounting period.

Dividends Wages Expense Revenues Depreciation Expense

Miss Krupt, a shareholder and accountant of Dewey, Cheatum and Howe, used company cash to pay her monthly mortgage on her home. Which of the following assumptions/principles did she violate?

Economic Entity Assumption

The debit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

Expenses for the month Dividends for the month

Which of the following characteristics are needed in order for information to be useful? (Select all that apply.)

Faithful representation Relevancy

True or False: Revenue on the income statement always equals Cash Collected on the statement of cash flows during the accounting period.

False

True or false: Net income equals the net amount of cash collected during the accounting period.

False

Land is reported on the balance sheet at its original purchase price.

Historical Cost Principle

Miss Krupt, accountant of Dewey, Cheatum and Howe, increased the company's long-term assets to their fair market values on the balance sheet. Which of the following assumptions/principles did she violate?

Historical Cost Principle

Which of the following statements is true?

Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to ______.

Interest Expense and credit to Interest Payable

Which of the following are true about an accounting system? (Select all that apply.)

Its purpose is to analyze, record, and summarize business activities.It captures information about the operating, investing and financing activities of a company.

Select all of the statements that are true.

Net Income equals Revenues minus Expenses. When Revenues are less than Expenses, a Net Loss is reported. Net Income equals Revenues minus Expenses. When Revenues are less than Expenses, a Net Loss is reported.

What is the effect on total shareholders' equity when a company purchases a cash register for a cash payment of $1,200?

No effect

Indicate whether each activity for Anudu Hair Salon would be classified as an operating, investing, or financing activity.

Purchased $100,000 of land. Correct B. Investing Activity Paid $200 for supplies to be used on customers over the next two months. Correct A. Operating Activity Received $500 from its customers. Correct A. Operating Activity

Indicate whether each activity for Anudu Hair Salon would be classified as an operating, investing, or financing activity.

Received $40,000 from its owners in exchange for common stock.-financing Purchased a barber's chair and sink for $35,000.-investing Paid $100 for advertising in the local paper.-operating

Match each description with the appropriate financial statement.

Reports the amount of supplies used during the period. Correct A. Income Statement Reports the amount of supplies on hand at the end of the period. Correct C. Balance Sheet Reports the amount paid for supplies during the period. Correct B. Statement of Cash Flows

The credit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

Retained Earnings balance at the end of the month. Revenues for the month.

Which of the following are found on the Statement of Shareholders' Equity? (Select all that apply.)

Retained EarningsCommon Stock

The adjusting entry to record revenue earned but not yet billed to customers includes a credit to ______.

Revenue

Sales on the income statement equals $100,000 and Cash Collected from Customers on the statement of cash flows equals $70,000. From the list of assumptions and principles, choose the one which is relevant to this statement.

Revenue Recognition Principle

Select all of the statements below that are true regarding revenue and expenses.

Revenue and expenses are reported on the income statement. Expenses are the costs of doing business necessary to earn revenue and does not equal the cash paid. Revenue and expenses are reported on the income statement. Revenue equals the amount of goods or services delivered to a customer. Expenses are the costs of doing business necessary to earn revenue and does not equal the cash paid.

During September, WVU collected $8,000,000 in advance ticket sales for basketball games to be played in January. The games were played in January as scheduled. The $8,000,000 will be reported as ______.

Revenue on the Income Statement for the month ended January 31

Faux Sure, Inc., earned $400,000 during its first month of business of which $300,000 was collected during the month. Match the amounts that will be reported on each of the first month's financial statements listed below.

Revenue on the income statement Correct D. $400,000 Cash Collected from Customers on the Statement of Cash Flows Correct C. $300,000 Accounts Receivable on the Balance Sheet Correct B. $100,000

Use the following information for Equitable, Inc., for the year ended December 31, Year 2. Assume no new common stock was issued during the year.

Review Shareholders' Equity in Module 1, LO6.2. Shareholders' Equity is found on the balance sheet, which reports Assets = Liabilities + Shareholders' Equity. Since Liabilities is not given, you cannot determine Shareholders' Equity using the accounting equation on the balance sheet. Shareholders' Equity is also reported on the statement of shareholders' equity and equals the beginning shareholders' equity + Revenue - Expenses - Dividends + Stock (remember REDS). All of these amounts are given. Note: Stock is $0 because no new common stock was issued. =42,000+25,000-15,000-7,000+0=45,000

Indicate the financial statement where you would expect to find each line item:

Salaries Expense Correct A. Income Statement Salaries Paid to Employees Correct C. Statement of Cash Flows Salaries Payable Correct D. Balance Sheet

Identify the normal balance of each account below.

Service Revenue Correct B. credit Notes Payable Correct B. credit Interest Expense Correct A. debit Dividends Correct A. debit Inventory Correct A. debit Accumulated Depreciation Correct B. credit Unearned Revenue Correct B. credit

The adjustment for supplies used during the period will result in a debit to the ______ account and a credit to the ______ account.

Supplies Expense; Supplies

The journal entry to record the purchase of supplies on account is debit ______.

Supplies and credit Supplies Payable

Which statement about a journal entry is NOT true?

The journal entry shows the balance in each account.

What is the purpose of the adjusted trial balance?

To ensure that total debits equal total credits after the adjustments have been recorded.

Liberty, Inc., a US company, sold merchandise to Belle, a French company, for 10,000 euros. In Liberty's US financial statements, this sale should be reported in ______.

USD

What is a good starting point for determining which accounts require adjustment?

Unadjusted trial balance

On April 28, Clean Dirt, Inc. received a phone call from a customer requesting 20 pounds of dirt to be delivered in May. On May 5, Clean Dirt, Inc. delivered the dirt and billed the customer. On June 5, Clean Dirt, Inc. received the customer's payment. Select the correct answer for each the questions below.

Under cash-basis accounting, revenue is recorded in which month? Correct C. June Under accrual accounting, revenue is recorded in which month? Correct B. May

Indicate whether the account is an Asset, Liability or Shareholders' Equity account:

Unearned Revenue Correct B. Liability Sales Correct C. Shareholders' Equity Accounts Receivable Correct A. Asset

Indicate whether the account is an asset, liability, or shareholders' equity account.

Utilities Payable Correct B. Liability Utilities Expense Correct C. Shareholders' Equity Correct A. Asset

Identify whether the account is to be debited or credited. Assets Liabilities 2,000 Utilities Payable Shareholders' Equity (2,000) Utilities Expense

Utilities Payable Correct B. credit Utilities Expense Correct A. debit

Interest Expense on Notes Payable is recorded with an increase to Interest Expense, which decreases shareholders' equity, and ______. (Select all that are true.)

a decrease to Cash, an asset, if the interest is paid an increase to Interest Payable, a liability, if the interest is owed an increase to Interest Payable, a liability, if the interest is owed

On May 31, Squid Roe, Inc., recorded the adjusting entry to recognize $800 of revenues earned but not yet billed.

a) account title: accounts receivable b) debit: 800 c) below account title: sales revenue d) credit: 800

Squid Roe, Inc., provided $2,000 of services for cash.

a) account title: cash b) debit: 2000 c) below account title: sales revenue d) credit: 2000

Squid Roe, Inc., had Salary Expense of $900 on its adjusted trial balance. Record the entry to close this expense at the end of the accounting period. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

a) account title: retained earnings b) debit: 900 c) below account title: salary expense d) credit: 900

On May 10, Lord of the Fries, Inc., sold $100 of inventory to a customer for $300 on account. Record the May 10 sale entry and then record the cost of the sale. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

account title: a. accounts receivable c. sales debt b. 300 credit d. 300 account title e. cost of goods sold g. inventory debt f. 100 credit h. 100

Doolittle & Dalley, Inc., provided $800 of services on account.

account title: a. accounts receivable c. sales revenue debit b 800 credit d. 800

On May 1, Squid Roe, Inc., collected $800 in advance from a customer for services to be performed over two months starting in May. Record the entry. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

account title: a. cash c. unearned revenue debit b. 800 credit d. 800

On July 31, Squid Roe, Inc., recorded the adjusting entry of $900 for wages owed to employees that will be paid in August, the next accounting period. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

account title: a. wages expense c. wages payable debit b. 900 credit d. 900

Revenue for the year totaled $900. Record the entry to close revenues at the end of the year. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

account title: a.revenue c. retained earnings debit b.900 credit d. 900

Financial information needed to manage a company is provided by a(n) ______ system.

accounting

When a business makes a sale on account, the asset created is a(n) ______?

accounts receivable

On May 1, Faux Furs, Inc., collected $35,000 from its customers. One quarter of the $35,000 was earned in May and the rest in June through August. During May, Faux Furs' had $4,000 in expenses of which only $2,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

accural: 35000/4-4000=4,750 cash biased=35000-2000 total: 28,250

The qualitative characteristic "Comparability" means that information ______.

allows users to make comparisons across financial statements

If a company debited an expense, the credit may have been to ______. (Select all that apply.)

an asset such as Prepaid Insurance, Supplies, Inventory, or Accumulated Depreciation a payable account such as Supplies Payable, Utilities Payable, Interest Payable cash

A transaction may be recorded with an increase in an asset and a decrease in ______.

another asset

Supplies

are assets on the balance sheet and report the amount of supplies to be used in the future

Match the financial statement that reports each of the following.

assests-balance sheet net income-income statement investing activities-statement cash flow

Using the information found in the financial statements for the month ended May 31, fill in the Unearned Revenue ledger account below. Cash Collected from Customers on the Statement of Cash Flows equals $600 for the month ended May 31. All cash was collected in advance. Service Revenue on the Income Statement equals $700 for the month ended May 31. The amount collected in advance but not yet earned on the Balance Sheet equals $300 at May 31. The May 1 beginning balance must be determined and entered at the top of the T account in either the a. or b. blank. Put "0" in the blank on the opposite side. When entering the ending balance in either the e. or f. blank, be sure to enter "0" in the blank on the opposite side. When entering the activity for the month, use blanks c. and d. (not a. or b.)

column 1: a.0 c.700 e.0 colums 2: b.400 d.600 f.300 .

The beginning balance in Lucre's Notes Payable was $50,000. During the month, Lucre borrowed $60,000 cash from Last National Bank and then paid First National Bank the $40,000 it had borrowed five months prior. The balance in Lucre's Notes Payable is now a ______.

credit of $70,000

Bank 'n' Roll, Inc., pays its employees once a month and records the expense at the time of payment. On May 31, Bank 'n' Roll, Inc., paid its employees $10,000 for work performed in May. The entry to record the payment includes a ______. (Select all that apply.)

credit to Cash for $10,000 debit to Wages Expense for $10,000

Nim Com Soup, Inc., issued $20,000 of stock in exchange for cash. The journal entry to record this transaction will include a ______ of $20,000.

credit to Common Stock debit to Cash

At the end of the accounting period, the adjusting entry to record the amount earned for services provided that was originally recorded as Unearned Revenue includes a ______. (Select all that apply.)

credit to Service Revenue debit to Unearned Revenue

The entry to record cash collected from customers in advance includes a ______. (Select all that apply.)

credit to Unearned Revenue debit to Cash

The normal balance of Accounts Payable is a ______ because it is a(n) ______.

credit, liability

The normal balance of Notes Payable is a ______ because it is a(n) ______.

credit, liability

The normal balance of Sales Revenue is a ______ because it is a(n) ______.

credit, shareholders' equity

The entry to close expenses requires the expense accounts to be _____.

credited

Revenue is increased with ______.

credits because it increases shareholders' equity

On May 1, its first month of business, Squid Roe, Inc., recorded the receipt of $900 in advance for services to be performed over the three months as Unearned Revenue. Record the May 31 adjusting entry to recognize the first month of revenue earned. (Select all that apply.)

debit Unearned Revenue $300 credit Revenue $300

Record the adjusting entry on December 31 for wages owed to employees that will be paid in January, the next accounting period. (Select all that apply.)

debit Wages Expense credit Wages Payable

Which of the following adjusting entries represent accruals that adjust for amounts earned or incurred that are owed? (Select all that apply.)

debit Wages Expense and credit Wages Payable debit Accounts Receivable and credit Revenue

Pizza Company sold $800 of pizzas on account. The journal entry to record the sale will include a ______. (Select all that apply.)

debit to Accounts Receivable credit to Sales Revenue

A company started the year with $400 of supplies. During the year, the company purchased an additional $1,200 of supplies on account of which it paid $1,000. There were $700 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the account period includes a _______.

debit to Supplies Expense for $900

A company pays $100,000 per week payroll for a 40-hour, five-day work week ending on Fridays. The adjusting entry on December 31, which is a Tuesday, is a ______.

debit to Wages Expense for $40,000 and a credit to Wages Payable for $40,000

The normal balance of Accounts Receivable is a ______ because it is a(n) ______.

debit, asset

The normal balance of Inventory is a ______ because it is a(n) ______.

debit, asset

The normal balance of Prepaid Insurance is a ______ because it is a(n) ______.

debit, asset

Expenses are increased with ______.

debits because they decrease shareholders' equity

On a trial balance, ______.

debits should equal credits

A transaction may be recorded with an increase in a liability and a(n) ______.

decrease in a shareholders' equity account

The expensing of a long-term asset, such as Equipment, over its useful life causes a(n) ______. (Select all that apply.)

decrease in shareholders' equity and assets

The entry to close expense accounts ______.

decreases Retained Earnings

Equipment is recorded as an asset and then expensed as it is used. This is an "accrual" or "deferral"?

deferral

The adjusting entry to record the amount of revenue earned that had been collected in advance is a result of an "accrual" or a "deferral"?

deferral

Assume Year 1 is the company's first year of business and there were $100 dividends in Year 1 and $100 dividends in Year 2. After determining the missing amounts ($______) in the above financial statements, calculate and type in the December 31, Year 2 Retained Earnings 1.$_________.

end Year 2: Revenues=12,500, expenses=1500, net income = 12500-1500=11000 end year 1: revenues=500 Expenses=500-100=(400) Net income=200-0-100=100 year 2: assest=16500 common stock=300 RETERNED EARNINGS ANSWER=200*+11000-100=11,100 year 1: assets=1000 Liabilities=500 common stock=300 retained earngins=200*

Thistle Do Nicely had $200 of supplies on May 1. During May, it purchased $400 of supplies on account. It paid $350 of the $400 it owed for its supplies. At May 31, Thistle Do Nicely only had $150 of supplies left. Supplies Expense on the ______.

income statement will equal $450

An end-of-period adjusting entry that decreases Unearned Revenue most likely will ______.

increase revenue

The adjusting entry to record amounts earned that were collected in advance include a(n) ______. (Select all that apply.)

increase to Revenues decrease to Unearned Revenue

After determining the missing amounts ($______) in the above Balance Sheet, calculate and type in the December 31 amount of Inventory 1.____?_____.

inventory=total liabilities/shareholder-cash-accounts buildings

Financing Activities:

involve borrowing/repaying creditors and any transactions with the shareholders (stocks and dividends).

Operating Activities:

involve collecting from customers and paying operating expenses; advertising

Hard Wok Cafe repays a $1,000 loan. This transaction ______.

is a financing activity none of these is correct causes total assets to decrease causes total liabilities to decrease Correct all of these are correct

Supplies Expense

is on the income statement and reports the amount of supplies used during the period.

Select the financing activities from the list below. (Select all that apply.)

issued stock, note payable

A grouping of all the T-accounts with their balances is called the ______.

ledger

The effect of journal entries on each account is summarized in the ______.

ledger

When a company receives cash in advance for services it has not yet performed, it records a(n) ______.

liability called Unearned Revenue

The U.S. Financial Accounting Standards Board is working with the International Accounting Standards Board to ______. (Select all that apply.)

make financial statements more comparable eliminate differences in financial reporting among countries

Relevant information means information______.

needs to be current, so users of financial statements can use it to make decisions

If a company incorrectly records cash received for services to be provided in the future by increasing Cash and increasing Sales Revenue, how will this error affect net income for the current period?

net income will be too low

U.S. GAAP are ______.

the accounting rules developed by the FASB for use in the United States

The dollar amount shown on the Balance Sheet for Supplies represents ______.

the cost of supplies that remain unused at the end of the period

The dollar amount shown on the Income Statement for Supplies Expense represents ______.

the cost of supplies used during the period

Expenses are ______.

the costs of doing business that are necessary to earn revenue

The financial reports of a business include only the results of that business's activities. This is ______.

the economic entity assumption

The economic entity assumption assumes ______.

the financial reports of a business include only the results of that business's activities

creditor's claim is

the liabilities

The heading of an income statement should include ______. (Select all that apply.)

the name of the business the title "Income Statement" the accounting period covered by the statement

Account titles are ______.

the names given to the items exchanged in transactions based on a company's chart of accounts

Revenues are recorded when ______.

the work is completed on the job, whether or not the cash is received

Morris Lest, Inc., purchased machinery for $10,000 cash. The effect of this transaction is to cause ______.

total assets to remain the same

A major purpose of preparing closing entries is to _______.

update the Retained Earnings account

Adjusting entries ______. (Select all that apply.)

update the accounts to their proper balances are needed in order to measure the period's net income or loss

Deferring revenue or expense means that the amount ______.

will be reported as revenue or expense in a later period