Review for Quiz 1 - Ch 1-2

Liabilities represent

Amounts owed to creditors.

Which of the following equations correctly represents the fundamental accounting equation?

Assets = Liabilities + Stockholders' Equity.

Summer Leasing received $11,200 from a customer to cover 24 months of rent in advance. How should Summer record this transaction?

Debit Cash; credit Deferred Revenue

A credit to Cash will:

Decrease assets.

In which financial statement does a company report its revenues?

Income Statement.

Purchasing office supplies on account for $100 is recorded as:

Option a

Which of the following transactions increases total liabilities?

Purchase office supplies on account.

Which of the following accounts normally has a credit balance?

Service Revenue.

Which of the following accounts normally has a debit balance?

Supplies.

A company reports the following in its balance sheet: Total assets of $800,000 and total liabilities of $700,000. Which of the following is true?

Total stockholders' equity equals $100,000.

A debit is used to increase which of the following accounts?

Utilities Expense.

Draco Company engages in the following cash payments: Purchase equipment $ 3,750 Pay rent 350 Repay loan to the bank 5,000 Pay workers' salaries 1,050 What is the total amount of cash paid for operating activities?

$1,400

The following amounts are reported in the ledger of Harmony Company: Assets $77,000 Liabilities 42,000 Retained Earnings 11,000 What is the balance in the Common Stock account?

$24,000

The ending Retained Earnings balance of Carriage, Incorporated decreased by $1.3 million from the beginning of the year. The company declared a dividend of $5.8 million during the year. What was the net income for the year?

$4.5 million