13035 - Financial Accounting exam 1

Following is a list of account balances of Nabers Delivery Services as of December​ 31, after the first year of operations. Accounts Receivable ​$5,000 Accounts Payable ​7,000 Salaries Expense ​6,000 Repairs Expense 600 Truck ​10,000 Equipment ​9,000 Notes Payable ​8,300 Cash ​9,300 Supplies Expense ​1,400 Service Revenue ​29,000 Gasoline Expense ​3,500 Salaries Payable 500 What is the amount of total liabilities at the end of the​ year? A. ​$23,800 B. ​$15,800 Your answer is correct. C. ​$15,300 D. ​$27,300

15,800

​Murphy, Inc. prepaid​ $7,200 on October​ 1, 2024 for a one−year insurance premium. Coverage begins October 1. On January​ 1, 2025​ (after December 31​adjustments), the Prepaid Insurance account will have a debit balance of​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ number.) A. ​$6,000 B. ​$5,400 This is the correct answer. C. ​$7,200 D. ​$7,800

5400

Marcus has decided to open an auto−detailing business. He will pick up an automobile from the​ client, take it to his​ parents' garage, detail​ it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special​ organization, which type of business​ organization, in​ effect, has he​ chosen? A sole proprietorship B. A limited−liability company C. A partnership D. A corporation

A sole Proprietorship

Jones Supply Services paid​ $350 cash, the amount owed from the previous​ month, to a materials supplier. Which of the following accounts​ decrease? A. Accounts Payable B. Retained Earnings C. Accounts Receivable D. Office Supplies

A. Accounts Payable

Which of the following journal entries would be recorded if a business purchased office supplies on account in a previous accounting period and now makes a cash payment of​ $750 to the supplier to settle the​ account? A. Accounts Payable 750 Cash 750 B. Office Supplies 750 Cash 750 C. Accounts Payable 750 Office Supplies 750 D. Cash 750 Accounts Payable 750

A. Accounts Payable 750 Cash 750

The matching principle states that​ ________. A. all expenses should be recorded when they are incurred during the period B. a​ business's activities can be sliced into small time segments C. financial statements can be prepared for specific periods

A. all expenses should be recorded when they are incurred during the period

Mason Painting Services has a weekly payroll of​ $20,000. December 31 falls on Wednesday and Mason will pay its employees the following Monday​ (January 5) for the previous full week. Assume that Mason has a five−day workweek and has an unadjusted balance in Salaries Expense of​ $845,000 at December 31. What amount should be debited to Salaries Expense on December​ 31? A. ​$12,000 B. ​$20,000 C. ​$845,000 D. ​$8,000

A. ​$12,000

Athens Delivery Service is hired on October​ 31, 20Y8 to perform​ services, beginning on November​ 1, 20Y8. The delivery services will be performed for six months at a rate of​ $3,400 per month.​ Athens' fiscal year ends on December 31. What amount of service revenue should be recorded as an adjusting entry on December​ 31, 20Y8? A. ​$6,800 B. ​$0 C. ​$3,400 D. ​$10,200

A. ​$6,800

Green Lawns Corporation earned​ $500 for landscaping services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this​ transaction? A. Cash B. Accounts Receivable C. Accounts Payable D. Supplies

B. Accounts Receivable

A business makes a cash payment of​ $12,000 to a creditor. Which of the following accounts is​ credited? A. Accounts Receivable B. Cash C. Bank

B. Cash

A business purchases equipment for​ $8,000 cash. Which of the following accounts is​ credited? A. Common Stock B. Cash C. Equipment D. Accounts Payable

B. Cash

Montgomery Equipment Rental Company received​ $1,000 cash from a​ customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting​ equation? A. Cash increases and Accounts Payable decreases. B. Cash increases and Accounts Receivable decreases. C. Cash increases and Service Revenue increases. D. Accounts Receivable increases and Service Revenue increases.

B. Cash increases and Accounts Receivable decreases.

In applying the revenue recognition​ principle, which of the following statements regarding multiple performance obligations is​ incorrect? A. A contract might have multiple performance obligations. B. Revenue is recognized after all performance obligations are satisfied. C. If the transaction has multiple performance​ obligations, the transaction price is allocated among the different performance obligations. D. The business can recognize revenue when​ (or as) it satisfies each performance obligation by transferring a good or service to a customer.

B. Revenue is recognized after all performance obligations are satisfied.

Equity of a corporation is broken out into two components. Which of the following are the two components of the equity of a​ corporation? A. common stock and liabilities B. contributed capital and retained earnings C. current assets and fixed assets D. revenues and expenses

B. contributed capital and retained earnings

Global​ Enterprises, Inc. signed a one−year ​$42,000 note payable at​ 8% interest on April​ 1, 2025. If Global only adjusts its accounts once a year at year−​end, how much interest expense was accrued on December​ 31, 2025?​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ number.) A. ​$3360 B. ​$2520 C. ​$2800 D. ​$840

B. ​$2520

Diamond, Inc. had the following transactions during​ June: Performed services for​ $3,000 on​ account; received cash on​ account, $6,000; paid​ $900 for repair​ expense; paid​ $1,900 to a supplier that it owed from the previous month. What is the combined effect on Cash of these June​ transactions? A. ​$2,800 decrease B. ​$3,200 decrease C. ​$3,200 increase D. ​$6,000 increase

B. ​$3,200 increase

The net income of Thomas Corporation was​ $74,000 for this year. The beginning balance of​ stockholders' equity was​ $28,000 and the ending balance was​ $71,000. The company issued no common stock during the year. What was the amount of dividends distributed during the​ year? A. ​$28,000 B. ​$31,000 C. ​$145,000 D. ​$71,000

B. ​$31,000

Following is an extract of account balances of Aztec Moving Services as of December​ 31, after the first year of operation. Accounts Receivable ​$7,000 Accounts Payable ​7,000 Salaries Expense ​5,000 Repairs Expense ​1,000 Truck ​12,000 Equipment ​9,000 Notes Payable ​8,600 Cash ​7,000 Supplies Expense ​1,000 Service Revenue ​32,000 Gasoline Expense ​3,700 Salaries Payable 500 What is the amount of total assets at the end of the​ year? A. ​$21,000 B. ​$35,000 C. ​$19,000 D. ​$28,000

B. ​$35,000

A business makes a cash payment of​ $12,000 to a supplier for supplies purchased two weeks earlier. Which of the following account is​ debited? A. Accounts Receivable B. Supplies C. Accounts Payable D. Cash

C. Accounts Payable

A business purchases equipment by paying​ $7,500 in cash and issuing a note payable of​ $16,000. Which of the following​ occurs? A. Cash is credited for​ $7,500, Equipment is credited for​ $23,500, and Notes Payable is debited for​ $16,000. B. Cash is debited for​ $7,500, Equipment is debited for​ $16,000, and Notes Payable is credited for​ $23,500. C. Cash is credited for​ $7,500, Equipment is debited for​ $23,500, and Notes Payable is credited for​ $16,000. D. Cash is debited for​ $7,500, Equipment is credited for​ $16,000, and Notes Payable is debited for​ $8,500.

C. Cash is credited for​ $7,500, Equipment is debited for​ $23,500, and Notes Payable is credited for​ $16,000.

Adventures Unlimited Company distributes cash dividends. How does this transaction affect the accounting​ equation? A. The​ assets, liabilities, and equity remain the same. B. The assets​ increase, and liabilities decrease. C. The assets​ decrease, and equity decreases. D. The assets​ decrease, and equity increases.

C. The assets​ decrease, and equity decreases.

Which of the following statements is true of the corporate form of​ business? A. Changes in the ownership of stock have a negative effect on the continuity of the corporation. B. It is easy for stockholders to lodge an effective protest against management. C. The board of directors sets policy for the corporation and appoints the officers. D. Any stockholder may commit the corporation to a contract.

C. The board of directors sets policy for the corporation and appoints the officers.

Unearned Revenue is classified as​ a(n) ________ account. A. equity B. asset C. liability D. revenue

C. liability

The following transactions for the month of March have been journalized and posted to the proper accounts. Mar. 1 The business received​ $7,000 cash and issued common stock to stockholders. Mar. 2 Paid the first​ month's rent of​ $1,000. Mar. 3 Purchased equipment by paying​ $2,000 cash and executing a note payable for​ $8,000. Mar. 4 Purchased office supplies for​ $730 cash. Mar. 5 Billed a client for​ $11,000 of design services completed. Mar. 6 Received​ $8,000 on account for the services previously recorded. What is the balance in Cash on March​ 6? A. ​$13,270 B. ​$13,000 C. ​$11,270 D. ​$12,270

C. ​$11,270

Dynamic Production Services started the year with total assets of​ $90,000 and total liabilities of​ $50,000. The revenues and the expenses for the year amounted to​$100,000 and​ $60,000, respectively. During the​ year, the company did not issue any common​ stock, but it distributed dividends of​ $40,000. Calculate​ Dynamic's net income for the year. A. ​$60,000 B. ​$90,000 C. ​$40,000 D. ​$100,000

C. ​$40,000

​Improvements, a home improvement​ magazine, collected​ $960,000 in subscription revenue on June 30. Each subscriber will receive an issue of the magazine in each of the next 12​ months, beginning with the July issue. The company uses the accrual method of accounting. What is the amount of Subscription Revenue that has been earned by the end of​ December? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ number.) A. ​$400,000 B. ​$960,000 C. ​$480,000 D. ​$560,000

C. ​$480,000

Precision Camera Services started the year with total assets of​ $130,000 and total liabilities of​ $60,000. The revenues and the expenses for the year amounted to​$150,000 and​ $90,000, respectively. During the​ year, the company did not issue any common​ stock, but it distributed dividends of​ $70,000. What is the amount of​stockholders' equity at the end of the​ year? A. ​$70,000 B. ​$90,000 C. ​$60,000 D. ​$150,000

C. ​$60,000

A business performs services for a customer for​ $26,000 on account. Which of the following accounts is​ debited? A. Accounts Payable B. Service Revenue C. Cash D. Accounts Receivable

D. Accounts Receivable

​Adams, Inc. recorded the following journal entry on March 2nd. Cash ​10,000 Unearned Revenue ​10,000 From the journal entry​ above, identify the transaction on March 2nd. A. Adams paid​ $10,000 for services to be received at a later date. B. Adams sold goods for​ $10,000 cash. C. Adams purchased goods worth​ $10,000 and signed a one−year note for the same amount. D. Adams received​ $10,000 for services to be performed at a later period

D. Adams received​ $10,000 for services to be performed at a later period

Which of the following is a characteristic of a​ corporation? A. Each stockholder has the authority to commit the corporation to a binding contract through​ his/her actions. B. Lenders of a corporation do not have the right to claim the​ corporation's assets to satisfy their obligations. C. Corporations are subjected to less governmental regulation than other forms of businesses. D. Corporations are separate taxable entities.

D. Corporations are separate taxable entities.

Country Homes Corporation just recorded a transaction in its books. If this transaction increased the total liabilities by​ $5,000, then​ ________. A. either assets or equity must decrease by​ $5,000 B. assets must decrease by​ $5,000 C. both assets and equity must each decrease by​ $2,500 D. assets must​ increase, or equity must decrease by​ $5,000

D. assets must​ increase, or equity must decrease by​ $5,000

Spring Company has assets and equity that amount to​ $290,000 and​ $60,000, respectively. Liabilities total​ ________. A. ​$290,000 B. ​$60,000 C. ​$350,000 D. ​$230,000

D. ​$230,000

The following are selected current​ month's balances for Allbright Enterprises. Accounts Payable ​$7,000 Revenue ​10,000 Cash ​4,000 Expenses ​1,200 Furniture ​13,000 Accounts Receivable ​15,000 Common Stock ​9,250 Notes Payable ​6,950 Based on this​ information, calculate the total amount of debits for the trial​ balance? A. ​$32,000 B. ​$29,200 C. ​$28,000 D. ​$33,200

D. ​$33,200

The assets of Star Company are​ $100,000 and the total liabilities are​ $40,000. The equity is​ ________. A. ​$100,000 B. ​$140,000 C. ​$40,000 D. ​$60,000

D. ​$60,000

The asset​ account, Office Supplies had a beginning balance of​ $5,100. During the accounting​ period, office supplies were​ purchased, on​ account, for​ $5,500. A physical​count, on the last day of the accounting​ period, shows​ $2,300 of office supplies on hand. What is the amount of Supplies Expense for the accounting​ period? A. ​$5,500 B. ​$1,900 C. ​$2,800 D. ​$8,300

D. ​$8,300

Anthony Delivery Service has a weekly payroll of​ $30,000. December 31 falls on Tuesday and Anthony will pay its employees the following Monday​ (January 6) for the previous full week. Assume that Anthony has a five−day workweek and has an unadjusted balance in Salaries Expense of​ $905,000 at December 31. What is the December 31 balance of Salaries Expense after adjusting entries are recorded and​ posted? A. ​$923,000 B. ​$905,000 C. ​$935,000 Your answer is not correct. D. ​$917,000

D. ​$917,000

Accountants record​ ________. A. the​ $20,000 increase in value of a building that actually cost​ $50,000 but could be sold for​ $70,000 B. economic recessions C. estimated future transactions D. only those events that have dollar amounts than can be measured reliably

only those events that have dollar amounts than can be measured reliably

​________ is the equity earned by profitable operations that is not distributed to stockholders. A. Common stock B. Retained earnings C. Assets D. Dividend

​___B. Retained earnings