AC 210 EXAM 1

On April 30, 2011, a three-year insurance policy was purchased with a cash payment of $18,000. Coverage began immediately. What is the amount to be reported on the balance sheet as Prepaid Insurance at December 31, 2011?

$14,000

During January 2015, the first month of operations, a consulting firm had the following transactions: •Issued common stock to owners in exchange for $40,000 cash. •Purchased $10,000 of equipment, paying $2,000 cash and signing a promissory note for $8,000. •Received $18,000 in cash for consulting services performed in January. •Purchased $3,000 of supplies with cash; all of the supplies were used in January. •Provided consulting services on account in the amount of $32,000 •Paid $6,000 to employees for work performed during January. •Received a bill for utilities for January of $6,800; the bill remains unpaid. What is the total of expenses that will be reported on the income statement for the month ended January 31

$15,800

During May, Robinson Corporation billed a customer $3,000 for services performed during May. During June, Robinson Corporation collected the $3,000. Which of the following statements about this transaction is correct?

$3,000 of revenue should be recorded in May

A company's financial records at the end of the year including the following amounts: Cash $ 70,000 Accounts receivable 28,000 Supplies 4,000 Accounts payable 10,000 Notes payable 5,000 Retained earnings, beginning of year 17,000 Common stock 40,000 Service revenue 61,000 Wages expense 8,000 Advertising expense 5,000 Rent expense 10,000 What is the amount of net income on the income statement for the year?

$38,000.

The following transactions occurred during July: a. Received $800 cash for services rendered during July. b. Received $5,000 from issuance of stock to investors. c. Received $400 from a customer in payment of accounts receivable from the prior month. d. Billed customers for services performed in July, $3,500. e. Borrowed $2,500 from the bank, giving a promissory note in exchange. f. Received $1,000 from a customer for services to be performed next year. What is the amount of Revenue for July?

$4,300

If Boward Co. has Common Stock of $5,000, total assets of $85,000, and total liabilities of $35,000, its Retained Earnings equals

$45,000

Spin Co. has $52,000 in its Cash account, $20,000 in its Inventory account, and $12,000 in its Notes Payable (short-term) account. If Spin's only other account is Common Stock, what is the balance of that account

$60,000

The following activities occurred in 2019: 1.Performed advertising services on account, $61,250. 2.Received cash payments for services performed in 2018 of $11,700. 3.Received deposits from customers for advertising services to be performed in 2020, $3,400. 4.Made payments to suppliers on account, $5,220. 5.Incurred $50,100 of operating expenses; $43,400 was paid in cash and $6,700 was on account and unpaid as of the end of the year. What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2019 assuming that the company uses the accrual basis of accounting

$61,250

In January 2017, a new consulting firm recorded the following transactions: •Issued stock to investors for $20,000 cash. •Purchased $5,000 of equipment, paying 20% in cash and giving a promissory note for the balance. •Received $9,000 in cash for consulting services performed in January. •Bought $1,500 of supplies on account; all of the supplies were used in January. •Provided consulting services for clients and billed them $16,000. •Paid $750 toward the supplies purchased above. •Paid $3,000 to employees for work performed in January. •Received a bill for rent and utilities for January of $3,400. What the amount of total expense to be reported on the Income Statement for the month of January?

$7,900

On December 1, 2010, B. Darin Company received $3,600 from S. Dee Company for rent of an office owned by B. Darin Company. The $3,600 is for the 4 month period from December 1, 2010 through March 31, 2011. B. Darin Company recorded this as deferred rent revenue in full when it was received on December 1. The adjusting entry on December 31 would include

A credit to Rent Revenue of $900

If an apartment leasing company receives the rent for January 2019 from a tenant in December 2018, this will be reported by the leasing company as

A liability in 2018

Which account is affected by recording the buying of goods on credit?

Accounts Payable

Kirby, Inc. borrows $16 million from its bank. It then uses this money to buy equipment. How do these two transactions affect the company's accounting equation

Assets and liabilities both increase by $16 million

Sue Shells, Inc. pays back $200,000 on a loan it had obtained earlier from a bank

Assets decrease by $200,000, liabilities decrease by $200,000, and stockholders' equity is unchanged

The Statement of Cash Flows for the current year contained the following Inflow from customers 10,000 Cash Outflow from purchase of equipment 40,000 Cash Inflow from capital contributed by stockholder 30,000 Cash Outflow from payment to suppliers and employees 5,000 Cash Outflow from payment of dividends to stockholder 1,000 Cash Inflow from borrowing from the bank 20,000 What was the amount of Cash Flows from Investing Activities

Cash Outflow of $40,000

The Statement of Cash Flows for the current year contained the following Inflow from customers 10,000 Cash Outflow from purchase of equipment 40,000 Cash Inflow from capital contributed by stockholder 30,000 Cash Outflow from payment to suppliers and employees 5,000 Cash Outflow from payment of dividends to stockholder 1,000 Cash Inflow from borrowing from the bank 20,000 What is the amount of Cash Flows from Financing Activities

Cash inflow of $49,000

Which of the following items would appear on a balance sheet

Common Stock and Notes Payable

Which of the following would not be reported on the income statement?

Cost of land purchased with cash for future use.

Gumbo Shrimp, Inc. started the month of June with supplies on hand of $2,000. It purchased $800 of supplies. At the end of June, $1,300 of supplies were left. What adjusting journal entry should be made on June 30?

Debit Supplies Expense for $1,500 and credit Supplies for $1,500

The adjusting entry to estimate depreciation expense for a period

Decreases assets and decreases equity

Which of the following statements about financial accounting is correct?

Financial accounting reports are primarily prepared to provide information for external decision makers

Which of the following would be reported on the income statement for the current year

In the current year, the company sold goods to customers who agreed to pay next year.

At the end of the current year, a company paid cash to acquire a storage facility with plans to use it in its business activities for several years. Choose the TRUE statement

In the current year, total assets and total stockholders' equity will remain unchanged.

A business can obtain financing by issuing stock or borrowing from third parties, such as banks. What are the balance sheet effects of issuing stock to obtain cash

Increase assets; No effect on liabilities; Increase stockholders' equity

Danny Company purchased supplies using cash. What is the effect on Danny's balance sheet?

No effect on total assets; no effect on total liabilities; no effect on total stockholders' equity

GBE Company paid $12,000 cash for insurance in March that provides coverage for six months, from July through December. How much expense should be recognized in March to be in accordance with generally accepted accounting principles?

No expense should be recognized in March

On June 30, a company purchased 1 year of insurance coverage which started immediately, paying cash of $2,400. The company's year end is 12/31. Choose the true statement

On the Income Statement for the year, insurance expense will be $1,200

On December 31, 2010, interest of $500 is owed on a bank loan that will not be paid until June 30, 2011. What is the necessary adjusting journal entry on December 31, 2010? A)Interest Expense 500 Cash 500 B)Interest Expense 500 Interest Payable 500

Option B

Which of the following September transactions would impact the September income statement?

Providing services

Assets

Represent the resources presently controlled by a company

A net loss for a period arises when

Revenues are less than expenses

When accounts receivable are collected

The amount of total assets is unchanged

The Statement of Cash Flows for the current year contained the following Inflow from customers 10,000 Cash Outflow from purchase of equipment 40,000 Cash Inflow from capital contributed by stockholder 30,000 Cash Outflow from payment to suppliers and employees 5,000 Cash Outflow from payment of dividends to stockholder 1,000 Cash Inflow from borrowing from the bank 20,000

The change in cash for the current year was an increase of $14,000

The Noble Corp. installs $75,000 of equipment, paying $25,000 cash and promising to pay the remaining $50,000 in 6 months. What is the impact to this transaction on the accounting equation

Total assets are increased by $50,000

A company incurred $5,000 in wages for employees for the year. $4,500 of these wages were paid by the end of the year. Choose the TRUE statement

Wages payable on the balance sheet will be $500 at the end of the year

If an expense has been incurred but will be paid later, then

a liability account is created or increased and an expense is recorded

The accrual adjustment recorded to adjust for revenues earned but not yet collected will cause

assets to increase

Retained Earnings represents

cumulative net income that has not been distributed to owners as dividends

The Smith Corporation paid $23,000 in advance for six months of rent. Which of the following records this transaction

debit Prepaid Rent and credit Cash for $23,000

Doug's Doodle Shop, specializing in dog supplies, signs a contract with a pet groomer. Next month, the groomer will begin leasing a portion of Doug's store and provide grooming services. The signing of the contract

has no effect on the accounting equation

The income statement

reports the amount of revenues earned and expenses incurred during the period.