ACC 101

If equity is $300000 and liabilities are $192000, then assets equal:

$492000

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accrual basis accounting.

Accounts payable appear on which of the following statements?

Balance Sheet

Which of the following accounts is not included in the calculation of a company's ending retained earnings?

Cash

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a

Contra account

A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $3,000, has been completed as of December 31, but the customer has not yet been billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company would need to make on December 31, the calendar year-end?

Debit Accounts Receivable, $3,000; credit Roofing Fees Revenue, $3,000.

An example of an operating activity is:

Paying wages

The time period assumption:

Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods

The primary objective of financial accounting is to:

Provide accounting info that serves external users

Identify the accounts that would normally have balances in the credit column of a business's trial balance

Revenues and liabilities

Resources a company own or controls that are expected to yield future benefits are:

assets

Andrea Apple opened Apple Photography on Jan 1 of the current year. During Jan, the following transactions occurred and were recorded in the company's books: 1. Andrea invested $13500 cash in the business in exchange for common stock 2. Andrea contributed $20000 of photography equipment to the business in exchange for common stock 3. The company paid $2100 cash for office furniture 4. The company received $5700 cash for services provided during Jan 5. The company purchased $6200 of office equipment on credit 6. The company provided $2750 of services to customers on account 7. The company paid cash of $1500 for monthly rent 8. The company paid $3100 on the office equipment purchased in transaction #5 9. Paid $275 cash for Jan utilities Based on this info, the amount reported as total stockholders' equity on the balance sheet at month end would be:

common stock ($33500) + Revenues ($8450) - Expenses ($1775) = $40175

two common subgroups for liabilities on a classified balance sheet are

current liabilities and long term liabilities

A credit entry:

decreases asset and expense accounts, and increases liability, common stock and revenue accounts

the difference between the cost of an asset and the accumulated depreciation for that asset is called

depreciation expense

a record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a:

journal

The measurement principle, also called the cost principle:

prescribes that accounting info is based on actual cost

A company earned $3,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

30%

On January 1, Eastern College received $1,200,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28?

300000

On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 of the current year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

A debit to Unearned Fees and a credit to Fees Earned for $1,000.

Identify the account below that is classified as an asset in a company's chart of accounts:

Account Receivable

If a company purchases equipment costing $4,500 on credit, the effect on the account equation would be:

Assets increase $4500 and liabilities increase $4500

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Assets, $30000 decrease; liabilities, $30000 decrease

The area of accounting aimed at serving the decision making needs of internal users is:

Managerial accounting

Statements that show the financial statements as if proposed transactions had already occurred are called:

Pro forma statements.

Select the account below that normally has a credit balance:

Wages Payable

Prepaid accounts are generally:

assets that represent prepayments of future expenses

the system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called

cash basis accounting

the broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the

expense recognition (matching) principle

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

income statement

Net Income:

is the excess of revenues over expenses

a broad principle that requries the activities of a business with specific time periods such as months, quarters or years is the

time period assumption

If a company is considering the purchase of a parcel of land that was acquired by the seller for $85000, is offered for sale at $150000, is assessed for tax purposed at $95000, is considered by the purchaser as easily being worth $140000, and is purchased for $137000, the land should be recorded in the purchaser's books at:

$137000

Determine the net income of a company for which the following info is available for the month of July: - Employee salaries expense: $180,000 - Interest expense: $10,000 - Rent expense: $20,000 - Consulting revenue: $400,000

$190,000

Use the following info as of Dec 31 to determine equity - Cash: $57,000 - Buildings: $157,000 - Equipment: $206,000 - Liabilities: $141,000

$297,000

A company pays its employees $4,000 each Friday, which amounts to $800 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:

$3,200.

High Step Shoes, had annual revenues of $185000, expenses of $103700, and paid dividends of $18000 during the current year. The retained earnings account before closing has a balance of $297000. The ending retained earnings balance after closing is

$360300

On January 1, Fashion Forward Magazine received $15,000 from subscribers for the annual subscriptions that it recorded in Unearned Subscription Revenue. The issues of the magazine are mailed to subscribers quarterly. What amount of subscription revenue should the magazine recognize on March 31 when the first issue is sent in March?

$3750

Savvy Sightseeing has beginning equity of $72000; revenue of $90000, expenses of $65000 and dividends to stockholders of $9000; there were no stock issuances. Calculate the ending equity

$88000

The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Retained earnings account? - total revenues: 125000 - total expenses: 60000 - retained earnings: 80000 - dividends: 15000

130000

On April 1, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the first year ended December 31?

337.5

Use the information in the adjusted trial balance presented below to calculate current assets for Wicked Wicker Company:

45600

A company had $6,992,000 in net income for the year. Its net sales were $15,200,000 for the same period. Calculate its profit margin.

46%

On April 30, Gomez Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52000 from customer payments. The May 31 Accounts Receivable balance was $13000. What was the amount of credit sales during May?

52000 - 18000 + 13000 = 47000

Cage Company had net income of $160 million and average total assets of $2000 million. It's return on assets (ROA) is:

8%

A corporation is:

A business legally separate form its owners

If a company receives $12000 from a stockholder, the effect on the accounting equation would be:

Assets increase $12000 and equity increases $12000

Alpha company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effect of this transaction on the accounting equation

Assets increase by $75000 and liabilities increase by $75,000

The income statement reports all of the following except:

Assets owned by a business

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

Assets would decrease $38,000, liabilities would decreases $38,000 and equity remains unchanged

The usual order for the asset subgroups of a classified balance sheet is:

Current assets, long-term investments, plant assets, intangible assets.

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is $3,250?

Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500.

On September 1, Kennedy Company loaned $100,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?

Debit Interest Receivable, $4,000; credit Interest Revenue, $4,000.

After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $33,000. The entry to close the income summary account will be:

Debit Retained earnings $33,000; credit Income Summary $33,000.

Gloria Catering provided $1000 of catering services and billed its client for the amount owed. Determine the general journal entry that Gloria Catering will make to record this transaction.

Debit: Accounts Receivable $1000 Credit: Catering Revenue $1000

Sharp Services provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expected to collect from the customer next month. Which of the following general journal entries did Sharp Services make to record the billing fo the customer?

Debit: Accounts Receivable $900 Credit: Consulting Revenue $800 Credit: Design Revenue $100

Adriana Graphic Design receives $1500 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?

Debit: Cash $1500 Credit: Accounts Receivable $1500

Sylvia's Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100. The client paid in cash immediately. Identify the general journal entry below that Silvias Studio will make to record the transaction

Debit: Cash $250 Credit: Rental Revenue $100 Credit: Instruction Revenue $150

Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $40000 cash in exchange for common stock. Identify the general journal entry that Innovation Consulting will make to record the transaction

Debit: Cash $40000 Credit: Common Stock $40000

Alejandro Consulting paid $2500 cash for a 5-month insurance policy that begins on March 1. Given the choices below, determine the general journal entry that Alejandro Consulting will make to record the cash payment. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts

Debit: Prepaid Insurance $2500 Credit: Cash $2500

Spencer Consulting purchased $7000 of supplies and paid cash immediately. Which of the following general journal entries will be recorded. Assume the company's policy is to initially record prepaid and unearned items in the balance sheet accounts

Debit: Supplies $7000 Credit: Cash $7000

Russel Co. received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following journal entries will Russel Co. make to record the receipt of the bill?

Debit: Utilities Expense $400 Credit: Account Payable $400

Jose Consulting paid $500 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.

Debit: Utilities Expense $500 Credit: Cash $500

Decreases in equity from costs of providing products or services to customers are called:

Expenses

An annual reporting period consisting of any twelve consecutive months is known as:

Fiscal year.

Rent expense appears on which of the following statements?

Income statements

The record of all accounts and their balances used by a business is called a:

Ledger (or General Ledger)

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

NOT debit salaries expense $600 and credit salaries payable $600

On October 1, Vista View Company rented warehouse space to a tenant for $2,500 per month. The tenant paid five months' rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Rent account. The company's annual accounting period ends on December 31. The adjusting entry needed on December 31 is:

NOT: Debit Unearned Rent, $12,500; credit Rent Earned, $12,500.

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

One asset increases $1,300 and another asset decreases $1,300, causing no effect

A classified balance sheet:

Organizes assets and liabilities into important subgroups that provide more information.

The trial balance prepared after all closing entries have been journalized and posted is called the:

Post-closing trial balance.

The process of transferring general journal entry info to the ledger is called:

Posting

The expense recognition principle, also called the matching principle:

Prescribes that a company records the expenses it incurred to generate the revenue reported

An example of an investing activity is:

Purchase of land

Distributions of cash or other resources by a business to its stockholders:

Reduce assets and equity

On Dec 15 of the current year, Conrad Accounting Services signed a $40000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Revenue Recognition Principle

Two accounting principles central to accrual accounting basis that are relied on in the adjusting process are:

Revenue recognition and Expense recognition (matching).

Centurion Co. had the following accounts and balance at Dec 31 Debit: Cash $10000 Debit: Accounts Receivable $2000 Debit: Prepaid Insurance $2400 Debit: Supplies $1000 Credit: Accounts Payable $5000 Credit: Common Stock $4900 Credit: Service Revenue $7000 Debit: Salaries Expense $500 Debit: Utilities Expense $1000 Total Debit: $16900 Total Credit: $16900

Services Revenue ($7000) - Salaries Expense ($500) - Utilities Expense ($1000) = $5500

A tool that represents a ledger account and is used to show the effects of transactions is called a

T-Account

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

The trial balance will not balance

The balance column in a ledger account is:

a column for showing the balance of the account after each entry is posted

A business uses a credit to record:

a decrease in an asset account

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

accounting cycle

A trial balance prepared after adjustments have been recorded is called a(n):

adjusted trial balance

a trial balance prepared before any adjustments have been recorded is

an unadjusted trial balance

The closing process is necessary in order to

ensure that net income or net loss and dividends for the period are closed into the retained earnings account

A debit:

is the left hand side of a T-account

prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of

items that require adjusting entries

which of the following assets is not depreciated

land

A company purchased new furniture at a cost of $14,000 on September 30. The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?

not 12500

A company's written promise to pay (in the form of a promissory note) a future amount is a

note payable

which of the following is classified as a plant asset

office equipment

Which of the following is classified as a current asset?

office supplies

A column in journals and ledger accounts that is used to cross reference journal and ledger entries is that:

posting reference column

which of the following is the usual final step in the account cycle?

preparing a post closing trial balance

The accounting principle that requires revenue to be recorded when earned is the:

revenue recognition principle

a double entry accounting system is an accounting system:

that records the effect of each transaction in at least two accounts with equal debits and credits

A balance sheet lists:

the types and amounts of assets, liabilities, and equity of a business as of a specific date