ACC 108 Exam 1

On a statement of owner's equity, beginning capital is $152,000, Drawing for the year is $65,000, and the ending capital is $191,000. What is the amount of Net Income for the year?

$104,000 Beginning Capital, $152,000 + Net Income, $104,000 - Drawing, $65,000 = Ending Capital, $191,000.

At the end of its first year of operations, Shapiro's Consulting Services reported net income of $27,000. They also had account balances of: Cash, $16,000; Office Supplies, $3,200; Equipment, $24,000 and Accounts Receivable, $8,000. The owner's total investment for this first year was $15,000 and the owner withdrew $2,000 for personal use. What are the total liabilities of Shapiro's Consulting Services at the end of the first year of operations?

$11,200 Investments $15,000 + Net Income $27,000 - Withdrawals $2,000 = $40,000 Equity. Assets = Cash $16,000 + Office Supplies $3,200 + Equipment $24,000 + Accounts Receivable $8,000 = $51,200 Total Assets. So Assets of $51,200 = 11,200 Liabilities + $40,000 Equity.

At the end of the first month of operations for Jackson's Catering Service, the business had the following accounts: Cash, $21,000; Prepaid Rent, $500; Equipment, $7,500 and Accounts Payable $4,000. By the end of the month, Jackson's had earned $32,000 of Revenues, and used $1,800 of Utilities Expenses, $4,000 of Rent Expense and $3,600 of Salaries Expenses. Calculate the net income to be reported by the company for this first month

$22,600 Revenues $32,000 - Utilities Expense $1,800 - Rent Expense $4,000 - Salaries Expense $3,600 = Net Income $22,600

At the end of its first year of operations, Shapiro's Consulting Services reported net income of $27,000. They also had account balances of: Cash, $16,000; Office Supplies, $3,200, Equipment, $24,000 and Accounts Receivable, $8,000. The owner's total investment for this first year was $15,000 and the owner withdrew $2,000 for personal use. Calculate the ending balance to be reported on the Statement of Owner's Equity in the Owner's Capital account.

$40,000 Investments $15,000 + Net Income $27,000 - Withdrawals $2,000 = $40,000

Total assets of Douglas Fuhr Furniture Co. are $84,000 and the total liabilities are $37,000. What is the amount of the owner's equity?

$47,000 Assets = Liabilities + Owner's Equity: $84,000 = $37,000 + $47,000

At the end of the first month of operations for SloMo Delivery Service, the business had the following accounts: Accounts Receivable, $11,350; Prepaid Insurance, $400; Equipment, $26,200 and Cash, $21,650. On the same date, SloMo owed the following creditors: Simpson Supply Company, $17,000; Allen Office Equipment, $14,500. The total assets for the SloMo Delivery Service are

$59,600. Assets = Accounts Receivable, $11,350 + Prepaid Insurance, $400 + Equipment $26,200 + Cash, $21,650 = $59,600.

The following are all government agencies except the

AICPA

When recording a business transaction into the journal, certain steps are followed. Identify the statement below that is CORRECT regarding the journalizing process.

An explanation is indented and entered on the line underneath the last credit in the entry.

An independent accountant who is licensed by the state and provides accounting services to the public for a fee is a

CPA

If a business issued a check for $1,000 to pay for two months rent in advance, what is the effect on the firms' assets, liabilities and owner's equity.

Cash will decrease

Which of the accounts below would ALL appear on the balance sheet.

Cash, Accounts Payable, Owner's Capital (ending balance)

A business earns $4,000 from various charge account clients. To record this transaction, the business would

Debit Accounts Receivable; Credit Fees Income

Agatha Panthis Landscape Architect Company earned $2,500 of revenue collecting $1,000 immediately and will correct the remaining amount in 30 days. The journal entry to record this transaction is:

Debit Cash $1,000; Debit Accounts Receivable $1,500; Credit Fees Income $2,500

A business performed $8,000 of services. Their customer paid $3,000 of the amount right away but charged the remaining amount. To record this transaction, the business would

Debit Cash $3,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $8,000

On December 10, Yummy Catering purchased a new oven costing $10,000. They issued a check a check for $2,000 and promised to pay the balance in 30 days. The journal entry to record this transaction is

Equipment $10,000 Cash $2,000 Accounts Payable $8,000

Which of the following accounts have normal credit balances?

Fees Income and John Smith, Capital

On September 1, Lazy A, Inc. paid $2,200 for a one year insurance policy. The journal entry to record this transaction is

Prepaid Insurance $2,200 Cash $2,200

On June 1, XYZ Inc. paid $400 to its landlord for rent for the current month. The journal entry to record this transaction is:

Rent Expense $400 Cash $400

The government agency that has final authority over the financial reporting of publicly owned corporations is the

Securities and Exchange Commission

The ending capital balance appears on which of the following statement(s)?

Statement of owner's equity and balance sheet

ABC Co. performed $5,000 of consulting work. Their customer paid them $3,500 right away and agreed to pay the balance in 30 days. Select the correct journal entry from the options below to record the transaction

a debit to Cash for $3,500; a debit to Accounts Receivable for $1,500 and a credit to Fees Income for $5,000

A company purchased equipment costing $15,000. They paid $1,000 right away and agreed to pay the balance in 30 days, the journal entry to record the purchase of equipment would include

a debit to Equipment for $15,000, a credit to Cash for $1,000 and a credit to Accounts Payable for $14,000

The journal entry to record a payment made in January for rent for the months of February and March would include:

a debit to Prepaid Rent and a credit to Cash.

The journal entry to record the withdrawal of cash by Sue Snow, the owner, to pay a personal utility bill would include:

a debit to Sue Snow, Drawing and a credit to Cash.

When an entry is made in the general journal,

accounts to be debited should be listed first.

The classification and normal balance of the accounts receivable account is

an asset with a debit balance

The classification and normal balance of the salaries expense account is

an expense with a debit balance

All financial statements submitted to the SEC by publicly owned corporations must include an auditor's report prepared by

an independent certified public accountant

When equipment is purchased on credit

assets and liabilities increase

When the owner writes a company check to pay the company's electric bill

assets and owner's equity decrease

When the owner invests equipment in a business

assets and owner's equity increase

The review of financial statements to assess their fairness and adherence to GAAP is

auditing

The owner's investment or equity in a business is called

capital

Owners are not personally responsible for the debts of the business if the form of business organization is a

corporation

On July 3, the ABC Company received $865 in cash on account from customers. The correct journal entry to record this transaction is

debit Cash, $865; credit Accounts Receivable, $865

When revenue is earned from charge account sales, the accountant:

debits Accounts Receivable and credits a revenue account

The Financial Accounting Standards Board is responsible for

developing generally accepted accounting principles.

Which of the following types of accounts normally have debit balances?

expenses and assets

A company issues periodic reports called

financial statements

Ginger Yale Ice Company receives money from a customer on account. Recording this transaction will

increase Cash

The financial activities of a business and the financial activities of the owners should be

kept totally and completely separate

Amounts that a business must pay in the future are known as

liabilities

Owners and managers need financial information in order to

make decisions

The balance sheet shows each of the following except the

net income of the business

Identify the type of accounts that would appear on a firm's income statement

revenues and expenses

Business papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a transaction has taken place are called

source documents

The "Net Income" or "Net Loss" is transferred from the income statement to the

statement of owner's equity

The ending capital balance appears on what financial statement(s)

statement of owner's equity and the balance sheet.

The Net Income amount from the Income Statement is transferred to which of the following statements?

the statement of owner's equity

The Net Income appears as a separate line item on what two statements?

the statement of owner's equity and the income statement