ACC 2301 - Exam 1

Retained earnings at the end of the year is calculated using:

Beginning RE, NI and Dividends

Liabilities normally carry a _______ balance and are shown in the ______________.

Credit; Balance Sheet

Childers Service Company provides services to customers totaling $3,000, for which it billed the customers. How would the transaction be recorded?

Debit A/R $3,000, Credit Svc. Rev $3,000

Styleson Inc. performed cleaning services for its customers for cash. These transactions would be recorded as:

Debit Cash, Credit Service Revenue

Daniel Dino Restaurant owes employees' salaries of $15,000. This would be recorded as:

Debit Salaries Expense, Credit Salaries Payable

If total liabilities of a company equal $16,000 and total stockholders' equity equals $9,000, then total assets equal $7,000.

False

The costs related to rent, utilities, and salaries in the current reporting period are examples of liabilities.

False

The process of transferring the debit and credit information from the journal to individual accounts in the general ledger is called journalizing.

False

Consider the following account balances of the Shattuck Law Firm at the end of the year: Accounts Payable = $4,400 Salaries Expense = 12,800 Cash = 1,700 Common Stock = 2,400 Service Revenue = 8,300 Supplies = 4,300 Retained Earnings = 1,100 Utilities Expense = 5,000 How many of these accounts would appear in Shattuck's year-end balance sheet?

Five

Revenues have what effect on the accounting equation?

Increase stockholder' equity

Receiving cash from an account receivable:

Increases one asset and decreases another asset

Which of the following would increase assets and increase liabilities?

Purchase office supplies on account

Consider the following list of accounts: Cash Retained Earnings Service Revenue Utilities Expense Salaries Expense Accounts Receivable Accounts Payable Common Stock Equipment Dividends How many of these accounts have a normal debit balance?

Six

Liabilities can be best described as:

The amount owed to creditors

After posting transactions to the general ledger accounts, the sum of the accounts with debit balances should equal the sum of the accounts with credit balances.

True

Borrowing cash from the bank causes assets to increase and liabilities to increase.

True

Dividends represent a return of the company's profits to its owners, the stockholders.

True

Paying dividends to its stockholders causes a company's stockholders' equity to decrease.

True

Paying for one year of rent in advance does not affect the accounting equation

True

Providing services to customers on account causes assets to increase and stockholders' equity to increase.

True

The assets of a company represent:

resources that will be used to benefit the company

Given the information below about Thomas Corporation, what was the amount of dividends the company paid in the current period? Beginning retained earnings = $54,000 Ending retained earnings = $110,000 Decrease in cash = $10,000 Net income = $84,000 Change in stockholders' equity = $15,000

$28,000

Using the information below from the accounting records of Thomas Corporation, stockholders' claims to the company's resources amount to: Assets = $1,200,000 L = $800,000 NI = $100,000 RE = $250,000

$400,000

Which of the following accounts would normally have a credit balance?

A/P, Svc. Rev. C/S

The accounts that represent the resources of the company are called:

Assets