Accounting 211 Exam One

ABC Company has assets totaling $50,000, liabilities totaling $30,000. What is the balance of the Stockholders Equity accounts if Retained Earnings has a credit balance of $5,000. $20,000 $5,000 $80,000 $15,000

$20,000

JR Inc. purchases supplies costing $500 on account from Supplies Distributing Company. The journal entry would include: A credit to cash a credit to accounts payable a debit to supplies expense a debit to accounts payable

A credit to accounts payable

Allen pays its account ($3,500) with Able Co. In full

Accounts Payable + 3,500 Cash - 3,500

Alpha sold $2,000 of services to Beta on credit. Beta promised to pay for it next month. Beta will report a $2,000: Accounts Payable. decrease in Cash, since it plans to pay next month. Accounts Receivable. net income.

Accounts Payable.

Allen Co. provides services $5,000 to Chester Inc., on account. Chester agrees to pay it back fully in 30 days

Accounts Receivable + 5,000 Service Revenue - 5,000

Alpha sold $2,000 of services to Beta on credit. Beta promised to pay for it next month. Alpha will report a $2,000: Accounts Payable. Accounts Receivable. net income. decrease in Cash, since it plans to pay next month.

Accounts Receivable.

What is the accounting equation?

Assets = Liabilities + Stockholders Equity

Allen invests $20,000 cash into his new company Allen Company in exchange for common stock

Cash + 20,000 Common Stock - 20,000

ABC borrows $25,000 cash from first bank. The note is due to be paid in 12 months.

Cash + 25,000 Notes Payable - 25,000

Chester Inc. pays its account ($5,000) in full

Cash + 5,000 Accounts Receivable - 5,000

Jeff Washburn incorporates a business names ABC Co. To provide funds for the new business, Jeff invests $5000 cash in exchange for common stock.

Cash + 5,000 Common Stock -5,000

ABC performed services for a client in the amount of $6,000 and received cash as payment.

Cash + 6,000 Service Revenue - 6,000

ABC purchases a computer costing $2,000 and pays cash

Computer + 2,000 Cash - 3,000

ABC purchases equipment costing $12,000. Paid Cash.

Equipment + 12,000 Cash - 12,000

Common Stock is a liability account.

False

Income from operating activities represents income generated from gains or losses generated in the sales of company assets like equipment or vehicles, unless the company is in the business of selling equipment and vehicles.

False

The Balance Sheet is dated as of a period of time, such as the Month ended December 31, 2022.

False

The normal balance of Notes Payable is a debit.

False

The normal balance of cash is a credit.

False

ABC purchases furniture from FH furniture costing $1,500 on account. The payable is due in 30 days.

Furniture + 1,500 Accounts Payable - 1,500

Four financial statements

Income statement, statement of retained earnings, balance sheet, statement of cash flow

What is the purpose of a trial balance?

Make sure financial statements for the period are correct and up to date.

Allen Co. purchases a 12- month insurance policy and pays $1,200 cash

Prepaid Insurance + 1,200 Cash - 1,200

ABC pays rent for the month of $1,000

Rent Expense + 1,000 Cash - 1,000

Revenue recognition principle

Revenue is recognized when the product is delivered not when its paid for

ABC pays salaries to its employees of $3,000 dollars cash

Salaries + 3,000 Cash - 3,000

Allen Co. Pays its employees $2,000 in cash for employment services provided

Salaries Expense + 2,000 Cash - 2,000

Allen Co. purchases services from Able Co. costing $3,500, on account, Allen will pay in full in 30 days

Service Expense + 3,500 Accounts Payable - 3,500

ABC purchases supplies costing $200 from Staples and pays cash.

Supplies + 200 Cash - 200

Allen Co. purchases supplies costing $600 and pays cash

Supplies + 600 Cash - 600

ABC Co. contracts Libby Design to create a logo for the company. ABC pays Libby Design $5,000 cash for the logo. Which of the following responses is correct? The journal entry would increase cash and increase logo. The journal entry would include a debit to Logo and a credit to cash The account logo is a liability The cost of the logo should be debited to an account named logo expense.

The journal entry would include a debit to Logo and a credit to cash

ABC purchases a truck costing $30,000. ABC paid $5,000 cash and signed a note for the $25,000 balance

Truck + 30,000 Cash - 5,000 Note Payable - 25,000

Debits must equal credits on a trial balance.

True

The normal balance of sales revenues is a credit.

True

Allen Co. pays utilities expense of $500 in cash

Utilities + 500 Cash - 500

ABC pays utilities of $300 cash

Utilities Expense + 300 Cash - 300

The normal balance of a liability is:

a credit

The normal balance of common stock is:

a credit

Jim invests $20,000 cash into his new company names JR, Inc. The company issues Jim common stock. The journal entry to record this transaction would include: a debit to common stock a credit to cash none of the above a credit to common stock

a credit to common stock

The normal balance of an asset is:

a debit

Net income is the amount: by which revenues exceed expenses. by which assets exceed expenses. the amount revenues exceed dividends and expenses by which assets exceed liabilities.

by which revenues exceed expenses.

What are the four external users of financial statements?

creditors, investors, directors, government

A cost of doing business is referred to as a(n) ______ and is considered necessary to earn ______. expense; revenue liability; expenses revenue; asset dividend; revenue

expense; revenue

Expense Recognition Principle

expenses should be recognized in the same period as the revenues to which they relate

Amounts earned by selling goods or services to customers are called dividends common stocks expenses revenues

revenues

The creditors' claims to a company's resources are represented by: total liabilities. retained earnings. common stock. total stockholder's equity.

total liabilities.