accounting chapter 3 sections 1-3

On November 1 of Year 1, Falloch, Inc. paid $2,400 cash for a contract allowing the company to use office space for one year. The company's fiscal closing date is December 31. Based on this information, the amount of cash flow from operating activities appearing on the Year 1, statement of cash flows would be

($2,400).

On October 1 of Year 1, Zeta Company collected $1,200 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of revenue appearing on the Year 1, income statement would be

300

On August 1 of Year 1, Presco Enterprises paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense appearing on the Year 1, income statement would be

500

Knoll Company started Year 2 with a $500 balance in its Cash account, a $500 balance in its Supplies account and a $1,000 balance in its common stock account. During Year 2 the company experienced the following events. (1) Paid $400 cash to purchase supplies (2) Physical count revealed $100 of supplies on hand at the end of Year 2 Based on this information the amount of supplies expense reported on the Year 2 income statement is

800

On May 1 of Year 1, Matthew Company paid $2,400 cash for an insurance policy that would protect the company for one year. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense and the cash flow from operating activities shown on the Year 1, financial statements would be

Insurance Expense- 1,600 Cash flow- ($2,400)

Which of the following shows how paying cash for an insurance policy that protects the company for some future time period affects a company's financial statements?

NA NA NANA NA NA− OA

Which of the following shows how paying cash to purchase supplies will affect a company's financial statements?

NA NA NANA NA NA− OA

Bookmyer Company experienced a business event that affected its financial statements as indicated below. Balance SheetIncome StatementStatement ofCash FlowsAssets=Liab.+EquityRev.−Exp.=Net Inc.NA NA NANA NA NA− OA Which of the following events could have caused these effects?

Paid cash to purchase supplies

On June 1 of Year 1, Doe Company paid $1,800 cash for an insurance policy that would protect the company for one year. The company's fiscal closing date is December 31. Based on this information alone, the amount of prepaid insurance and insurance expense shown on the Year 2 financial statements would be

Prepaid Insurance- zero Insurance Expense-750

Which of the following statements is false?

Prepaid insurance is shown on the income statement.

Bookmyer Company experienced a business event that affected its financial statements as indicated below. Balance SheetIncome StatementStatement ofCash FlowsAssets=Liab.+EquityRev.−Exp.=Net Inc.− NA −NA + −NA Which of the following events could have caused these effects?

Recognized supplies expense

Baltimore Company paid $3,600 cash for the right to use office space during the coming year. Which of the following shows how this event would affect Baltimore's ledger accounts?

cash- (3,600), prepaid rent- 3,600

AAA Consulting Services collected $6,000 cash for services to be provided in the future. Which of the following shows how recognizing the cash receipt will affect the company's ledger accounts?

cash-6,000 unearned revenue- 6,000

Lawyers Inc. accepted a $12,000 retainer for which the company agreed to provide services in the future. Recognizing this event would

defer the recognition of revenue. cause the company's assets to increase. cause the company's liabilities to increase. - this option: All of the answers are correct.

When a company purchases prepaid rent, it

defers recognition of rent expense

A deferral

exists when a company receives cash before recognizing the associated revenue.

When a company purchases supplies on account

liabilities increase

On October 1 of Year 1, Lesikar Company paid $1,200 cash for an insurance policy that would provide protection for a one year term. Which of the following shows how the required adjustment on December 31, Year 1, will affect Lesikar's ledger accounts?

prepaid insurance- (300), retained earnings- (300)

On May 1 of Year 1, Matthew Company collected $2,400 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of service revenue and the cash flow from operating activities shown on the Year 1, financial statements would be

service revenue-1,600 cash flow-2,400

Delta Company started Year 2 with a $1,700 balance in its Cash account, a $700 balance in its Supplies account and a $2,400 balance in its Common Stock account. During Year 2 the company experienced the following events. (1) Paid $1,600 cash to purchase supplies. (2) Physical count revealed $400 of supplies on hand at the end of Year 2. Based on this information, which of the following show how the year end adjusting entry required to recognize supplies expense would affect Delta's account balances?

supplies- (1,900), retained earnings- (1,900)

Howard Company purchased $300 of supplies on account. Which of the following shows how this purchase will affect Howard's accounting equation?

supplies- 300, accounts payable-300

A cost may be recorded as an expense or as an asset purchase. This statement is

true

On August 1 of Year 1, Accounting Associates (AA) collected $1,200 cash for consulting services to be provided for one year beginning immediately. Based on this information, which of the following show how the required adjustment on December 31, Year 1, would affect AA's ledger accounts?

unearned revenue- (500) retained earnings=500

On June 1 of Year 1, Zoe Company collected $1,800 cash for medical services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information the amount of unearned revenue and service revenue shown on the Year 1, financial statements would be

unearned revenue- 750 service revenue- 1,050

On August 1 of Year 1, Accounting Associates collected $1,200 cash for consulting services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of unearned revenue appearing on the December 31, Year 2 balance sheet would be

zero

On October 1 of Year 1, Wilburn Company paid cash for an insurance policy that would provide protection for a one year term. Which of the following shows how the required adjusting entry on December 31, Year 1, will affect Wilburn's financial statements?

− NA −NA + −NA

Which of the following shows how adjusting the accounts to recognize supplies expense will affect a company's financial statements?

− NA −NA + −NA