Accounting Midterm

Thistle Do Nicely had $100 of supplies on May 1. During May, it purchased $500 of supplies on account. It paid $150 of the $500 it owed for its supplies. At May 31, Thistle Do Nicely only had $15 of supplies left. Supplies Expense on the income statement equals ______.

585

Determine the missing Retained Earnings balance. Cash$20,000Supplies5,000Inventory30,000Land Buildings, Net of Accumulated Depreciation20,000Total Assets$100,000 Notes Payable$10,000Stock30,000Retained Earnings Total Liabilities & Shareholders' Equity

60,000

If a company's total assets equals $90,000 and its shareholders' equity equals $30,000, then its liabilities must equal $______.

60,000

Wok On Water, Inc.'s employees had worked during its first month of May and earned $6,000. Wok on Water had paid $1,000 of the amount owed. How much will be reported as Wages Expense on its May income statement?

6000

During the year, A Salt & Buttery, Inc., had revenue of $90,000 of which $16,000 was collected from customers. It also had expenses of $29,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals $______.

61,000

Determine the missing Cost of Goods Sold in the following multi-step income statement: Sales Revenue$1,000Cost of Goods Sold?Gross Profit300Operating Expenses100Operating Income?Interest Expense10Net Income?

700 Sales Rev-COGS= Gross Profit

Florist Gump, Inc. purchased land at a cost of $8,000 on February 2, 2000. At December 31, 2014, the land is worth $27,000 according to an appraiser. At what amount should the land be reported on Florist Gump's balance sheet at December 31, 2014?

8,000

During its first month of business, Purses, Inc., purchased 5 purse(s) at $40 each and sold 3 purses for $80 each. Purses' Inventory balance on the balance sheet at the end of the month equals $______.

80 5x40=200; 3x4=120 200-120=80 BS=whats leftover

What is the effect on total shareholders' equity when a company purchases a cash register for a cash payment of $1,200? Increase Decrease No effect

no effect

______ activities are involved with providing goods and services to the customer.

operating

Collecting cash from customers is a(n) ______. operating activity investing activity financing activity expense

operating activity

The cost of a long-term asset, such as Equipment, is expensed ______. in the period it is purchased in the period it is sold over its useful life never because it is an asset

over its useful life

The income statement reports the ______. changes that occurred in shareholders' equity during the accounting period revenues minus expenses for the accounting period cash collected and cash paid during the period economic resources, obligations, and net worth

revenues minus expenses for the accounting period

Purses, Inc., sold 2 purse(s) that cost $30 each to its customers for a price of $80 each. The Gross Profit amount on the income statement will equal $______.

100 sales rev-cogs=gross profit

In its first month of business, Sea World Cruises, Inc., collected $21,000 from customers in advance during May. At May 31, it had a balance in its Deferred Revenue of $8,000. What is the amount of Revenue earned that had been collected in advance?

13,000

On January 1 of its first month of business, Bags Bunny, Inc., paid $21,000 for eight months rent beginning in January. How much will be reported as Prepaid Rent on its balance sheet at January 31?

18,375

How many of the following accounts are assets? Supplies Expense Retained Earnings Cash Notes Payable Stock Equipment

2

During December, Acme, Inc., performed and billed its customers $26,000 for services on account of which it collected $5,000. How much revenue should Acme record in December?

26,000

How many of the following accounts (line items) are found on the income statement? Accounts ReceivableSales RevenueCash Collected from CustomersWages PayableWages ExpenseDepreciation ExpenseAccumulated Depreciation

3

During December, Acme, Inc., performed and billed its customers $30,000 for services on account of which it collected $2,000. How much revenue should Acme record in December?

30,000

If a company's total assets equals $50,000 and its shareholders' equity equals $20,000, how much are the creditors' claims to the company's assets?

30,000

How many of the following accounts (line items) are found on the balance sheet? Accounts PayableInventoryCash Paid for MerchandiseWages PayableWages ExpenseSupplies ExpenseDeferred RevenueDepreciation Expense

4 (Accounts Payable (L), Inventory (A), Wages Payable (L), and Deferred Revenue (L) are found on the balance sheet.)

Wok On Water, Inc.'s employees had worked during the first month of May and earned $6,000. Wok on Water had paid $2,000 of the amount owed. How much will be reported as Wages Payable on its May 31 balance sheet?

4000

Jim's Jungle Gyms reported the following information in its year ended December 31 financials: Net Income $ 35,000 Sales Revenue 93,000 Retained Earnings - beginning balance 15,000 Dividends 4,000 What were the company's total Expenses for the current year?

58,000

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity. Cash Notes payable equipment

A L A

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity. Inventory . Bonds Payable Accounts Payable

A L L

Match the definition with each of the elements of the accounting equation. A. Economic resources that will provide future benefit B. Owners' claims to economic resources C. Creditors' claims to economic resources

A SE L

Cap & Trade, Inc., purchased 500 baseball caps @ $6 each. Show the effect of this transaction on total Assets, Liabilities, Stock and/or Retained Earnings and the account titles. If no effect, select "$0 No Effect". A. $(3,000) Cost of Goods Sold B. $0 No Effect C. $(3,000) Cash D. $(3,000) Cash; $3,000 Inventory E. $(3,000) Inventory F. $3,000 Inventory

A $(3,000) Cash; $3,000 Inventory L $0 No Effect SE $0 No Effect

Jim's Jambs, Inc., recorded an adjusting entry for the $15 of interest it owes on its $3,000 note payable. Show the effect of this transaction on total Assets, Liabilities, Stock and/or Retained Earnings and the account titles. If no effect, select "$0 No Effect". A. $(15) Cash B. $0 No Effect C. $15 Interest Expense D. $(15) Interest Expense E. $(15) Notes Payable F. $15 Interest Payable G. $15

A $0 No Effect L $15 Interest Payable Stock no effect RE $(15) Interest Expense

On February 2, Wursthaus, Inc., purchased 800 sausages that cost $6.00 each on account. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." A. (4,800) Cash B. (800) Accounts Receivable C. (800) Inventory Expense D. (800) Cash E. (4,800) Accounts Payable F. (800) Accounts Payable G. (800) Inventory H. 4,800 Inventory I. 0 No Effect J. 4,800 Accounts Payable K. 4,800 Accounts Receivable

A 4,800 Inventory L 4,800 Accounts Payable SE 0

In May, Rec Rooms, Inc., collected $8,000 owed by customers for services performed in April. Show the effect of this collection on the accounting equation. If there is no effect, select "0 No Effect." A. 8,000 Cash; (8,000) Accounts Receivable B. 8,000 Cash C. 8,000 Accounts Receivable; (8,000) Cash D. 8,000 Accounts Payable E. 8,000 Accounts Receivable F. 0 No Effect G. (8,000) Accounts Receivable H. 8,000 Cash; (8,000) Accounts Payable

A 8,000 Cash; (8,000) Accounts Receivable L 0 SE 0

Offsets, Inc., purchased land for $100,000 by issuing an $80,000 note and paying the remainder with cash. What is the net effect of this transaction for each column in the accounting equation? IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." A. $100,000 increase B. No effect C. $20,000 increase D. $80,000 decrease E. $20,000 decrease F. $80,000 increase

A 80 increase L 80 increase SE no effect

On February 20, Wursthaus, Inc., paid for $500 of the sausages purchased on account on January 21. Show the effect of this transaction on the accounting equation below. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." A. 500 Accounts Payable B. 500 Inventory Expense C. (500) Accounts Payable D. 0 No Effect E. 500 Cash F. (500) Inventory Expense G. (500) Cash H. (500) Cost of Goods Sold I. 500 Inventory

A- (500) Cash L- (500) Accounts Payable SE- no change

Stockem, Inc., issued $80,000 of stock in exchange for cash. Show the effect of this entry on total Assets, Liabilities and/or Shareholders' Equity and the account titles. If no effect, select "$0 No Effect". A. $80,000 Cash B. $0 No Effect C. $80,000 Stock D. $80,000 Equipment E. $80,000 Sales Revenue F. $80,000 Service Revenue G. $(80,000) Stock H. $(80,000) Cash

Assets $80,000 Cash Liabilities $0 No Effect Stock $80,000 Stock Retained Earnings no effect

Lawn & Order borrowed cash from a bank by issuing a $10,000 promissory note. The effect on Lawn & Order's accounting equation is as follows: Assets and shareholders' equity decrease Assets and liabilities decrease Assets and liabilities increase Assets and shareholders' equity increase

Assets and liabilities increase

Which of the following would be included in the operating activity section of the Statement of Cash Flows? (Select all that apply.) Cash collected from customers Cash paid to suppliers Purchase of a new office building Cash paid to employees Purchase of land

Cash collected from customers Cash paid to suppliers Cash paid to employees

Indicate the financial statement where you would expect to find each line item: - A. B. C. D. Cost of Goods Sold - A. B. C. D. Cash Paid for Merchandise - A. B. C. D. Inventory - A. B. C. D. Accounts Payable

IS cash BS BS

Indicate the financial statement where you would expect to find each line item: - A. B. C. Utilities Expense - A. B. C. Cash Paid for Utilities - A. B. C. Utilities Payable A. Balance Sheet B. Statement of Cash Flows C. Income Statement

IS cash flow BS

ndicate the financial statement where you would expect to find each line item: - A. B. C. D. Wages Expense - A. B. C. D. Wages Paid to Employees - A. B. C. D. Wages Payable A. Income Statement B. Statement of Shareholders' Equity C. Statement of Cash Flows D. Balance Sheet

Income S Cash flow bs

On December 1, Burrows, Inc., borrowed money from a bank. The bank requires Burrows to pay the interest and the principal at the end of six months. As a result, the year-ended December 31 financial statements will report ______. (Select all that apply.) Interest Expense on the Income Statement Interest Revenue on the Balance Sheet Notes Payable on the Balance Sheet Notes Payable on the Statement of Shareholders' Equity Notes Payable on the Income Statement Interest Expense on the Balance Sheet

Interest Expense on the Income Statement Notes Payable on the Balance Sheet

Match the definition with each element of the accounting equation. A. Creditors' claims to economic resources. B. Economic resources that will provide future benefit. C. Amounts earned by selling goods and services. D. Owners' claims to economic resources. E. Amounts used to generate profits.

Liabilities A R SE E

If a company incorrectly records cash received for services to be provided in the future by increasing Cash and increasing Sales Revenue, how will this error affect net income for the current period? Net income will be too high. Net income will not be affected by this error. Net income will be too low.

Net income will be too high.

Indicate whether the account is an Asset, Liability or Shareholders' Equity account: - A. B. C. Cost of Goods Sold - A. B. C. Rent Expense - A. B. C. Prepaid Rent

SE SE A

An owner contributes $10,000 cash to her company in exchange for stock. This will increase the company's ______. (Select all that apply.) Net Income Total Assets Stock Total Shareholders' Equity Cash Total Liabilities Retained Earnings

Total Assets Stock Total Shareholders' Equity Cash

Jim's Jambs, Inc., recorded $150 of depreciation on its equipment for the month. Show the effect of this transaction on total Assets, Liabilities and/or Shareholders' Equity and the account titles. If no effect, select "$0 No Effect". A. $(150) Cash B. $(150) Accumulated Depreciation C. $150 Notes Payable D. $0 No Effect E. $150 Cash F. $(150) Depreciation Expense G. $150 Accumulated Depreciation H. $150 Depreciation Expense

a- (150) accumulated dep l- no change se- (150) dep expense

Burrows, Inc. issued a note payable to the bank at the beginning of the month and owes interest on the note at the end of the month. (The interest is not going to be paid until later.) Show the effect of this transaction on total Assets, Liabilities and/or Shareholders' Equity and the account titles. If no effect, select "No Effect". - A. B. C. Assets - A. B. C. Liabilities - A. B. C. Shareholders' Equity

a- no effect l- increase se- decrease

Hard Wok Cafe repays a $1,000 loan. This transaction ______. is a financing activity causes total liabilities to decrease causes total assets to decrease all of these are correct none of these is correct

all of these are correct Operating Activities: involve collecting from customers and paying operating expenses Investing Activities: involve purchasing/selling long-term assets and investments in marketable securities (investments in stocks and bonds of other companies) Financing Activities: involve borrowing/repaying creditors and any transactions with the shareholders (stocks and dividends)

Liabilities are ______. amounts the company owes to shareholders amounts the company owes to creditors economic resources expected to benefit the company in the future expenses incurred to help generate revenues

amounts the company owes to creditors

A company owns an economic resource that will provide it with future benefits. This economic resource is ______. an asset net income revenue retained earnings an expense a liability

an asset

The statement of cash flows reports the ______. economic resources, obligations, and net worth cash collected and cash paid during the period revenues minus expenses for the accounting period changes that occurred in shareholders' equity during the accounting period

cash collected and cash paid during the period

The statement of shareholders' equity reports the ______. changes that occurred in shareholders' equity during the accounting period economic resources, obligations, and net worth revenues minus expenses for the accounting period cash collected and cash paid during the period

changes that occurred in shareholders' equity during the accounting period

A transaction may be recorded with an increase in a liability and a(n) ______. increase in shareholders' equity decrease in an asset decrease in shareholders' equity

decrease in shareholders equity

The adjusting entry to record amounts earned that were collected in advance include a(n) ______. (Select all that apply.) increase to Accounts Receivable decrease to Deferred Revenue increase to Revenues decrease to Accounts Receivable increase to Cash

decrease to Deferred Revenue increase to Revenues

The expensing of a long-term asset, such as Equipment, over its useful life is called ______. accretion accumulation appreciation depreciation a financing activity

depreciation

The balance sheet reports the ______. is a summary of all of the revenues minus all of the expenses for an accounting period is a list of all the cash collected and cash paid during a period describes the financial situation of a company at a specific point in time shows the changes that took place in shareholders' equity during a period

describes the financial situation of a company at a specific point in time

Wages Payable on a company's balance sheet most likely means that __________. employees did not yet receive payment for the last few days of work because the last day of the accounting period was not a payday the company owes vendors for purchases on account the company made advance payments to its employees the company's accountants are seriously confused. Wages appear on the income statement, not on the balance sheet employees were overpaid and now owe the company money

employees did not yet receive payment for the last few days of work because the last day of the accounting period was not a payday

Indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity. - A. B. C. Issued $10,000 of stock. - A. B. C. Purchased $1,000 of inventory. - A. B. C. Purchased land for $1,000.

financing operating invest

Paying a cash dividend to shareholders is a(n) ______. operating activity investing activity financing activity expense

financing activity

Morris Lest, Inc., purchased machinery for $10,000 cash. The effect of this transaction is to cause ______. total assets to remain the same total liabilities to increase total assets to increase total shareholders' equity to decrease total shareholders' equity to increase total liabilities to decrease

total assets to remain the same