Exam 1 Accounting

During the month of July, the Scolari Corporation received $60,000 in investments from owners, paid $25,000 cash for inventory, and purchased $10,000 of inventory on account. The ending balance in the accounts payable account for the month of July is:

$10,000 credit.

Georgia Company paid $48,000 for two years of insurance coverage on July 1, 2013. The company prepares financial statements on July 31, 2013. What is the amount of insurance expense on July 31?

$2,000

Mason Company has a weekly payroll of $5,000. Wages are paid every Friday for the work performed Monday through Friday of that week. Assuming that the accounting period ends on a Tuesday, what amount of Wages Expense should be recorded on that date?

$2,000

If the assets of the business are $410,000, and the liabilities total $200,000, how much is the owners' equity?

$210,000

Ending assets for CompuHelp equals $650,000 and the beginning capital account was $325,000. If investments by owners during the period were $225,000 and the owners withdrew a total of $150,000, what were ending liabilities?

$250,000

Net income for the period was $245,000. The capital account of Sherry, owner of RVs 'R Us, had a beginning balance of $25,000. If Sherry had withdrawals of $15,000 during the year, what is the ending balance in her capital account?

$255,000

During June, Busy Beaver bought $5,000 of office supplies on account, and promised to pay the vendor the full amount in July. At the end of June, Busy Beaver estimated that there was $2,000 of office supplies left unused. How much supplies expense should Busy Beaver report for June?

$3,000

During June, Busy Beaver performed $3,500 of services for clients on account. In June, $500 of this amount was collected in cash. The remaining $3,000 was collected in July. How much service revenue should Busy Beaver report for June?

$3,500

A materials-inventory account had a beginning balance of $100,000, purchase of materials was $50,000, and usage of material was $120,000. The ending inventory balance was:

$30,000 debit.

During the month of July, the Scolari Corporation received $60,000 in investments from owners, paid $25,000 cash for inventory, and purchased $10,000 of inventory on account. The ending balance in the cash account for the month of July is:

$35,000 debit.

During the month of July, the Scolari Corporation received $60,000 in investments from owners, paid $25,000 cash for inventory, and purchased $10,000 of inventory on account. The ending balance in the inventory account for the month of July is:

$35,000 debit.

Vaughn-Williams Co. has total assets of $600,000 and owners' equity of $320,000. It purchased $80,000 of merchandise on account and collected $50,000 on account from its customers. As a result, the company's total liabilities would be __________.

$360,000

If total assets are $85,000 and total liabilities are $45,000, then what is total owners' equity?

$40,000

During the year, ABC Company had revenues of $100,000 of which $90,000 has been collected from customers. It also had expenses of $60,000 of which $40,000 has been paid. The owners were paid $20,000 in dividends. Net income for the year equals:

$40,000.

The following data pertains to Thompson Corporation. Total assets at January 1, 20X4, were $310,000; at December 31, 20X4, total assets were $382,000. During 20X4, sales were $1,072,000; cash dividends were $14,000; and operating expenses (exclusive of cost of goods sold) were $610,000. Total liabilities at December 31, 20X4, were $175,000; at January 1, 20X4, total liabilities were $130,000. There was no additional paid-in capital during 20X4. What was net income for 20X4?

$41,000

The following data pertains to Thompson. Total assets at January 1, 20X4, were $310,000; at December 31, 20X4, total assets were $382,000. During 20X4, sales were $1,072,000; cash withdrawals were $14,000; and operating expenses (exclusive of cost of goods sold) were $610,000. Total liabilities at December 31, 20X4, were $175,000; at January 1, 20X4, total liabilities were $130,000. There were no additional capital investments by Thompson during 20X4. What was net income for 20X4?

$41,000

During the month of July, the Scolari Corporation received $60,000 in investments from owners, paid $25,000 cash for inventory, and purchased $10,000 of inventory on account. The ending balance in the paid-in capital account for the month of July is:

$60,000 credit.

Which of the following entities would most likely have an Unearned Revenue account?

A magazine publisher

Which of the following is the accounting equation?

Assets = Liabilities + Owners' Equity

Which of the following accounts is depreciated?

Building

Which of the following is the correct journal entry for providing $20,000 worth of consulting services for cash?

Cash 20,000 Service Revenue 20,000

A business makes a cash payment of $12,000 to a creditor. Which of the following occurs?

Cash is credited for $12,000.

Which of the following is legally a separate entity from its owner?

Corporation

Which of these businesses pays taxes on its income?

Corporation

Which of the following is a disadvantage of the corporate form of ownership?

Double taxation

Salaries payable on a company's balance sheet indicates that:

Employees had not received payment for the last few days of work because the last day of the accounting period was not a payday.

Sue Mason owns a bagel shop as a sole proprietorship. Sue includes her personal home, car, and boat on the books of her business. Which of the following is violated?

Entity concept

Which of the following is the correct journal entry for a purchase of equipment for $50,000 cash?

Equipment 50,000 Cash 50,000

What items should be matched according to the matching principle?

Expenses with revenues

Which of the following would not be an internal user of accounting information?

Internal Revenue Service

Which of the following is true about every adjusting entry?

It affects a balance sheet account and an income statement account.

Which sequence of actions correctly summarizes the accounting process?

Journalize transactions, post to the accounts, prepare a trial balance

A trial balance is which of the following?

List of all the accounts with their balances

The accountant for Ace Electronics forgot to make the adjusting entry for depreciation on the company's equipment. As a result of this mistake:

Net income is too high

Which of the following statements about cash is true?

None of the answers are true.

Which of the following events increase an owner's capital account of a sole proprietorship?

Owner's contributions

Which of the following accounts increase with a credit?

Owners' Capital

What is the claim of a business owner to the assets of the business called?

Owners' equity

Which of the following events decreases retained earnings?

Payment of dividends

On August 1, Fargo's paid $2,100 for 1-year's rent in advance. What is Fargo's adjusting journal entry on December 31?

Rent Expense 875 Prepaid Rent 875

Employees are paid $6,400 every Friday for a 5-day workweek. The accounting period ends on Wednesday, December 31. Which of the following would be the adjusting entry for the salaries and benefits expense on December 31?

Salary Expense 3,840 Salary Payable 3,840

Which of the following is the concept that differentiates a corporation from its management?

Separate legal entity

Which financial statement shows cash collected from customers?

Statement of cash flows

Which of the following is the correct journal entry for purchasing $5,000 worth of supplies on account?

Supplies 5,000 Accounts Payable 5,000

Which is the private organization that is primarily responsible for formulating accounting standards?

The Financial Accounting Standards Board

What is book value?

The cost of the depreciable asset minus accumulated depreciation

A company in its first year of business earned revenues of $100,000 but collected only $80,000 in cash from its customers. Which of the following is correct?

The income statement will show revenues of $100,000, the balance sheet will show accounts receivable of $20,000, and the statement of cash flows will show cash collected from customers of $80,000.

Revenue has been collected in advance; earned amounts have not been recognized at the end of 2010, but instead, all revenue was recognized as earned in 2011. What would be the effects on income for 2010 and 2011 if the error was made?

Understate, Overstate

Maxim Company has just started a program of selling gift certificates at its store. In the first month, the company recorded a cash sale of $6,000 worth of certificates and customers redeemed $1,750 of these certificates for merchandise. As of the end of the month, what adjusting journal entry should be reported?

Unearned Revenue 1,750 Revenue from Gift Certificates 1,750

ABC, Inc. shows $300 of supplies expense on its income statement. ABC must have:

Used $300 of supplies during the period.

When is revenue recorded under the cash-basis system of accounting?

When cash is received

In October, $600 cash was received by Briar Company in advance of providing a service. If 40% of the service was performed by Briar by November 30, the adjusting entry would include __________.

a debit to unearned services for $240 and a credit to revenues from services for $240

The adjusting entry to record an accrued expense also involves recording __________.

a liability

unearned revenue is always

a liability

The adjusting entry to record accrued revenue also involves recording __________.

an asset

Korsikov Corp. purchased merchandise on account for $85,000. As a result, there was:

an increase to both sides of the accounting equation.

If an accountant forgets to adjust the Prepaid Rent account, the result will be __________.

an overstatement of net income

Current assets include __________.

cash and accounts receivable

Liabilities are:

debts or obligations owed to creditors.

On September 15, 20X4, the Larsen Company declared a $3,000 cash dividend payable on October 10, 20X4. The effect of the October 10, 20X4 transaction on the Larsen Company would be to:

decrease the balance in the cash account and decrease the balance in the dividend payable account by $3,000.

During one period, a corporation earned income of $20,000, received paid-in capital of $30,000, paid dividends of $15,000, and retired debt of $5,000. The retained income account:

increased $5,000.

A loan from the bank __________.

increases assets and liabilities

The accountant for Ace Electronics forgot to make the adjusting entry for depreciation on the company's equipment. As a result of this mistake, __________.

net income is too high

Ravel Co. purchased merchandise with $200,000 of its cash. As a result, there was __________.

no change in the total amount of its assets

Rite-it-up, Inc. purchased land for $20,000 on May 1, 2012. On December 31, 2012, similar land sells for $25,000. Under U.S. GAAP, the land should be shown:

on the balance sheet as a $20,000 asset.

If a company purchases inventory by paying cash this will cause an increase in:

one asset and decrease in another

Financial accounting provides financial statements and financial information that are intended to be used by:

potential investor

When a company pays for six months of insurance in advance, it records __________.

prepaid insurance, an asset

Accounts receivable appears on a company's balance sheet because:

the company sold merchandise to customers, but has not received payment yet.

The owner of Shady Grove Company has the bookkeeper write company checks to pay for his personal items. This violates __________.

the separate-entity assumption

Retained earnings can be found on:

the statement of changes in shareholders' equity and the balance sheet.

Christie's Lemonade Stand shows $300 of supplies expense on its income statement. Christie must have __________.

used $300 of supplies during the period