Exam 1 Review

On January 1, 2019, a company reported assets of $1,000,000 and liabilities of $600,00. During 2019, assets decreased by $100,000 and Stockholders' Equity decreased $200,000. What is the amount of liabilities at December 31, 2019? a) $200,000 b) $500,000 c) $600,000 d) $700,000

d) $700,000

Nov. 9: Purchased office equipment for $4,000 and office supplies for $150 from Office Depot receiving an invoice of $4,150. None of the office supplies were used during November. The journal entry to record payment for the office equipment and supplies will include a credit to a) Salary expense b) Salaries payable c) Prepaid expenses d) Accounts payable

d) Accounts payable

All of the following accounts have normal debit balances EXCEPT a) Accounts receivable b) Dividends c) Supplies expense d) Service revenue

d) Service revenue

Certified Electronics operates five days per week with a daily payroll of $40,000. Employees are paid every Saturday for the work week just completed (Monday - Friday). The last day of the month is Wednesday, May 31. The correct adjusting entry for May 31 is? a) Wages Payable: $40,000; Cash: $40,000 b) Wages Expense: $40,000; Wages Payable: $40,000 c) Wages Expense: $120,000; Cash: $120,000 d) Wages Expense: $120,000; Wages Payable: $120,000

d) Wages Expense: $120,000; Wages Payable: $120,000

What is the order of a financial statement?

1. Income Statement 2. Retained Earnings 3. Balance Sheet 4. Cash Flow

Cash ($75,000), Property, plant & equipment ($350,000), Capital stock ($500,000), Retained earnings (?), Accounts Receivable ($250,000), Long-term debt ($200,000), Accounts payable ($100,000), and Inventory ($175,000) What is the retained earnings balance at the end of the current year? a) $50,000 b) $550,000 c) $800,000 d) $850,000

a) $50,000 Beg RE + Net Income - Dividend = Ending RE

On October 1, a company borrowed $200,000 on a two-year, 12% note, with interest and principal to be paid at maturity. How much interest expense will be reported on the income statement for the year ending December 31? a) $6,000 b) $18,000 c) $24,000 d) $12,000

a) $6,000

On October 1, 2019, a company paid $9,000 rent in advance. The rent per month is $1,000. Assuming the company's accounting period ends on December 31, 2019, what will be reported on the financial statements? a) Prepaid Rent of $6,000 on its balance sheet at December 31, 2019 b) Prepaid Rent of $9,000 on its balance sheet at December 31, 2019 c) Rent Expense of $9,000 on its 2019 income statement d) Rent Expense of $6,000 on its 2019 income statement

a) Prepaid Rent of $6,000 on its balance sheet at December 31, 2019

Carlock Systems received a 6-month, 12% note for $50,000 from a customer on November 1, 2019. The note is due on April 30, 2020. Assuming the company's accounting period ends on December 31, how much interest revenue should be recognized during 2019 and 2020? 2019/2020 a) $2,000/1,000 b) $1,000/2,000 c) $0/$6,000 d) $1,000/$5,000

b) $1,000/2,000

Which of the following entries properly closes a temporary account? a) Dividends: 200; Retained Earnings 200 b) Income Summary: 400; Salaries Expense: 400 c) Accumulated Depreciation: 1,600; Income Summary: 1,600 d) Income Summary: 20,000; Service Revenue: 20,000

b) Accumulated Depreciation: 1,600; Income Summary: 1,600 temporary accounts include: revenue, expenses, & dividends

Dividends are declared and paid to the company's stockholders. What effect does this transaction have on the company's accounting equation? a) Assets and liabilities decrease. b) Assets and retained earnings decrease. c) Liabilities decrease and retained earnings increase. d) Liabilities increase and contributed capital decreases.

b) Assets and retained earnings decrease.

Homevestors purchased land for $400,000 in 2007. In 2019, an independent appraiser assessed the value of the land at 900,000. At what amounts should the land be recorded on the company's 2019 financial statements? a) At its $900,000 appraised value b) At its cost of $400,000 c) At $500,000, the difference between the land's cost and assessed value d) Whichever amount the company considers to be the best indicator of the land's true value

b) At its cost of $400,000

Carithers Cleaning Service received advance payments from customers during 2019 of $24,000. At December 31, 2019, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2019, the balances in the Unearned Service Revenue and Service Revenue accounts will be: a) Unearned Service Revenue: $0; Service Revenue: $24,000 b) Unearned Service Revenue: $5,000; Service Revenue: $19,000 c) Unearned Service Revenue: $5,000; Service Revenue: $24,000 d) Unearned Service Revenue: $24,000; Service Revenue: $5,000

b) Unearned Service Revenue: $5,000; Service Revenue: $19,000 Beg. Unearned Rev. - Earned Rev. = Ending Unearned Rev.

"Revenues" are best described as a) decreases in assets resulting from the sale of goods or services b) increases in assets resulting from the sale of products or services c) assets used or consumed in the sale of products or services d) an increase in the financing activities

b) increases in assets resulting from the sale of products or services

Nov. 1: Sent bills to clients for services provided in August in the amount of $12,000. Nov. 9: Purchased office equipment for $4,000 and office supplies for $150 from Office Depot receiving an invoice for $4,150. None of the office supplies were used during November. Nov. 15: Paid for the office furniture and supplies purchased from Office Depot. Nov. 23: Received a $350 bill from WKPR Radio for Advertising. The bill will be paid next month. Nov. 30: Paid salaries of $2,500 to employees. Based on these transactions, what is the total amount of expense that should be reported on the company's income statement for the month? a) $350 b) $2,500 c) $2,850 d) $3,000

c) $2,850

Inventory ($380,000), Land ($290,000), Cash ($129,000), Prepaid Rent ($33,000), Retained Earnings ($220,000), Accounts Receivable ($190,00), Accounts Payable ($180,000), Unearned Revenue ($110,000), Common Stock ($312,000), Long-term Notes Payable ($200,000) Calculate the total current assets. a) $842,000 b) $1,022,000 c) $732,000 d) $842,000

c) $732,000 A = L + SE

Cash ($75,000), Property, plant & equipment ($350,000), Capital stock ($500,000), Retained earnings (?), Accounts Receivable ($250,000), Long-term debt ($200,000), Accounts payable ($100,000), and Inventory ($175,000) What amount should the company report on its Balance Sheet for Total Assets? a) $550,000 b) $775,000 c) $850,000 d) $950,000

c) $850,000 Current Assets include: cash, accounts receivable, prepaid insurance, inventory, supplies, short-term investments Non-current Assets include: PPE, notes receivable, intangible assets Minus accumulated depreciation

Nov. 1: Sent bills to clients for services provided in August in the amount of $12,000. The journal entry to record the bills sent to clients will include a debit of $12,000 to a) Service revenue b) Cash c) Accounts receivable d) Retained earnings

c) Accounts receivable

The purchase of office equipment on credit has what effect on the accounting equation? a) Assets and stockholders' equity decrease b) Liabilities increase and stockholders' equity decreases c) Assets and liabilities increase d) Assets and liabilities decrease

c) Assets and liabilities increase

A novelties company makes cash sales to customer. What effect does this transaction have on the accounting equation? a) Liabilities and retained earnings increase. b) Assets and liabilities increase. c) Assets and retained earnings increase. d) There is no effect on the accounting equation, as one asset account increases while another asset account decreases.

c) Assets and retained earnings increase.

A local medical clinic operates five days per week with a daily payroll of $100,000. Employees are paid every Tuesday for the prior week's work (Monday - Friday). The last day of the month is Tuesday, April 30. What effect does the accrual at April 30 have on the clinic's net income? a) Increase by $200,000 b) Decrease by $300,000 c) Decrease by $200,000 d) Increase by $300,000

c) Decrease by $200,000

A company purchased equipment for $150,000 cash. What is the effect on total assets? a) Increase b) Decrease c) No net effect d) Cannot be determined from this limited information.

c) No net effect

Under accrual accounting when is revenue recognized? a) When cash is received, and expenses when the costs are incurred. b) When cash is received, and expenses when cash is paid. c) When earned, and expenses when incurred. d) When earned, and expenses when cash is paid.

c) When earned, and expenses when incurred.