MRQs Ch 1,2,3

Baxtor Corporation provides consulting services. Selected transactions of Baxtor Corporation are described as​ follows: ​a) Received $10,900 cash and issued common stock to Joe Jones. ​b) Paid $2,400 cash for computer equipment for office use. ​c) Borrowed $11,800 from a local bank and deposited the money in the checking account. ​d) Paid $1,700 rent for the month. ​e) Paid $260 cash for office supplies to be used next year. ​f) Completed a consulting project for a local business and received $5,300 cash. Calculate the net income.

$3,600

The Dividends account of​ Brownstone, Inc. has the following​ postings: (see image) Calculate the ending balance of the account.

$3,900 debit

The Common Stock account for November of​ Brownstone, Inc. had the following​ transactions: an issuance of Common Stock of​ $20,000 on November 1 and an issuance of Common Stock of​ $20,000 on November 15. Assuming a beginning balance in Common Stock of​ $10,000, what is the balance in Common Stock as of November​ 15?

$50,000 credit

The asset​ account, Office Supplies had a beginning balance of $5,000. During the accounting​ period, office supplies were​ purchased, on​ account, for $5,500. A physical​ count, on the last day of the accounting​ period, shows $2,800 of office supplies on hand. What is the amount of Supplies Expense for the accounting​ period?

$7700

The equity of Alliance Company is $200,000 and the total liabilities are $10,000. The total assets are​ ________.

210,000

Precision Camera Services started the year with total assets of $110,000 and total liabilities of $65,000. The revenues and the expenses for the year amounted to $110,000 and $70,000​, respectively. During the​ year, the company did not issue any common​ stock, but it distributed dividends of $55,000. What is the amount of​ stockholders' equity at the end of the​ year?

30,000

The net income of Hollywood Talent Services is​ $22,000. The beginning and ending​ stockholders' equity balances were​ $34,000 and​ $50,000, respectively. The company issued no common stock. Calculate the amount of dividends.

6,000

The Salaries Payable account is​ a(n) ________.

A liability account with a normal credit balance.

Which of the following journal entries would be recorded if a business purchased​ $800 of office supplies on​ account?

B.

Jones Supply Services paid​ $350 cash, the amount owed from the previous​ month, to a materials supplier. Which of the following accounts​ decrease? A. Accounts Receivable B. Accounts Payable C. Retained Earnings D. Office Supplies

B. Accounts Payable

Which of the following statements is true of​ expenses? A. Expenses increase​ equity, so an expense​ account's normal balance is a credit balance. B. Expenses decrease​ equity, so an expense​ account's normal balance is a debit balance. C. Expenses decrease​ equity, so an expense​ account's normal balance is a credit balance. D. Expenses increase​ equity, so an expense​ account's normal balance is a debit balance.

B. Expenses decrease​ equity, so an expense​ account's normal balance is a debit balance.

Which of the following organizations is responsible for the creation and governance of accounting standards in the United​ States? A. American Institute of Certified Public Accountants B. Financial Accounting Standards Board C. Securities and Exchange Commission D. Institute of Management Accountants

B. Financial Accounting Standards Board

Which of the following is a major reason why corporate ownership is popular in the United​ States? A. The life of a corporation is limited by the death of the owner. B. Stockholders have limited liability for the debts of the corporation. C. Most corporations are small− or medium−sized. D. A corporation is usually managed by the owners.

B. Stockholders have limited liability for the debts of the corporation

Which of the following statements is true of a trial​ balance? A. A trial balance shows the total amounts of assets and​ liabilities, but not equity. B. A trial balance is prepared after the balance sheet. C. A trial balance presents data in debit and credit format. D. A trial balance has the same format as a balance sheet.

C. A trial balance presents data in debit and credit format.

Which of the following is the correct accounting​ equation? A. Assets​ + Revenues​ = Equity B. Assets​ + Revenues​ = Liabilities​ + Expenses C. Assets​ = Liabilities​ + Equity D. Assets​ + Liabilities​ = Equity

C. Assets​ = Liabilities​ + Equity

Which of the following statements regarding the primary objective of financial reporting is​ correct? A. The primary objective of financial reporting is to provide information useful for the acquisition of long−term assets. B. Relevant information ensures that users of the information will make the correct decisions. C. Information that is faithfully representative is​ complete, neutral, and free from error. D. To be​ useful, information must follow the Generally Accepted Accounting Principles which are created and governed by the Securities and Exchange Commission.

C. Information that is faithfully representative is​ complete, neutral, and free from error.

Which of the following is the record holding all the​ accounts, the changes in those​ accounts, and their​ balances? A. Source document B. Trial balance C. Ledger D. Journal

C. Ledger

Which of the following accounts is an​ asset? A. Accounts Payable B. Service Revenue C. Prepaid Expense D. Salaries Expense

C. Prepaid Expense

Which of the following accounts is NOT a​ liability? A. Salaries Payable B. Accounts Payable C. Prepaid Insurance D. Unearned Revenue

C. Prepaid Insurance

Regarding generally accepted accounting principles​ (GAAP), which of the following statements is incorrect​? A. The primary objective of financial reporting is to provide information useful for making investment and lending decisions. B. GAAP rests on a conceptual framework that identifies the​ objectives, characteristics,​ elements, and implementation of financial statements. C. Relevant information is​ complete, neutral, and free from error. D. GAAP is currently formulated by the Financial Accounting Standards Board.

C. Relevant information is​ complete, neutral, and free from error.

Which of the following accounts is NOT an​ asset? A. Equipment B. Furniture C. Service Revenue D. Fixtures

C. Service Revenue

Montgomery Equipment Rental Company received​ $1,000 cash from a​ customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting​ equation?

Cash increases and Accounts Receivable decreases.

Smith Company earns​ $50,000 of revenue and collects this amount in cash. What is the effect on the accounting​ equation?

Cash increases by​ $50,000 and Service Revenue increases by​ $50,000.

A business makes a payment of​ $1,400 on a note payable. Which of the following journal entries would be​ recorded?

Cash is​ credited, and Notes Payable is debited for​ $1,400.

Which of the following is an asset​ account? A. Wages Payable B. Notes Payable C. Unearned Revenue D. Accounts Receivable

D. Accounts Receivable

Which of the following is the correct order of preparation of financial​ statements? A. Balance sheet → statement of retained earnings → income statement → statement of cash flows B. Statement of retained earnings → balance sheet → income statement → statement of cash flows C. Balance sheet → income statement → statement of retained earnings → statement of cash flows D. Income statement → statement of retained earnings → balance sheet → statement of cash flows

D. Income statement → statement of retained earnings → balance sheet → statement of cash flows

Which of the following financial statements reports cash receipts and cash payments during a period of​ time? A. Statement of retained earnings B. Cash receipts budget Your answer is not correct. C. Balance sheet D. Statement of cash flows

D. Statement of cash flows

Which of the following accounts increases with a​ debit? A. Accounts Payable B. Rent Expense C. Unearned Revenue D. Service Revenue

rent expense

Zach Company previously recorded the prepayment of three​ months' office rent of $3,000. One month of rent has now been used. The adjusting entry would​ be:

rent expense 1,000 / prepaid rent 1,000

​________ is the equity earned by profitable operations that is not distributed to stockholders.

retained earnings

Morris Company has​ $600 in salaries that have been earned by employees on December 31 but will not be paid until the following January 1. Assuming the company uses the accrual​ basis, what would be the adjusting entry on December​ 31?

salaries expense 600 / salaries payable 600

A business performs services for a customer for​ $26,000 on account. Which of the following accounts is​ credited?

service revenue

Zach Company has a balance in Office Supplies of $1,050 before adjustment. Office supplies of $300 remain at the end of the year. The adjusting entry would​ be:

supplies expense 750 / office supplies 750

The right side of a T−Account always represents​ ____________.

the credit side

The left side of a T−Account always represents​ ____________.

the debit side

Posting a transaction means​ ________.

transferring data from the journal to the ledger

Which of the following is not a type of adjusting​ entry?

unearned expenses

A liability created when a business receives cash from customers in advance of providing services or delivering goods is called​ a(n) ________.

unearned revenue

Zach Company previously recorded receiving​ $1,000 cash in advance. Zach Company has earned​ ½ of the amount. The adjusting entry would​ be:

unearned revenue 500 / service revenue 500

Which of the following statements is true of the corporate form of​ business? A. Any stockholder may commit the corporation to a contract. B. It is easy for stockholders to lodge an effective protest against management. C. Changes in the ownership of stock have a negative effect on the continuity of the corporation. D. The board of directors sets policy for the corporation and appoints the officers.

D. The board of directors sets policy for the corporation and appoints the officers.

Selected information for Advanced Spa Services and Dalton Spa Services​ follows: Advanced Spa Services Total Assets - $160,000 Total Stockholders' Equity - $73,000 Total Revenues - $86,000 Net Income - $10,000 Dalton Spa Services Total Assets - $210,000 Total Stockholders' Equity - $113,000 Total Revenues - $76,000 Net Income - $20,000 The total assets and total​ stockholders' equity balances are as of December​ 31, 2024. Total revenues and net income are for the year ended December​ 31, 2024. No dividends were paid. Average net assets are $180,000 for Advanced and $230,000 for Dalton. Which business owes more to creditors and how much does that business​ owe?

Dalton owes​ more, Liabilities are $97,000

A business makes a cash payment of​ $12,000 to a supplier for supplies purchased two weeks earlier. Which of the following account is​ debited?

accounts payable

Hatfield Company was hired on December 1 to perform services and earned during the month​ $600 with payment to be received the first day of the following month. Assuming the company uses the accrual​ basis, what would be the adjusting entry on December​ 31?

accounts receivable 600 / service revenue 600

In​ a(n) ________________​ adjustment, the expense occurs before a cash payment is made.

accrued

The entry to record depreciation includes a credit to the​ ________ account.

accumulated depreciation

The economic resources of a business such as​ furniture, building, and land are its​ ________.

assets

An adjusting entry is completed​ ________.

at the end of the accounting period

Which of the following accounts decreases with a​ credit? A. Accounts Payable B. Unearned Revenue C. Cash D. Common Stock

cash

Zach Company received​ $1,000 cash in advance for services to be completed within the next six months. The journal entry would​ be:

cash 1000 / unearned revenue 1000

Mars Electronic Company receives cash from a​ stockholder, John​ Tilden, and issues common stock to him. The two accounts involved in this transaction are​ ________.

cash and common stock

______ are professional accountants who serve the general​ public, not one particular company.

certified public accountants

Which of the following accounts increases with a​ credit? A. Common Stock B. Dividends C. Accounts Receivable D. Prepaid Expense

common stock

​________ compile financial​ statements, interact with​ auditors, and oversee regulatory reporting.

controllers

​________ typically work in a manufacturing business and help analyze accounting data.

cost accountants

Lisa Smith decided to start her CPA practice as a professional​ corporation, Smith​ CPA, PC. The corporation purchased an office building for​ $35,000. The real estate agent said the building was worth​ $50,000 in the current market. The corporation recorded the building as a​ $50,000 asset because Lisa believes that is the real value of the building. Which of the following concepts or principles of accounting is being​ violated?

cost principle

The two basic categories of adjusting entries are​ _______.

deferrals and accruals

In​ a(n) ________________​ adjustment, the cash payment occurs before an expense is incurred or the cash receipt occurs before the revenue is earned.

deferred

A cash payment of​ $5,000 was made for dividends. Which of the following accounts is​ debited?

dividends

Distribution of cash or other assets to the stockholders is called​ ________.

dividends

Stuart Allen Corporation manufactures computer hardware. The president of the corporation bought a new car as a gift for his daughter and paid for it using cash from the business. Since the corporation paid for the​ car, it was recorded in its books as an asset. Which of the following concepts or principles of accounting did the corporation​ violate?

economic entity assumption

The​ owners' claims to the assets of the business are called​ ________.

equity

For​ revenues, the category of account and its normal balance is​ ________.

equity and a credit balance

Dividends are the expenses of a business. (True or False)

false

GAAP refers to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to​ ________.

generally accepted accounting principles

Thompson Company purchased a building for​ $90,000 on December 1 in exchange for a one−year loan at​ 10% with interest and note to be paid one year later. Assuming the company uses the accrual​ basis, what would be the adjusting entry on December​ 31?

interest expense 750 / interest payable 750

Transactions are first record in a​ ________.

journal

The primary objective of financial reporting is to provide information useful for making investment and​ _________ decisions.

lending

Adjusting entries are needed to correctly measure the​ ________.

net income​ (loss) on the income statement

Which of the following accounts decreases with a​ debit? A. Accounts Receivable B. Notes Payable C. Rent Expense D. Cash

notes payable

The Service Revenue account of​ Brownstone, Inc. has the following​ postings: (see image) Calculate the ending balance of the account.

$1,100 credit

McCoy Corporation provides plumbing services. Transactions during the first year of operations are provided below. ​a) Received​ $13,000 cash and issued common stock to Sharon McCoy. ​b) Paid​ $1,100 cash for equipment to be used for plumbing repairs. ​c) Borrowed​ $14,000 from a local bank and deposited the money in the checking account. ​d) Paid​ $300 rent for the year. ​e) Purchased​ $200 of office supplies by cash. ​f) Completed a plumbing repair project for a local lawyer and received​ $3,200 cash. Calculate the amount of total liabilities at the end of the first year.

$14,000

Following is a list of account balances of Tanner Lawn Services as of December​ 31, after the first year of operations. Accounts Receivable - $7200 Accounts Payable - 6800 Salaries Expense - 7500 Repairs Expense - 1700 Truck - 12,000 Equipment - 13,000 Notes Payable - 27,100 Cash - 23,300 Supplies Expense - 1600 Service Revenue - 39,000 Gasoline Expense - 8800 Salaries Payable - 2,200 Calculate the net income.

$19,400

The Accounts Receivable account of​ Brownstone, Inc. has the following​ postings: (see image) Calculate the ending balance of the account.

$26,000 debit

Which of the following financial statements is used to report the economic​ resources, debt, and overall financial position of a​ company? A. balance sheet B. income statement C. statement of retained earnings D. statement of cash flows

A. balance sheet

Which of the following events is NOT recorded by​ accountants? A. effects of an economic boom B. signing a​ $400,000 note to purchase land C. sale of merchandise on account D. purchase of a building for​ $200,000 cash

A. effects of an economic boom

Which of the following financial statements would be most useful if an analyst wants to know the profitability of a​ company? A. income statement B. statement of retained earnings C. balance sheet D. statement of cash flows

A. income statement

Jason Repair Corporation incurred​ $1,500 as advertising expense and promised to pay the advertising agency within 30 days. Which of the following will decrease as a result of this​ transaction? A. ​Stockholders' equity B. Liabilities C. Assets D. Revenues

A. stockholders' equity

​Adams, Inc. recorded the following journal entry on March 2nd. From the journal entry​ above, identify the transaction on March 2nd.

Adams received $8,000 for services to be performed at a later period.

The Financial Accounting Standards Board​ (FASB) works with the following groups. Which of these groups was congressionally​ created?

Public Company Accounting Oversight Board

A debt that a business owes is called​ ________.

a liability