AC 200

Paul Savage purchased a restaurant named Burger Haven from Larry Jones. The purchase would cause the number of reporting entities to

remain constant

Which term describes a distribution of the Company's assets back to the owners of the business?

Dividend

Owens Company started Year 2 with $10,000 in accounts payable. On March 1, Owens incurred expenses of $6,000 on account. If the ending balance of accounts payable was $4,000. How much of the accounts payable did Owens pay off during the year?

$12000

Olly & Sons is a construction company. The company started the year with $90,000 in the land account. During Year 2, Olly & Sons purchased multiple lots of land. The first lot cost $25,000, the second lot cost $28,000 and the third lot cost $31,000. The company sold one lot that had a cost of $50,000 for $50,000. What is the ending balance in the land account?

$124,000

XYZ Company ended year 1 with accounts receivable of $100,000. On February 1, Year 2 XYZ provided services on account for $40,000. On May 1, Year 2 XYZ provided services for $20,000 cash. On November 1, Year 2 XYZ provided services on account for $70,000. What is the ending balance in accounts receivable as of December 31, Year 2?

$210,000

Smokey Enterprises began operations by receiving $100,000 cash from its sole owner Jessica Jones. During its first year of operations, the business earned $20,000 in cash from operations and paid $15,000 in cash expenses. What is Smokey Enterprises' net income for its first year of operations?

$5000

he following items were drawn from the financial statements of Rogers Company: (1) Assets (2) Stockholders' Equity (3) Salary expense (4) Land (5) Rent revenue (6) Notes payable (7) Cash collected from the issue of stock (8) Common stock (9) Cash paid for dividends (10) Cash (11) Liabilities (12) Dividends (13) Cash paid to purchase land (14) Retained earnings Which of the items listed above were drawn from the balance sheet?

1, 2, 4, 6, 8, 10, 11, and 14

Rushmore Company started the year with $5,000 in accounts payable. During the year, the company provided services on account for $45,000. Rushmore incurred $36,000 expenses on account during the year, and by year end the balance in accounts payable was $24,000. Assuming that these are the only accounting events that affected Rushmore, how much of the accounts payable did the company pay off during the year?

17000

Nest Company started Year 2 with a beginning balance of $7,000 in accounts receivable. During the year, revenue on account amounted to $13,000. The company incurred $3,000 of expenses on account and paid dividends of $500. If the company had an ending balance in accounts receivable of $2,000, how much cash was collected from customers?

18000

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the restaurant on the first day of the year. How many reporting entities exist in this scenario?

3 Reporting entities

Jay Company started Year 2 with a beginning balance of $10,000 in accounts receivable. During the year, revenue on account amounted to $25,000. Cash collections of accounts receivable amounted to $5,000. Expenses for the period were $2,100. The company paid dividends of $450. Based on this information alone, what is the ending balance in accounts receivable for Year 2?

30,000

The following information was drawn from Gore, Inc.'s statement of cash flows. (1) $2,000 net cash outflow from investing activities. (2) $3,000 net cash inflow from financing activities. (3) $6,000 net increase in the cash balance. Based on this information, the amount of cash flow from operating activities appearing on the statement of cash flows must be a

5000 net cash inflow

At the time of liquidation, Owens Company reported assets of $260,000, liabilities of $180,000, common stock of $90,000 and retained earnings of ($10,000). What amount of Fairchild's assets are the shareholders entitled to receive? Multiple Choice $70,000 $80,000 $90,000 $160,000

80,000

The balance sheet presents an explanation of the changes in the beginning and ending balances of stockholders' equity. a comparison of the benefits and the sacrifices a company experiences from its operations. information in three categories including operating, investing, and financial activities. a list of a company's assets and the sources of those assets.

A list of a company's assets and the sources of those assets

Which of the following is an accurate definition of the term asset?

A resource that will be used to produce revenue

Liabilities

All of the answers are characteristics of liabilities represent obligations to repay debts may increase when assets increase are found on the claims side of the accounting equation

When a company earns revenue on account the asset account, accounts receivable, increases. a revenue account increases. liabilities are not affected. All of the answers are correct.

All of the answers are correct

Which of the financial statements are required by the generally accepted accounting principles (GAAP)? Income Statement Statement of Changes in Stockholders' Equity Statement of Cash Flows Balance Sheet All of these financial statements are required by GAAP

All of them

Which of the following is a true statement? Cash revenue is an economic benefit that will cause assets and retained earnings to increase. A cash expense is an economic sacrifice that will cause assets and retained earnings to decrease. A cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease. All of the answers represent true statements.

All the Above

Which of the following is an asset source event? Received Cash from the issue of common stock Borrowed Cash from creditors Earned Cash Revenue All the Above

All the above

Which of the following is not a source of assets?

All the answers represent sources of assets Creditors, investors, and operations

Kay Company recorded a transaction that had the following effects on its financial statements. Balance Sheet Assets = Liab. + Equity − + NA NA Which of the following types of transactions could have caused these effects?

An asset exchange transaction

Sims Company received cash from the issue of common stock. This event is

An asset source transaction

Barnett Company paid a cash dividend. This event is

An asset use transaction

Sims Company earned cash revenue by providing services to its customers. This event is

Asset source transaction

Which of the following is an accurate depiction of the accounting equation?

Assets=Liabilities+common stock + Retained Earnings

During year 1 Xing Enterprises experienced the following events. (1) Earned $4,000 of revenue on account (2) Incurred $3,500 of expenses on account Based on this information the amount of total assets, net income, and cash flow from operating activities appearing on the year 1 financial statements is Multiple Choice Total Assets Net Income Cash flow from Operating Activities $500 $500 zero Total Assets Net Income Cash flow from Operating Activities $4,000 $500 zero Total Assets Net Income Cash flow from Operating Activities $4,000 $500 $500 Total Assets Net Income Cash flow from Operating Activities $4,000 $4,000 $500

B

Accounts payable will appear on which of the following financial statements? Multiple Choice Statement of changes in stockholders' equity Balance sheet Statement of cash flows Income statement

Balance Sheet

Accounts receivable will appear on which of the following financial statements? Statement of changes in stockholders' equity Statement of cash flows Income statement Balance sheet

Balance Sheet

Ending cash balance is shown on which of the following financial statements? Balance Sheet Balance Sheet and Statement of Cash Flows Statement of Cash Flows Income Statement and Statement of Changes in Stockholders' Equity

Balance Sheet and the Statement of Cash Flows

Which of the following financial statements is prepared as of a specific date? Income Statement Statement of Changes in Stockholders' Equity Statement of Cash Flows Balance Sheet

Balance sheet

Which of the following financial statements provides information about a company as of a specific point of time? Income Statement Balance Sheet Statement of Cash Flows None of the above

Balance sheet

Mary Company collected cash from an account receivable. The recognition of the cash collection will affect which of the following financial statements? Income statement and the balance sheet Income statement and the statement of cash flows Balance sheet and the statement of cash flows Statement of changes in stockholders' equity

Balance sheet and the statement of cash flows

Which of the following is normally shown first on the statement of cash flows? Cash flow from financing activities Cash flow from operating activities Cash flow from investing activities Noncash transactions

Cash flow from operating activites

Which of the following is an example of revenue? Cash received from a bank loan Cash received from investors from the sale of common stock Cash received from the sale of land Cash received from customers at the time services were provided

Cash received from customers at the time services were provided

The Statement of Changes in Stockholders' Equity shows changes in which of the following accounts? Liabilities and Common Stock Assets and Liabilities Common Stock and Retained Earnings Retained Earnings and Assets

Common Stock and Retained Earnings

Public accountants perform which of the following functions to ensure that financial information provided by a Company to investors is in accordance with G.A.A.P.?

Conduct an Audit

Certain transactions entered into the accounting equation will cause the equation not to balance. This statement is

False

Companies maintain accounting records that show assets at the amount of their market value because that information is more relevant than the historical cost. This statement is

False

Financial accounting is primarily intended to satisfy the information needs of internal stakeholders.

False

Managerial accounting information is usually less detailed than financial accounting information

False

Resource owners want to provide resources to businesses with high profit potential because those businesses will pay higher taxes. This statement is

False

The Statement of Changes in Stockholders' Equity is used to inform the creditors how their stake in the company changed over the period. This statement is:

False

The primary purpose of managerial accounting is to prepare financial statements in accordance with a reporting framework (e.g. GAAP).

False

The stockholders of a business have a priority claim to its assets in the event of liquidation. This statement is:

False (Creditors have priority over stockholders in the event of a company's liquidation.)

Generally Accepted Accounting Principles (GAAP) are designed to provide guidance for

Financial Accounting

Which of the following types of businesses require financial information to operate effectively?

For Profit Businesses. Governmental entities, and non-profit businesses

How many financial statements does a company prepare each accounting period? One Two Three Four

Four

Garcia Company recognized revenue on account. The recognition will affect which of the following financial statements? Income statement Income statement and the balance sheet Statement of cash flows Balance sheet

Income Statement and Balance Sheet

Net income appears on which of the following financial statements? Balance Sheet Balance Sheet and Statement of Changes in Stockholders' Equity Income Statement Income Statement and Statement of Changes in Stockholders' Equity

Income Statement and Statement of changes in Stockholders Equity

Yang Company recognized accrued salary expense. The recognition will affect which of the following financial statements? Balance sheet Income statement and the balance sheet Statement of cash flows Income statement

Income statement and the balance sheet

What is the process of dividing up assets and allocating them to resource providers (creditors and investors)? Equity distribution Stock repayment Liquidation Utilization

Liquidation

Paying cash to settle a salaries payable obligation will affect which section of the statement of cash flows? Non Cash Financing Investing Operating Activities

Operating Activites

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the Company on the first day of the year. Which of the following appropriately reflects the cash transactions between these reporting entities?

Option A 50,000 increase 450,000 increase 500000 decrease

Which of the following models accurately depicts the effects of an asset use transaction on the accounting equation? Balance Sheet Assets = Liab. + Equity A. + + NA B. − NA − C. + NA + D. NA + −

Option B

Knopp Company experienced an event that had the following effects on its financial statements. Balance Sheet Income Statement Statement of Cash Flows Assets = Liab. + Equity Rev. − Exp. = Net Inc. NA + − NA + −NA Which of the following events would have caused these effects? Recognized accrued salary expense Borrowed money Earned revenue on account Purchased land by issuing a note payable

Recognized accrued salary expense

Which term describes assets earned from operations that have been reinvested into the business?

Retained Earnings

Guadalupe, Inc. provided $5,000 of services in Year 1 but did not collect cash from its customers until Year 2. Select the correct answer from the following options assuming Guadalupe used accrual accounting. The Company will recognize $5,000 of revenue and $5,000 of cash flow from operations in Year 1. The Company will recognize $5,000 of revenue in Year 1 and $5,000 of cash flow from operations in Year 2. The Company will recognize $5,000 of cash flow from operations in Year 1 and $5,000 of revenue in Year 2. The Company will recognize zero of revenue in Year 1 and $5,000 of cash flow from operations in Year 2.

The Company will recognize $5,000 of revenue in Year 1 and $5,000 of cash flow from operations in Year 2.

The accounts payable account appears on the income statement. the statement of cash flows. the statement of changes in stockholders' equity. the balance sheet.

The balance sheet

What does negative retained earnings indicate? Multiple Choice The company has lost some or all of the owner's investment. The company experienced a large cash outflow during the year. The company's liabilities are greater than its assets. The company's common stock is negative.

The company has lost some or all of the owners invesments

Emerald Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $50,000 cash from the issue of common stock Borrowed $45,000 cash from the state bank Earned $120,000 of cash revenue Paid $180,000 cash expenses The company was liquidated at the end of Year 1. Based on this information Multiple Choice the stockholders would receive $50,000. the stockholders would receive $110,000. the creditor (the bank) would receive $35,000. the creditor (the bank) would receive $45,000.

The creditor (the bank) would receive 35000

When a company collects cash from accounts receivable, the asset accounts receivable increases. stockholders' equity increases. total assets are not affected. liabilities decrease.

Total assets are not affected

If a company recognizes accrued salary expense the employees have worked and have been paid for the work they completed. the employees have been paid but have not completed their work. the employees will work in the future and will be paid in the future. the employees have completed work but have not been paid.

The employees have completed work but have not been paid

Watt Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $6,000 cash from the issue of common stock. Borrowed $3,000 cash from the state bank. Earned $4,000 of cash revenue. Paid $2,000 cash expenses. The company was liquidated at the end of Year 1. Based on this information Multiple Choice the stockholders would receive $6,000. the stockholders would receive $8,000. the creditor (the bank) would receive $2,000. the creditor (the bank) would receive $6,000.

The stockholders would receive 8000

Ellen Elder and her brother, Buster started Elder Company when they each invested $600 in the company. After the investments there will be

Three reporting entities

A company can have a negative balance in retained earnings. This statement is:

True

A company using accrual accounting may report revenue on the income statement even if it does not collect cash. This statement is

True

Accounting provides a service to society by gathering and reporting information about a company's profit potential. This statement is

True

Businesses earn profits by converting financial, physical, and labor resources into goods and services that satisfy consumer demands. This statement is

True

GAAP requires that companies adhere to financial accounting standards

True

How accounting transactions are recorded will vary depending on the entity perspective taken. This statement is

True

Managerial accounting information includes financial and nonfinancial information.

True

Owners of the business who contribute money to the business take more risk than creditors who loan money to the business. This statement is

True

The Statement of Changes in Stockholders' Equity is measured for a period of time such as a year. This statement is:

True

The accounting information intended to satisfy the needs of a company's employees is managerial accounting information.

True

The amount of revenue shown on the income statement may differ from the amount of cash inflow from operating activities shown on the statement of cash flows. This statement is

True

the three primary types of reporting entities are consumers resource owners and businesses

True

GreyCo and Sons earns $6,900 of revenue on account in Year 1. Cash collections of receivables amount to $6,300 in Year 1 with the remainder being collected in Year 2. Based on this information alone the company's financial statements would show a balance of $600 in accounts receivable at the beginning Year 2. cash inflow from operating activities of $600 during Year 1. a balance of $600 in accounts receivable at the end of Year 2. cash inflow from operating activities of $6,300 during Year 2.

a balance of 600$ in accounts receivable at the beginning of year 2

The income statement presents an explanation of the changes in the beginning and ending balances of stockholders' equity. a comparison of the benefits and the sacrifices a company experiences from its operations. information in three categories including operating, investing, and financial activities. a list of a company's assets and the sources of those assets.

a comparison of the benefits and the sacrifices a company experiences from its operations

Which of the following are shown on the Balance Sheet? a. Total assets b.. Land c. Common Stock d. Net Change in Cash f. Revenue g. Notes Payable h. Stockholders' Equity i. Total Liabilities and Stockholders' Equity j. Expenses k. Net Income l. Ending cash balance m. Beginning cash balance n. Dividends

a, b, c, f, g, h, k

Harbert, Inc. had a beginning balance of $12,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $10,500. During the period, Harbert collects $72,000 of its accounts receivable. Harbert incurred $63,000 of cash expenses during the accounting period. Required a. Based on the information provided, determine the amount of revenue recognized during the accounting period. b. Based on the information provided, determine the amount of net income earned during the accounting period. c. Based on the information provided, determine the amount of cash flow from operating activities.

a- 70,500 solve for x beginning AR- 12,000 Increase in AR from sales- x Reduction in AR collections- (72000) ---------- Endings in accounts receivable balance b- 7500 c-9000

f a company recognizes $5,000 of accrued salary expense on December 31, Year 1, on January 1, Year 2 there will be a zero balance in the Accrued Salaries Expense account. on January 1, Year 2 there will be a $5,000 balance in the Accrued Salaries Payable account. the December 31, Year 1 expense recognition will not affect the cash account. All of the answer are correct.

all of the answers are correct

When a company incurs accrued expenses the liability account, accounts payable, increases. stockholders' equity decreases. assets are not affected. all of the answers are correct.

all of the choices are correct

Sims Company received cash from the issue of a note payable to a bank. This event is

an asset source transaction

The statement of changes in stockholders' equity presents an explanation of the changes in the beginning and ending balances of stockholders' equity. a comparison of the benefits and the sacrifices a company experiences from its operations. information in three categories including operating, investing, and financial activities. a list of a company's assets and the sources of those assets.

an explanation of the changes in the beginning and ending balances of stockholders equity

If total assets increase then

liabilities, common stock, or retained earnings must increase.