ACC 2000 F19 Exam 1

NW Air Charter signed a four-month note payable in the amount of $20,000 on September 1. The note requires interest at an annual rate of 9%. The amount of interest to be accrued at the end of September is

$150

The accounting process is correctly sequenced as

C. identification, recording, communication

At January 1, 2018, Alligator Industries reported retained earnings of $150,000. During 2018, Alligator has a net loss of $30,000 and paid dividends of $15,000. At December 31, 2018, the amount if retained earnings is

a. $105,000

If total assets equal $345,000 and total stockholders' equity equal $140,000, then total liabilities must equal

a. $205,000

Meat Puppets Company purchased equipment for $7,200 on December 1. It is estimated that annual depreciation on the equipment will be $1,800. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

a. Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150

Stone Roses Candies paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the company pays $1,500 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January?

a. Salaries and Wage Expense . 4500 Salaries and Wages Payable 4500

Accumulated Depreciation is

a. a contra asset account

The difference between the cost of a depreciable asset and its related accumulated depreciation is referred to as the

a. book value of the asset

If income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a

a. credit to the retained earnings account

TransAm Mail Service purchased equipment for $2,500. TransAm paid $400 in cash and signed a note for the balance. TransAm debited the Equipment account, credited Cash and

a. credited a liability account for $2,100

Assets normally show

a. debit balances

Credits

a. decrease assets and increase liabilities

Revenues would not result from

a. issuance of common stock

Retained earnings at the end of the period is equal to

a. retained earnings at the beginning of the period plus net income minus dividends

In the first month of operations, the total of the debit entries to the cash account amounted to $1,200 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n)

b. $400 debit balance

If total liabilities increased by $30,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during the same period?

b. $50,000 increase

Which of the following correctly identifies normal balances of accounts?

b. Assets - Debit Liabilities - Credit Stockholders' Equity - Credit Revenues - Credit Expenses - Debit

Owner's equity is best depicted by the following:

b. Assets-Liabilities

An accountant has debited an asset account for $1,200 and credited a liability account for $500. What can be done to complete the recording of the transaction?

b. Credit a different asset account for $700

Each of the following accounts is closed to Income Summary except

b. Dividends

The expense recognition principle matches

b. Expenses with liabilities

In a service-type business, revenue is considered recognized

b. When the service is performed

A dividend is

b. a distribution of a company's earnings to its stockholders

Unearned revenue is classified as

b. a liability account

The closing entry process consists of closing

b. all temporary accounts

A net loss will result during a time period when

b. expenses exceed revenues

Closing entries are made

b. in order to transfer net income (or loss) and dividends to the retained earnings account

Depreciation expense for a period in the

b. portion of an asset's cost that expired during the period

In order to close the dividends account, the

b. retained earnings account should be debited

Accrued revenues are

b. revenue for services performed but not yet received in cash or recorded

The normal balance of any account is the

b. side which increases that account

Closing entries are necessary for

b. temporary accounts only

Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

b.Debit Supplies Expense. $5,200; Credit Supplies $5,100

At October 1, 2018, Padilla Industries has an accounts payable balance of $40,000. During the month, the company made purchases on account of $33,000 and made payments on account of $48,000. At October 31, 2018, the accounts payable balance is

c. $25,000

The basic accounting equation may be expressed as

c. Assets-Liabilities = Stockholder's Equity

The historical cost principle requires that when assets are acquired, they be recorded at

c. Cost

Net income results when

c. Revenues > Expenses

Expenses sometimes make their contribution to revenue in a different period than when they are paid. When salaries and wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the period?

c. Salaries and Wages Payable

A debit is not the normal balance for which account listed below?

c. Service Revenue

ON March 8, Black Candy Company bought supplies on account from the Arcade Fire Company for $550. Black Candy Company incorrectly debited Equipment for $500 and credited Accounts Payable for $500. The entries have been posted to the ledger. The correcting entry should be:

c. Supplies . 550 Equipment . 500 Accounts Payable 50

Adjusting entries can be classified as

c. accruals and deferrals

An adjusting entry

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

A debit to an asset accounts indicates

c. an increase in the asset

Liabilities:

c. are existing debts and obligations

If expenses are paid in cash, then

c. assets will decrease

A balance sheet shows

c. assets, liabilities, and stockholders' equity

Adjusting entries are required

c. because some costs expire with the passage of time and have not yet been journalized

Unearned revenues are

c. cash received and a liability recorded as liabilities before services are performed

An accumulated depreciation account

c. has a normal credit balance

Accrued expenses are

c. incurred but not yet paid or recorded

An income statement

c. reports the revenues and expenses for a specific period of time

At December 1, 2018, Cursive Company's accounts receivable balance was $1,800. During December, Cursive has credit revenues on account of $7,200 and collected accounts receivable of $6,000. At December 31, 2018, the accounts receivable balance is

d. $3,000

On June 1, 2018, Portugal Inc. reported a cash balance of $12,000. During June, Portugal made deposits of $5,000 and made disbursements totaling $14,000. What is the cash balance at the end of June?

d. $3,000 debit balance

Expenses incurred but not yet paid or recorded are called

d. Accrued expenses

Closing entries are journalized and posted

d. after the financial statements are prepared

Closing entries

d. cause the revenue and expense accounts to have zero balances

The balance in the prepaid Rent account before adjustment at the end of the year is $21,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is to

d. debit Rent Expense, $7,000: credit Prepaid Rent, $7,000

Prepaid expenses are

d. paid and recorded in an asset account before they are used or consumed

The right side of an account

d. the credit side

The left side of an account is

d. the debit side