ACC 231 test 1

Liability accounts are increased

By credits

Cray Corp. purchased supplies at a cost of $12,000 during 2008. At January 1, 2008, supplies on hand were $2,000. At December 31, 2008, supplies on hand are $1,000. Determine the amount of supplies expense for 2008.

$13,000

Given the following data, what is the amount in the supplies account to be shown as an asset on the balance sheet at the end of the period? Supplies (beginning of period) $500 Supplies purchased (during period) 425 Supplies used (during period) 375

$550 (formula)

What will not cause a trial balance to be out of balance?

A credit entry is posted to the wrong account as a credit.

If a company receives rent for January 2009 from a tenant in December 2008, that rent would be

A liability in 2008

If the business has an ____ from a customer, then the customer has an ____ to the business

Accounts receivable; accounts payable

A system of accounting in which revenues and expenses are recorded as they are earned and incurred, is called

Accrual-basis accounting

Which of the following types of accounts will always be credited when a prepaid expense account is adjusted?

Assets

Food To Go is a local catering service. Conceptually, when should Food To Go recognize revenue from its catering service?

At the date the meals are served

A system of accounting in which revenues and expenses are recorded only when cash is received or paid, is called

Cash-basis accounting

The entry to close the expense accounts normally includes a

Credit to each expense account

Owners' equity accounts are decreased with

Debit entries

Bay Graphics pays its employees each Friday for a five-day total workweek. The payroll is $9,000 per week. If the end of the accounting period occurs on a Wednesday, the adjusting entry to record wages payable would include a:

Debit to Salary Expense of $5,400 (formula??)

The entry to close the revenue accounts normally includes a

Debit to each revenue account

Christopher Company purchased $20,000 of equipment for cash. The correct entry to record the purchase of equipment is

Equipment 20,000(dr) Cash 20,000(Cr)

On August 1, 2009, Base Line Realty purchased a two-year insurance policy for $15,000. On that date, the company debited Prepaid Insurance for $15,000. The adjusting entry on December 31, 2009, would include a debit to

Insurance Expense for $3,125

Income statement accounts are also known as which of the following?

Nominal accounts

Balance sheet accounts are also known as which of the following?

Real accounts

Closing entries are

Required to bring all nominal accounts to a zero balance prior to starting a new accounting cycle

What is included in net income?

Revenue-Dividends-Supplies/expences

What Increase owners' equity

Revenues

Advantage Auto sold merchandise to a customer for $3,000 on credit on July 10, 2008. The customer paid Advantage Auto the amount due on July 31. Under the accrual basis of accounting, which of the following statements is true?

The July 31st transaction has no effect on total assets under the accrual basis.

A company's retained earnings balance would decrease by

The declaration and payment of dividends

Which of the following statements about adjusting entries is NOT true?

They are recorded on a daily basis as transactions occur.

Hanna's Swim Club sells season memberships for $200 each. During January of 2008, 60 season memberships were sold. As of March 31, 2008, only $3,000 of season membership fees had been collected from customers. The swim season runs for 4 months starting May 15, 2008. Which one of the following is an amount reported on the financial statements for the period ending March 31, 2008?

Unearned swim membership revenue of $3,000

Forney Industries' plant operates five days per week with a daily payroll of $4,000. Employees are paid every Saturday for the work week just completed (Monday through Friday). The last day of the month is Wednesday, March 31. The correct adjusting entry at March 31 is

Wages Expense 12,000(dr) Wages Payable 12,000(Cr)

A $430 bill for electricity for the month of April is received and will be paid on its due date in June.

accounts payable.

City Office Inc. delivers furniture ($1,060) and office supplies ($160) to Narada leaving an invoice for $1,220.

accounts payable.

Payment is made to City Office Inc. for the furniture and office supplies delivered earlier for $1,220

accounts payable.

Bills are sent to clients for services provided in April in the amount of $800.

accounts receivable.

Salaries are paid to employees, $850.

cash.