Accounting 203

Sparkling Pools provides $1,000 of pool maintenance services during July and collects payment in August. The company performs $1,600 of pool maintenance services during July that were paid for in June. The company accepts an order to perform $500 of pool maintenance services in August (that is actually performs in August) and will be paid in the same month. Revenue should be credited for:

$0 in June, $2,600 in July, and $500 in August

Accounts payable had a balance of $18,200 at the beginning of the month. During the month, three debits in the amounts of $4,700, $11,300, and $14,800 were posted to accounts payable, and three credits in the amounts of $3,600, $9,500, and $12,700 were posted to accounts payable. What is the ending balance of the accounts payable account?

$13,200

Park and company was recently formed with a $5,000 investment in the company by stockholders in exchange for common stock. The company then borrowed $2000 from a local bank, purchased $1,000 of supplies on the account, and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance. Based on these transactions the company's total assets are:

11,000

Your company receives advance payments in October for services that are provided during November. Which of the following is true?

A liability is recorded in October; in November the liability is reduced and revenue is recorded

Expenses are reported on the:

income statement in the time period in which they are incurred

Which of the following would not represent a financing activity?

Buying supplies on account

Your company bought a 30-second advertisement that aired during the Super Bowl at a cost of $1.2 million. It is legally obligated to pay for the ad but has not yet done so. How does the purchase and use of the ad time affect your company's balance sheet?

It increases liabilities and decreases stockholders equity by $1.2 million each

cash flows from investing activities includes amounts:

Received from the sale of the company's office building

Assets:

Represent the resources presently controlled by a company

Which of the following statements regarding debits and credits is always correct?

The total value of all debits recorded in the ledger must equal the total value of all credits recorded in the ledger.

In October, your company prepaid rent of $7,000 for November and December. Which of the following describes the effects of this transaction on your company in October?

There is no change to total assets, liabilities, or stockholders equity.

The separate entity assumption means:

a company's financial statements reflect only the business activities of that company

Accounting systems:

analyze, record, summarize, and the activities affecting its financial condition and performance

A customer purchased $1,500 of services on credit two months ago and has just paid the bill. The receipt of the payment from the customer is recorded as a

Debit to cash and a credit to accounts receivable

Which one of the following statements regarding the accrual and cash basis of accounting is true

Using the accrual basis of accounting, if payment is received after delivery of a good or service, an asset is recorded at the time the good or service was delivered.

Your company pays back $2 million on a loan it had received earlier from a bank.

Assets decrease by $2 million, liabilities decrease by $2 million, stockholders' equity is unchanged.

Which on of the following statements regarding the debit/credit processing of revenues and expenses is true?

Credits increase revenues

Which of the following statements about the balance sheet is correct?

Current Liabilities are debts and other obligations that will be paid or fulfilled within 12 months of the balance sheet date

Which of the following statements about financial accounting is true?

Financial accounting reports are primarily prepared to provide information for external decision makers

Financing that individuals or institutions have provided to a corporation is:

classified as a liability when provided by creditors and as stockholders' equity when provided by owners