Accounting Exam 1 ACC201

What amount would be shown as total current assets on SUnshine's September 30th Balance Sheet? A) $2280 B) $2820 C) $4080 D)$6480

A- $2280 Cash ($1320) + AR ($540) +Supplies ($420) = TCA ($2280)

Earnings Per Share

Net Income- Preferred Stock Dividends/ Average common shares outstanding

The Total amount of Winter's End's Working Capital is

$135. ($215(CA)-80) (Accounts Payable $70 and Salaries Payable $10)

Net income $100,000 Dividends 6,000 Retained earnings at December 31, 2019 $120,000 What was the balance of Retained Earnings at January 1, 2019? A) $26,000 B) $214,000 C) $21,000 D) $106,000

A) $26,000 ($120,000 + $6,000 − $100,000 = $26,000)

What would be shown as retained earnings on Sunshine's Balance sheet at September 30th? A) $420 B) $900 C)$2520 D) $1380

$420

What amount will be shown as net income for the month of September on Sunshines Income Statement? A) $420 B) $900 C) $2520 D) $1380

$420.. Beginning retained earnings (0)+net income (900)- dividends (4800)= ending retained earnings ($420)

Which of the following will not cause a trial balance to be out of balance? a.A credit entry is posted to the wrong account, but still as a credit. b.An account is accidentally omitted from the trial balance. c.The balance for the account is incorrectly computed. d.A debit entry is posted as a credit.

A) A credit entry is posted to the wrong account, but still as a credit.

A machine costing $400 is purchased by paying $50 cash and signing a note payable for he remainder. The journal entry should include a A) Credit to Notes Payable B) Debit to cash C) Credit to Notes Receivable D) Credit to Machine

A) Credit to Notes Payable ($400-$50 Cash= $350 Notes Payable)

The entry on Rainbow's books to record stockholders' investment of $10,000 in exchange for common stock in rainbow would be A) Debit Cash $10,000 and Debit Common Stock $10,000 B) Debit Cash $10,000 and Credit Common Stock $10,000 C) Credit Cash $10,000 and Credit Common Stock $10,000 D) Credit Cash $10,000 and Debit Common Stock $10,000

B) Debit Cash $10,000 and Credit Common Stock $10,000 (Increase Cash (Debit) Increase SE (Credit) )

What would be shown as total Stockholders Equity on the September 30 Balance Sheet for Sunshine? A) $2280 B) $2820 C) $4080 D)$1,260

B- $2,820 Common Stock ($2400) + Ending Retained Earnings (420) = TSE ($2820)

If a company has current assets of $2,100,000 and current liabilities of $500,000, calculate its working capital. a.$2,100,000 b.$500,000 c.$1,600,000 d.$2,600,000

C) 1,600,000 (2,100,000-500,000= 1,600,000

Cash $75,000 Accounts Receivable $250,000 Property, plant & equipment 350,000 Long-term debt 200,000 Capital stock 500,000 Accounts payable 100,000 Retained earnings ? Inventory 175,000 What is the retained earnings balance at the end of the current year? a.$800,000 b.$550,000 c.$850,000 d.$50,000

D) 50,000 (Assets = $75,000 + $350,000 + $250,000 + $175,000 = $850,000 Liabilities = $200,000 + $100,000 = $300,000 Stockholders' Equity = $850,000 − $300,000 = $550,000 Retained Earnings = $550,000 − $500,000 = $50,000)

Which of the following statements is true about revenue? A) Revenue is the amount charged to customers for goods or services sold to them. B) Revenue accounts are increased by crediting home. C) Revenue is recorded when a sale is made on credit D) All of the above

D) All of the above

The purchase of office equipment on credit has what effect on the accounting equation? a)liabilities increase and stockholders' equity decreases b)assets and stockholders' equity decrease c)assets and liabilities decrease d)assets and liabilities increase

D) Assets and Liabilities Increase

Which of the following are Noncurrent assets? A)inventories B)machinery and equipment C)unearned revenues D)accounts receivable

Machinery and Equipment

The Total dollar amount of assets to be classified as property, plant and equipment is?

PPE= Land ($165)+Buildings ($150) or $315

If total liabilities increased by $15,000 and stockholder's equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?

$20,000 Increase

What will be shown as Sunshine's total expenses on the income statement for the month of September? A_ $420 B) $900 C) $2580 D) $2100

$2100 ( Salary Expense $1200 + Supplies Expenses $240+ Advertising Expense $360 + Utilities Expense $300= Total Expense of $2100)

The Total dollar amount of assets to be classified as current assets by Winters end is? A) $145 B) $180 C) $215 D) $290

$215 {Cash ($65) +Prepaid Insurance ($30) +Accounts Receivable ($50) +Inventory ($70) equals current assets}

Cash$75,000 Accounts Receivable$250,000 Property, plant & equipment 350,000 Long-term debt 200,000 Capital stock 500,000 Accounts payable 100,000 Retained earnings ? Inventory 175,000 What amount should the company report on its Balance Sheet for Total Assets? A)$775,000 B)$550,000 C)$850,000 D)$950,000

C) 850,000

If ABC Inc. on Dec 31 has Assets of $32000 and Liabilities of $8,000. total Stockholder's Equity would be:

$24,000

The entry on Rainbow's books to record revenue earned of $1,000 would include A) A debit to revenue for $1,000 B) A credit to accounts receivable for $1,000 C) A credit to revenue for $1,000 D) A credit to cash for $1,000

C) A credit to Revenue for $1,000 (Debit to Cash or AR for $1,000 and Credit to Revenue for $1000)

On July 7, Year 2, Summer Enterprises received cash of $700 for services rendered. The entry to record this transaction will include: A) A debit to service revenue of $700 B) A credit to accounts receivable for $700 C) A debit to cash of $700 D) A credit to Accounts Payable of $700

C) A debit of Cash of $700

Which of the following statements best describes the effects of recognizing revenue earned by a business entity? a)Assets increase and stockholders' equity decreases when either cash or credit sales are made. b)Stockholders' equity increases only when credit sales are made. c)Assets and stockholders' equity increase when either cash or credit sales are made. d)Assets increase only when cash sales are collected.

C) Assets and stockholders' equity increase when either cash or credit sales are made.

Because some totals from one financial statement carry forward to another financial statement, it is necessary to prepare the financial statements in the following order A) Income Statement, Balance Sheet, Statement of Cash Flows, Statement of Retained Earnings B) Statement of Retained Earnings, Income Statement, Statement of Cash Flow, Balance Sheet C) Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows D) None of these

C) Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows

Sales $780,000 Cost of Sales $700,000 Selling, general & administrative expense 20,000 Other Expense 15,000 Dividends 5,000 Income Tax Expense 12,500 Refer to Bay Camera. What is the company's Net Income for the current year? A)$32,500 B)$80,000 C)$22,500 D)$42,500

A) 32,500 ($780,000 − $700,000 − $20,000 − $15,000 − $12,500 = $32,500)

Collection of a $1,200 Accounts Receivable A) Increases an asset $1200; Decreases an Asset $1,200 B) Increases an asset $1200; decreases a liability $1200 C) Decreases a liability $1,200 ; Increases stockholder's equity $1,200 D) Decreases an asset $1,200; decreases a liability $1,200

A) Increases an asset $1,200; decreases an asset $1,200

Which of the following transactions would have caused the assets and liabilities to increase by $15,000 A) Office furniture purchased for $20,000, $5,000 Cash paid and $15,000 note payable given for the balance B) The company issued an additional $1500 shares of $10 par value stock at par for cash C) Office furniture purchased for $15,000 , $5,000 Cash paid and a $10,000 note payable given for the balance D) A $15,000 note payable was issued by the company to replace a past-due account payable

A) Office furniture purchased for $20,000 , $5,000 cash paid and a $15,000 note payable given for the balance

Long-Term Assets held for use in the production or sale of other assets or services are called? A) Plant and Equipment B) Current Assets C) Intangible Assets D) Accrued Assets

A) Plant and Equipment

An informative system that provides useful information to people who make rational investment, credit, and similar decisions to help them reach better decisions

Accounting

The accounting equation can be expressed as follows A) Assets=Liabilities+Capital B) Assets= Liabilities+Owner's Equity C) Assets= Liabilities+Stockholder's Equity D) All of the above

All of the above

A company showed the following Balances in accounts at the end of the first year Cash $10 Common Stock $2 Accounts Payable $4 Prepaid Insurance $1 Dividends $1. Notes Payable $6 AR $5. Revenues $30 Expenses $25 What did the company show as total credits on its' trial balance for the end of the first year A) 43 B) 42 C) 41 D) 44

B) 42 (AP $4 + NP $6) + CS $2 + Rev $30 = $42 dollars.

The entry on Rainbow's books to record the payment of a liability of $300 would include A) A debit to Cash for $300 B) A debit to AP for $300 C) A credit to AP for $300 D) A credit to AR for $300

B) A debit to AP for $300

A company purchased equipment for $9 cash. As a result of this event A) Equity decreased by $9 B) Assets remained unchanged C) Assets increased by $9 D) Both A and C are correct

B) Assets remain unchanged A=L+SE (Equipment goes under Asset)

Which set of items below are current assets? a. Cash, Accounts Receivable, Capital Stock, and Sales b.Cash, Accounts Receivable, Inventory, and Office Supplies c.Net Income, Cash, Office Supplies, and Inventory d.Accounts Receivable, Net Income, Inventory, and Dividends

B) Cash, Accounts Receivable, Inventory, and Office Supplies

Sales $780,000 Cost of Sales $700,000 Selling, general & administrative expense 20,000 OtherExpense 15,000 Dividends 5,000Income Tax Expense 12,500 What amount will be reported as Retained Earnings on the Balance Sheet at December 31, 2019, assuming this is the first year of operations? a.$42,500 b.$22,500 c.$27,500 D) Not enough Info is provided

C) $27,500 ($780,000 − $700,000 − $20,000 − $15,000 − $12,500 = $32,500) ($32,500 − $5,000 = $27,500)

If total assets are $200,000; liabilities are $120,000; and common stock is $50,000, retained earnings is A) $320,000 B) $370,000 C) $30,000 D) $270,000

C) $30,000 Assets= Liabilities +Common Stock+ERS. -> BRE+ Rev-Exp. (Assets $200,000 -$120,000- $50,000 or $30,000) ($200,000-$170,000= $30,000)

In the first month of Springy Company's operations, the total debit entries to the cash account amounted to $1,000 and the total credit entries to the cash account amounted to $400. Spring's cash account has a A) $400 Credit Balance B) 1,000 Debit Balance C) $600 Debit Balance D) $400 Credit Balance

C) $600 Debit Balance ($1000-$400=$600)

If a company has assets of $5,000,000, liabilities of $3,000,000, and retained earnings of $1,200,000, how much is total stockholders' equity? A) $800,000 B) $1,800,000 C) $2,000,000 D) $3,800,000

C) 2,000,000 ($5,000,000−$3,000,000 = $2,000,000)

Winter's End's Current Ratio is A) 1.57 B) 1.94 C) 2.69 D) 3.14

C) 2.69: 1. ($215/80= 2.69: 1)

Cash $234,000 Accounts Payable $97,000 Inventories 121,000 Notes Payable 211,000 Land 453,000 Accounts Receivable 46,000 Calculate Current Assets. A) $498,000 B) $854,000 C)$401,000 D) $709,000

C) 401,000 ( $234,000 Cash + $46,000 Accounts Receivable + $121,000 Inventory = $401,000)

Which of the following statements is FALSE? A) Ethics is the application of a code of conduct to everyday life B) All business activities which are legal are in fact thereby ethical business activities C) Professional ethics involves the application of a code of conduct to the practice of a profession D) Ever person who becomes an accountant is responsible for upholding the high standards of the profession

C) Professional ethics involves the application of a code of conduct to the practice of a profession

Which of the following best describes the term "retained earnings" of a company? A) The amount of total profits earned by a company since it began operations. B) The future economic resources of a company. C) The accumulated net income of a company that has not been distributed to owners in the form of dividends. D) The amount of claim that the owners have on the assets of the company.

C) The accumulated net income of a company that has not been distributed to owners in the form of dividends.

What amount would be shown as Total assets on Sunshine's September 30 Balance Sheet A) $2280 B) $2820 C) $4080 D)$6480

C- $4080 Cash ( $1320) + AR(540) +Supplies ($420) + Equipment ($1800) = TA ( $4080)

Revenues $2,500,000 Expenses 2,000,000 Retained Earnings at December 31, 2018 100,000 Retained Earnings at December 31, 2019 450,000 How much was paid out in dividends in 2019? a.$500,000 b.$350,000 c.$250,000 d.$150,000

D) $150,000 ($100,000 + $2,500,000 − $2,000,000 − X = $450,000 X = $150,000)

At January 1, Year 2, fall industries reported Retained Earnings of $260. During Year 2, Fall had a net loss of $60 and paid dividends to the stockholders of $40. At Dec 31, year 2, the balance in retained earnings is A) $260 Debit B) $280 Credit C) 200 Debit D) $160 Credit

D) $160 Credit (BRE ($260 Credit)+NI or NL ($60 Debit) - Dividends ($40 Debit) = Ending Retained Earnings ($160 Credit)

On January 1, 2019, a company reported assets of $1,000,000 and liabilities of $600,000. During 2019, assets decreased by $100,000 and Stockholders' Equity decreased $200,000. What is the amount of liabilities at December 31, 2019? A) 500,000 B) 600,000 C) 200,000 D 700,000

D) $700,000

Which one of the following financial statements show the end of the year cash balance for a business entity A) Balance Sheet/Retained Earnings B) Retained Earnings/Cash Flow C) Income Statement/ Retained Earnings D) Balance Sheet/ Statement of Cash Flow

D) Balance Sheet/ Statement of Cash Flow

Which one of the following correctly represents one of the basic financial statement models? A) Assets + Liabilities = Total Assets B) Revenues + Expenses = Net Income C)Assets − Liabilities = Net Income D) Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings

D) Beginning Retained Earnings + Net income -Dividends= Ending Retained Earnings

A company provided consulting services and billed the client $500. As a result of this event A) Assets remained unchanged B) Assets increased by $500 C) Equity increased by $500 D) Both B and C are correct

D) Both B and C are correct

The entry on Rainbow's books to record the purchase of $500 of supplies on account would be: A) Credit Supplies $500 and Credit Accounts payable $500 B) Credit Supplies $500 and Debit Accounts payable $500 C) Debit Supplies $500 and Debit Accounts payable $500 D) Debit Supplies $500 and Credit Accounts Payable $500

D) Debit Supplies $500 and Credit Accounts payable $500 (Increases Supplies (Asset/Debit) and Increase (AP/Credit)

June 1Purchased two new maintenance carts on account at $750 each. Payment is due in 30 days June 8Accepted $500 of advance payments from customers for services to be provided next month June 15Received the utility bill for $300. Payment is due in 30 days June 20Billed customers $1,500 services provided. Payment is due in 30 days. June 30Received $500 from customers who were billed earlier Refer to Hesson Properties. What journal entry is required to record the purchase of the carts? a.Accounts Payable 1,500 Equipment1,500 b.Equipment 1,500 Cash 1,500 C) Cash 1,500 Equipment1,500 D) Equipment 1,500 Accounts Payable1,500

D) Equipment 1,500 Accounts Payable 1,500

All of the following accounts have normal credit balances except a.common stock. b.accounts payable. c.unearned revenue. d.inventory.

D) Inventory

Which of the following terms fit this definition "The area of accounting principally concerned with reporting external users"

Financial Accounting