ACG2021 FINAL

What is the accounting equation?

Assets = Liabilities + Owner's Equity

A company reports the following amounts: Assets = $7,400; Liabilities = $2,200; Stockholders' equity = $5,200; Dividends = $900; Revenues = $6,900; and Expenses = $3,000. What amount is reported for net income?

NI = $3,900

A list of all account names used to record transactions of a company is referred to as a: a. Chart of accounts. b. Journal. c. Financial statement. d. Transaction.

a. Chart of accounts

The retained earnings account had a beginning credit balance of $26,000. During the period, the business had a net loss $12,650, and the company paid dividends of $8,250. The ending balance in the retained earnings account is: a. $5,100. b. $38,650. c. $30,400. d. $13,350.

a. $5,100.

Use the following appropriate amounts to calculate net income: Revenues, $11,200; Liabilities, $3,900; Expenses, $5,000; Assets, $17,500; Dividends, $1,200. a. $6,200 b. $2,450 c. $5,000 d. $13,600

a. $6,200

The financial statement that shows the financial position of a company at a specific point in time is called the: a. Balance Sheet. b. Statement of Stockholders' Equity. c. Statement of Cash Flows. d. Income Statement.

a. Balance Sheet

Childers Service Company provides services to customers totaling $3,100, for which it billed the customers. How would the transaction be recorded? a. Debit accounts receivable $3,100, credit service revenue $3,100 b. Debit service revenue $3,100, credit accounts receivable $3,100 c. Debit accounts receivable $3,100, credit cash $3,100 d. Debit cash $3,100, credit service revenue $3,100

a. Debit accounts receivable $3,100, credit service revenue $3,100

Summer Leasing received $10,800 for 24 months rent in advance. How should Summer record this transaction? a. Debit cash; credit deferred revenue b. Debit cash; credit service revenue c. Debit prepaid rent; credit rent expense d. Debit rent expense; credit cash

a. Debit cash; credit deferred revenue

After the closing entries are posted to the accounts, all temporary accounts: a. Have zero balances. b. Have balances equal to the amounts shown in the unadjusted trial balance. c. Are open. d. Have balances equal to the amounts shown in the adjusted trial balance.

a. Have zero balances

Under accrual-basis accounting, companies typically report expenses: a. In the same period as the revenue they help to generate. b. In the same period in which a liability is paid. c. In the same period in which cash is paid. d. In the same period in which an asset is purchased.

a. In the same period as the revenue they help to generate.

In which financial statement does a company report its revenues? a. Income Statement. b. Statement of Cash Flows. c. Balance Sheet. d. Statement of Stockholders' Equity.

a. Income Statement

Under cash-basis accounting, companies typically record revenue: a. In the period in which we received cash from customers for goods and services. b. In the period in which goods and services are prepared to be sold to customers. c. In the period in which customers order goods and services. d. In the period in which we provide goods and services to customers.

a. in the period in which we received cash from the customers for goods and services

Purchasing land with cash would have what effect on the accounting equation? a. No effect. b. Total assets decrease. c. Total liabilities increase. d. Total assets increase.

a. no effect

The following table contains financial information for Trumpeter Inc. before closing entries: Cash $12,200 Supplies 5,800 Prepaid Rent 3,000 Salary Expense 6,400 Equipment 66,800 Service Revenue 29,100 Miscellaneous Expenses 21,300 Dividends 4,100 Accounts Payable 4,600 Common Stock 66,100 Retained Earnings 19,800 What is Trumpeter's net income? a. $1,400 b. $1,900 c. $9,100 d. $10,100

a.$1,400

Eve's Apples opened for business on January 1, 2018, and paid for two insurance policies effective that date. The liability policy was $39,600 for eighteen-months, and the crop damage policy was $19,200 for a two-year term. What was the balance in Eve's Prepaid Insurance account as of December 31, 2018? a. $36,000 b. $22,800 c. $58,800 d. $9,600

b. $22,800

The entry to close the expense accounts includes: a. A debit to all expense accounts. b. A debit to Retained Earnings. c. A debit to all expense accounts and a credit to Retained Earnings. d. A credit to Retained Earnings.

b. A debit to Retained Earnings.

Financial statements are prepared from which of the following trial balances? a. Unadjusted trial balance. b. Adjusted trial balance. c. Post-closing trial balance. d. Financial trial balance.

b. Adjusted trial balance

Financing cash flows include which of the following? a. Cash paid for supplies. b. Cash received from the issuance of common stock. c. Cash received from the sale of a used company truck. d. Cash received from a customer.

b. Cash received from the issuance of common stock.

During the year, Cheng Company paid salaries of $23,300. In addition, $9,600 in salaries has accrued by the end of the year but has not been paid. The year-end adjusting entry would include which one of the following? a. Debit to salaries expense for $32,900 b. Credit to salaries payable for $9,600 c. Credit to salaries expense of $9,600 d. Debit to salaries payable for $23,300

b. Credit to salaries payable for $9,600

Paying dividends to stockholders would be recorded with a: a. Credit to Dividends b. Debit to Dividends c. Debit to Salaries Expense d. Credit to Common Stock

b. Debit to Dividends

The term GAAP stands for: a. General Accounting Accountability Principles b. Generally Accepted Accounting Principles c. Generally Accepted Auditing Principles d. General Accounting and Audit Principles

b. Generally Accepted Accounting Principles

Financial accounting provides information primarily to: a. Government officials. b. Investors and creditors. c. Suppliers and customers. d. Tax regulators.

b. Investors and creditors

Transactions are recorded using debits and credits in a(n): a. Financial statement. b. Journal. c. Annual report. d. Chart of accounts.

b. Journal

Amounts owed to creditors are reported as: a. Stockholders' equity. b. Liabilities. c. Assets. d. Revenues.

b. Liabilities

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded? a. November 15. b. November 1. c. Neither. d. One-half on each date.

b. November 1

Which of the following transactions decreases stockholders' equity? a. Repay amounts previously borrowed from the bank. b. Pay salaries for the current period. c. Purchase supplies on account. d. Purchase office supplies on account.

b. Pay salaries for the current period

Which of the following accounts normally has a credit balance? a. Accounts Receivable. b. Service Revenue. c. Cash. d. Dividends.

b. Service Revenue

The balance in retained earnings represents: a. The amount of income earned by the company over its life. b. The amount of income earned over the company's life minus the dividends paid to shareholders over the company's life. c. Income earned during the current period. d. Income earned during the current period minus dividends distributed to stockholders' during the current period.

b. The amount of income earned over the company's life minus the dividends paid to shareholders over the company's life.

Effective internal control over cash includes the requirement that: a. The same person who makes deposits should also record the deposits. b. The person who makes deposits should NOT record the deposits. c. Only checks are used for payment of purchases. d. a. and b.

b. The person who makes deposits should NOT record the deposits.

A debit to Salaries Expense will: a. Decrease liabilities. b. Decrease stockholders' equity. c. Increase assets. d. Increase stockholders' equity.

b. decrease in stockholders' equity

DW has an ending retained earnings balance of $52,500. If during the year DW paid dividends of $4,600 and had net income of $21,500, then what was the beginning retained earnings balance? a. $5,100 b. $26,400 c. $35,600 d. $69,400

c. $35,600

The following financial information is from Shovels Construction Company. Accounts payable $13,300 Buildings 88,000 Cash 11,700 Accounts receivable 11,300 Sales tax payable 4,000 Retained earnings 46,700 Supplies 41,800 Notes payable (due in 18 months) 34,000 Interest payable 1,700 Common stock 53,100 What is the amount of current assets, assuming the accounts above reflect normal activity? a. $23,000 b. $117,900 c. $64,800 d. $152,800

c. $64,800

All transactions related to a particular item over a period of time are summarized in a(n): a. Chart. b. Entry. c. Account. d. Schedule.

c. Account

Operating cash flows include which of the following? a. Cash received from the sale of a used company truck. b. Cash received from a bank loan. c. Cash paid for supplies. d. Cash received from the issuance of common stock.

c. Cash paid for supplies

Investing cash flows include which of the following? a. Cash paid for supplies. b. Cash received from a customer. c. Cash received from the sale of a used company truck. d. Cash received from the issuance of common stock.

c. Cash received from the sale of a used company truck

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting? a. December 10. b. One-half on each date. c. December 20. d. Neither.

c. December 20

After transactions are recorded in the journal, they are posted to the: a. Chart of accounts. b. Trial balance. c. General ledger. d. Financial statements.

c. General ledger

In which financial statement does a company report its expenses? a. Statement of Stockholders' Equity. b. Balance Sheet. c. Income Statement. d. Statement of Cash Flows.

c. Income Statement

Which of the following transactions increases total liabilities? a. Pay for rent in the current period. b. Pay dividends to stockholders. c. Purchase office supplies on account. d. Purchase equipment with cash.

c. Purchase office supplies on account.

Which of the following accounts is not listed in a post-closing trial balance? a. Accounts Receivable. b. Equipment. c. Service Revenue. d. Interest Payable.

c. Service Revenue

Which of the following is considered cash for financial reporting purposes? a. Checks received from customers. b. Coins and currency. c. All of the above. d. Debit card sales.

c. all of the above

A credit to Cash will: a. Decrease liabilities. b. Increase assets. c. Decrease assets. d. Decrease stockholders' equity.

c. decrease assets

The following financial information is from Bronco Company. All debt is due within one year unless stated otherwise. Retained Earnings $62,700 Supplies 38,900 Equipment 73,200 Accounts Receivable 9,200 Deferred Revenue 4,700 Accounts Payable 14,800 Common Stock 23,200 Notes Payable (due in 18 months) 33,000 Interest Payable 5,100 Cash 22,200 What is the amount of current liabilities? a. $19,900 b. $14,800 c. $57,600 d. $24,600

d. $24,600

Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n): a. Unearned revenue. b. Prepaid expense. c. Accrued revenue. d. Accrued expense.

d. Accrued expense.

Which of the following represents a resource of the company? a. Liability. b. Expense. c. Dividend. d. Asset.

d. Asset

Expenses represent: a. Cash paid for the purchase of the company's long-term resources. b. Sales of products or services to customers. c. Cash paid to investors. d. Costs of providing products or services to customers.

d. Costs of providing products or services to customers.

Providing services to customers for cash would be recorded with a: a. Credit to Cash. b. Debit to Accounts Receivable. c. Debit to Service Expense. d. Credit to Service Revenue.

d. Credit to Service Revenue

The revenue recognition principle states that companies typically record revenue: a. In the period in which goods and services are prepared to be sold to customers. b. In the period in which we received cash from customers for goods and services. c. In the period in which customers order goods and services. d. In the period in which we provide goods and services to customers.

d. In the period in which we provide goods and services to customers

Closing entries are: a. Made to transfer the balances of permanent accounts to retained earnings. b. Optional. c. Made to record events that occurred during the period but have not yet been recorded. d. Made to transfer the balances of temporary accounts to retained earnings.

d. Made to transfer the balances of temporary accounts to retained earnings

Who ultimately is responsible for properly applying GAAP? The company's: a. Auditors. b. Creditors. c. Stockholders. d. Management.

d. Management.

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting? a. November 1. b. One-half on each date. c. Neither. d. November 15.

d. November 15

Which of the following transactions decreases total assets? a. Receive a utility bill but do not pay it. b. Receive cash from customers for sales in the current period. c. Purchase supplies on account. d. Pay dividends to stockholders.

d. Pay dividends to stockholders.

Which of the following is an example of a prepaid expense? a. Service was provided to a customer but not yet billed. b. Utilities have been incurred but not yet paid. c. Interest is incurred through the passage of time. d. Rent has been purchased in advance.

d. Rent has been purchased in advance.

Which of the following correctly describes a list of accounts and their balances, showing that debits equal credits? a. General ledger. b. Chart of accounts. c. Journal. d. Trial balance.

d. Trial Balance