Download Financial Accounting Exam: Solutions & Key Concepts and more Exams Finance in PDF only on Docsity!
Financial Accounting Exam with NGN With
100% Verified Solutions | Updated & Verified |
As of December 31, 2015, Calexico Company has assets of $42,000 and stockholders' equity of $20,000. What are the liabilities for Calexico Company as of December 31, 2015? - ✔✔$22,000. $42,000 - $20,000 = $22, If total liabilities decreased 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 that same period? - ✔✔$10,000 decrease $20,000 - $30,000 = ($10,000) The accounting equation for Quattro Enterprises is as follows: Assets Liabilities Stockholders' Equity $120,000 = $60,000 + $60, If Quattro purchases office equipment on account for $25,000, the accounting equation will change to Assets Liabilties Stockholders' Equity a. $120,000 = $60,000 + $60, 000 b. $145,000 = $60,000 + $85, c. $145,000 = $72,500 + $72,
d. $145,000 = $85,000 + $60,000 - ✔✔d. $120,000 + $25,000 = $145,000; $60,000 + $25,000 = $85, If a corporation distributes cash to its stockholders, then - ✔✔stockholders' equity will decrease. Liabilities of a company are owed to - ✔✔creditors Which of the following statements is correct? - ✔✔Stockholders' equity can be described as ownership claim on total assets An income statement - ✔✔presents the revenues and expenses for a specific period of time. Barsuk Company began the year with stockholders' equity of $108,000. During the year, Barsuk issued stock for $147,000, recorded expenses of $420,000, and paid dividends of $28,000. If Barsuk's ending stockholders' equity was $290,000, what was the company's revenue for the year? - ✔✔$483,000. $108,000 + $147,000 + (X - $420,000) - $28,000 = $290,000; X = $483, During the year 2015, Dilego Company earned revenues of $90,000, had expenses of $56,000, purchased assets with a cost of $10,000 and paid dividends of $6,000. Net income for the year is - ✔✔$34,000. $90,000 - $56,000 = $34,
Explanation: Increase assets by $10,000 to $100,000 because the purchase of $10,000 worth of equipment (an asset) increases assets. Increase liabilities by $10,000 to $60,000 because Doug Corp. purchased the $10,000 of equipment on account which means Doug Corp. increases their Accounts Payable (liability account) by $10,000, which thus increases liabilities. On January 1, 2015, Cat Power Company reported stockholders' equity of $705,000. During the year, the company paid dividends of $30,000. At December 31, 2015, the amount of stockholders' equity was $825,000. What amount of net income or net loss would the company report for 2015? - ✔✔Net income of $150, $705,000 + X - $30,000 = $825,000; X = $150, Stockholders' equity is decreased by all of the following except. - ✔✔sales of stock. Decreased by: expenses. dividends. net losses
Stahl Consulting started the year with total assets of $60,000 and total liabilities of $15,000. During the year, the business recorded $48,000 in catering revenues and $30,000 in expenses. Stahl issued stock of $9,000 and paid dividends of $15,000 during the year. The stockholders' equity at the end of the year was - ✔✔$57,000. ($60,000 - $15,000) + ($48,000 - $30,000) + $9,000 - $15,000 = $57, Fat Possum's Service Shop started the year with total assets of $330,000 and total liabilities of $240,000. During the year, the business recorded $630,000 in revenues, $420,000 in expenses, and paid dividends of $60,000. Stockholders' equity at the end of the year was: - ✔✔$240, ($330,000 - $240,000) + ($630,000 - $420,000) - $60,000 = $240, A dividend is - ✔✔a distribution of the company's earnings to its stockholders. Sources of increases to stockholder's equity are - ✔✔additional investments by owners. Kennedy Company issued stock to Ed Kennedy in exchange for his investment of $75,000 cash in the business. The company recorded revenues of $555,000, expenses of $420,000, and had paid dividends of $30,000. What was Kennedy's net income for the year? - ✔✔$135,000. $555,000 - $420,000 = $135,000. Sharon Foods, Inc. reported the following transactions for September 2016.
Phair and Associates is a financial planning service. The account balances at December 31, 2015 are
ABC company is a financial planning service. The account balances at December 31, 2015 are shown
A trial balance is a listing of - ✔✔general ledger accounts and their balances Which of the following statements is false? - ✔✔Revenues decrease retained earnings but increase
- Accounts Payable $ 5, shown below:
- Accounts Receivable 19,
- Buildings 140,
- Cash 11,
- Common Stock 143,
- Equipment 15,
- Land 42,
- Notes Payable 95,
- Notes Receivable 8,
- Prepaid Insurance 6,
- Supplies
- What amount are shown as the total debits on its trial balance? - ✔✔$243,
- Cash...............................................................$ 11,
- Accounts Receivable.......................................... 19,
- Prepaid Insurance..........................................6,
- Supplies....................................................................
- Notes Receivable...................................................8,
- Equipment........................................................... 15,
- Buildings............................................................. 140,
- Land.......................................................................42,
- Total debits $243,
- Accounts Payable $ 5, below:
- Accounts Receivable 19,
- Buildings 140,
- Cash 11,
- Common Stock 143,
- Equipment 15,
- Land 42,
- Notes Payable 95,
- Dividend 3,
- Notes Receivable 8,
- Prepaid Insurance 6,
- Supplies
- Salary Expenses 1,
- Prepaid Rent 1,
- What amount are shown as the total debits on its trial balance? - ✔✔$248,
- Cash...............................................................$ 11,
- Accounts Receivable.......................................... 19,
- Prepaid Insurance..........................................6,
- Prepaid Rent..................................................1,
- Supplies....................................................................
- Notes Receivable...................................................8,
- Equipment........................................................... 15,
- Buildings.............................................................140,
- Land......................................................................42,
- Dividend..........................................................3,
- Salary Expenses.............................................1,
- Total debits $248,
TRUE:
Revenues increase retained earnings and increase stockholder's equity Revenues increase stockholders' equity. Revenues have normal credit balances. Revenues are a positive factor in the computation of net income. The following transactions took place for Xiu Xiu Company during the month of June: (a) Purchased equipment on account for $9,000. (b) Billed customers $5,000 for services performed (c) Made payment of $2,300 on account for equipment purchased earlier in the month. (d) Collected $2,900 on customer accounts for the services performed earlier in the month. Based on the information given, which of the statements is correct about ending balance of cash at the end of June assuming the balance of cash at the beginning of June is a debited amount of $2,800? - ✔✔the balance in cash account is a debit balance for $3,400 at the end of June 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? - ✔✔Credit a different asset account for $700.
The normal balance of any account is the - ✔✔side which increases that account. Which of the following journal entries is recorded correctly and in the standard format? - ✔✔Salaries and Wages Expense 500 Advertising Expense 1, Cash 1, On January 14, Edamame Industries purchased supplies of $700 on account. The entry to record the purchase will include - ✔✔a debit to Supplies and a credit to Accounts Payable. Supplies $700 Accounts Payable $ 700 Electrelane Company showed the following balances at the end of its first year: Cash $ 4, Prepaid insurance 7,
Accounts receivable 5, Accounts payable 4, Notes payable 6, Common stock 2, Dividends 1, Revenues 32, Expenses 25, What did Electrelene Company show as total credits on its trial balance? - ✔✔$44, Accounts payable $ 4, Notes payable 6, Common stock 2, Revenues 32, Total credits $44, On October 3, Karl Schickele, a carpenter, received a cash payment for services previously billed to a client. Karl paid his telephone bill, and he also bought equipment on credit. For the three transactions, at least one of the entries will include a - ✔✔credit to Accounts Payable. A trial balance would only help in detecting which one of the following errors? - ✔✔A transposition error when transferring the debit side of journal entry to the ledger Sonic Youth Corporation purchased a one-year insurance policy in January 2015 for $49,500. The insurance policy is in effect from March 2015 through February 2016. If the company neglects to make
C. An asset—expense relationship exists with accrued expense adjusting entries. D. Depreciation expense for a period is the original cost of an asset - accumulated depreciation. - ✔✔B is correct On January 1, 2014, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31, 2015 is - ✔✔$2, Solution: $7,560 × 1/3 = $2, Pixies Inc. pays its rent of $54,000 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true? A. Failure to make the adjustment does not affect the February financial statements. B. Expenses will be overstated by $4,500 and net income and stockholders' equity will be understated by $4,500. C. Assets will be overstated by $9,000 and net income and stockholders' equity will be understated by $9,000.
D. Assets will be overstated by $4,500 and net income and stockholders' equity will be overstated by $4,500. - ✔✔Only D is correct Solution: $54,000 ¸ 12 = $4, Soundgarden Company collected $18,200 in May of 2015 for 5 months of service which would take place from October of 2015 through February of 2016. The revenue reported from this transaction during 2015 would be - ✔✔$10, $18,200 × 3/5 = $10, What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $18,500, and unexpired amounts per analysis of policies of $6,000?
- ✔✔Debit Insurance Expense, $12,500; Credit Prepaid Insurance, $12,500. $18,500 - $6,000 = $12, If a resource has been consumed but a bill has not been received at the end of the accounting period, then - ✔✔an adjusting entry should be made recognizing the expense. 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 time period? - ✔✔Salaries and Wages Payable.
REM Real Estate received a check for $27,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $27,000. Financial statements will be prepared on July 31. REM Real Estate should make the following adjusting entry on July 31: - ✔✔Debit Unearned Rent Revenue, $4,500; Credit Rent Revenue, $4,500. $27,000 ÷ 6 = $4, Crue Company had the following transactions during 2015: Sales of $4,800 on account Collected $2,000 for services to be performed in 2016 Paid $1,625 cash in salaries Purchased airline tickets for $250 in December for a trip to take place in 2016 What is Crue's 2015 net income using accrual accounting? - ✔✔$3,175. $4,800 - $1,625 = $3, Ryan Adams, an employee of Heartbreaker Corp., will not receive his paycheck until April 2. Based on services performed from March 15 to March 31, his salary was $1,000. The adjusting entry for Heartbreaker Corp. on March 31 is - ✔✔Salaries and Wages Expense 1, Salaries and Wages Payable 1, On July 1, Runner's Sports Store paid $14,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the
adjusting entry to be made by Runner's Sports Store is - ✔✔Debit Rent Expense, $3,500; Credit Prepaid Rent, $3,500. $14,000 ÷ 4 = $3, If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, the failure to make an adjusting entry will cause - ✔✔assets to be understated 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: - ✔✔Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150. $1,800 ÷ 12 = $ Employees at Tengo Corporation are paid $15,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salaries and wages expense should be recorded two days later on January 2? - ✔✔$6, $15,000 × 2/5 = $6, Mary Chain Investments purchased an 18-month insurance policy on May 31, 2015 for $3,600. The December 31, 2015 balance sheet would report Prepaid Insurance of - ✔✔$2,200. ($3,600 ÷ 18) × (18 - 7) = $2,
