Practice Test Chapters 1-4 Flashcards
Hesson Properties, Inc.
The following transactions occurred during June:
June 1 Purchased two new maintenance carts on account at $750 each. Payment is due in 30 days.
June 8 Accepted $500 of advance payments from customers for services to be provided next month.
June 15 Received the utility bill for $300. Payment is due in 30 days.
June 20 Billed customers $1,500 for services provided. Payment is due in 30 days.
June 30 Received $500 from customers who were billed earlier.
What journal entry is required to record the cash collected in advance?
Cash Debit: $500
Unearned Revenue Credit: $500
Which one of the following would never be considered a cash equivalent?
a. corporate commercial paper
b. U.S. Treasury bills
c. common stock issued by a corporation
d. money market funds
C
The going concern assumption is concerned with what?
the company’s ability to continue operations long enough to carry out its existing obligations
Designs on You
The following information relates to the company’s May bank reconciliation:
Bank statement balance $5,000
Unadjusted cash balance from the company records ?
Deposit in transit 1,000
Outstanding checks 500
Bank service charges 50
Interest earned on the bank account 10
Customer’s NSF check returned by the bank 25
In addition, a check issued was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000.
What is the unadjusted cash balance according to the company’s records on May 31?
$5365
$5,000 unadjusted bank balance + $1,000 deposit in transit − $500 outstanding checks = $5,500 adjusted cash balance $5,500 − $200 (error) − $10 (interest) + $50 (service charges) + $25 (NSF) = $5,365
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. $2,000,000
b. $800,000
c. $1,800,000
d. $3,800,000
A
$5,000,000 (Assets) − $3,000,000 (Liabilities) = $2,000,000 (Stockholders’ Equity)
Which one of the following is not one of the three business activities?
a. investing
b. measuring
c. operating
d. financing
B
What is the primary objective of financial reporting?
a. To help the investors assess the future prospects of a company
b. To help management make appropriate decisions related to company operations
c. To help the creditors in evaluating their decision to make loans to a company
d. All of these
D
The account that records differences between amounts of cash deposited and amounts from the cash register tapes is called:
Cash over and short
Hesson Properties, Inc.
The following transactions occurred during June:
June 1 Purchased two new maintenance carts on account at $750 each. Payment is due in 30 days.
June 8 Accepted $500 of advance payments from customers for services to be provided next month.
June 15 Received the utility bill for $300. Payment is due in 30 days.
June 20 Billed customers $1,500 for services provided. Payment is due in 30 days.
June 30 Received $500 from customers who were billed earlier.
What journal entry is required to record the collections on account from customers?
Cash Debit: $500
Accounts receivable: $500
Cash Express had no supplies on January 1 but purchased $2,581 in supplies during the year. on December 31, the supplies on hand were $1,492. What amount for supplies will be reported on the firm’s balance sheet?
$1492
Which of the following is not a form of a business organization?
a. governmental agency
b. sole proprietorship
c. corporation
d. partnership
A
When should a shipping company recognize revenue from its delivery service?
When the package has been delivered
Benchmark Surveyors
The following balances are provided:
Cash: $234,000
Accounts Payable: $97,000
Inventory: $121,000
Notes Payable, long-term: $211,000
Land: $453,000
Accounts Receivable: $46,000
Calculate Current Assets.
$401000
($234,000 Cash + $46,000 Accounts Receivable + $121,000 Inventory = $401,000)
Which one of the following is the correct fundamental accounting equation?
a. Assets + Liabilities = Stockholders’ Equity
b. Assets + Stockholders’ Equity = Liabilities
c. Assets + Retained Earnings = Stockholders’ Equity
d. Assets = Liabilities + Stockholders’ Equity
D
Bass Tours
The following balances were taken from the company’s records:
Inventory: $380,000
Accounts Receivable: $190,000
Land: $290,000
Accounts Payable: $180,000
Cash: $129,000
Unearned Revenue: $110,000
Prepaid Rent: $33,000
Common Stock: $312,000
Retained Earnings: $220,000
Long-term Notes Payable: $200,000
Calculate the current ratio.
2.52 to 1
($129,000 Cash + $190,000 Accounts Receivable + $380,000 Inventory + $33,000 Prepaid Rent) / ($180,000 Accounts Payable + $110,000 Unearned Revenue) = 2.52 to 1