Quiz 3 and 4 Flashcards
The ending Retained Earnings balance of ABC decreased by $1.5 million from the beginning of the year. The company declared a dividend of $4.4 million during the year. What was the net income for the year?
2.9 Million
Which of the following is not possible when recording a transaction?
Liabilities increase and assets decrease.
Consider the following transactions:
1) Issued common stock for cash.
2) Purchased equipment by signing a note payable.
3) Provided services to customers on account.
4) Collected cash from customers on account.
How many of these four transactions increased the given company’s total liabilities?
1
Consider the following transactions:
1) Issued common stock for cash.
2) Purchased equipment by signing a note payable.
3) Provided services to customers on account.
4) Collected cash from customers on account.
How many of these four transactions increased the given company’s total assets?
2
The following table contains financial information for ABC before closing entries:
Cash
$23,000
Common Stock
34,000
Supplies
4,000
Advertising Expense
2,000
Accounts Payable
20,000
Service Revenue
30,000
Salaries Expense
3,000
Prepaid Rent
4,000
Dividends
3,000
Equipment
45,000
How many of the above accounts are permanent?
6
The primary focus for financial accounting information is to provide information useful for:
Investment decisions and credit decisions
Consider the following transactions:
1) Issued common stock for cash.
2) Purchased equipment by signing a note payable.
3) Provided services to customers on account.
4) Collected cash from customers on account.
How many of these four transactions increased the given company’s total liabilities?
1
One of the three condition of an asset is that an accountant can _____________ the asset.
measure
A company provides services on account. Indicate how this transaction would affect (1) assets, (2) stockholders’ equity, and (3) revenues.
(1) Increase, (2) Increase (3) Increase
Of the following, the most important objective for financial accounting is to provide information useful for:
Predicting cash flows
The two groups who have claims on the Assets in a business are (3 words, second word is and)
Creditors and owners
On September 30, ABC paid employee salaries of $7,000, including $1,000 it owed to its employees last month. What are the effects of this transaction on the accounting equation?
Assets decreased, liabilities decreased, and expenses increased
Consider the following account balances of ABC at the end of the year:
Accounts Payable
$4,400
Salaries Expense
12,800
Cash
1,700
Common Stock
2,400
Service Revenue
8,300
Supplies
4,300
Retained Earnings
1,100
Utilities Expense
5,000
How many of these accounts would appear in ABC’s year-end balance sheet?
5
Which of the following is not a balance sheet item?
Revenues
Assets
Common stock
Retained earnings
1 - Revenues
What is the amount of current assets, assuming the accounts above reflect normal activity? (just type in numbers)
Accounts Payable
$12,000
Buildings
70,000
Cash
8,000
Accounts Receivable
7,000
Sales Tax Payable
5,000
Retained Earnings
47,000
Supplies
2,000
Notes Payable (due in 18 months)
35,000
Interest Payable
3,000
Common Stock
45,000
17000
Accounts Receivable + Cash + Supplies
ABC had the following final balances after the first year of operations:
assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; net income, $10,000. What is the amount of ABC's liabilities? (just type numbers)
30000
Executory Contracts are generally
not recorded
In a three line heading, the first line is the:
Company name
Owners’ Equity is
Just a number not a thing
Which of the following transactions would cause an increase in both the assets and liabilities of a company?
Purchase of a building by issuing a note payable.
When a company provides services on account, the accounting equation would be affected as follows:
Assets increase and stockholders’ equity increases.
When a company pays cash for equipment, what is the effect on the accounting equation for that company?
No change
One of the three conditions for an asset is that the business __________ the asset
owns
The following financial information is from ABC. All debt is due within one year unless stated otherwise.
Retained Earnings
$52,000
Supplies
37,000
Equipment
72,000
Accounts Receivable
8,600
Deferred Revenue
6,000
Accounts Payable
15,000
Common Stock
25,000
Notes Payable (due in 18 months)
35,000
Interest Payable
7,000
Cash
22,400
What is the amount of current liabilities? (just type numbers)
28000
Given the following, stockholders’ claims to the company’s resources amount to: (If your number is 12,345 do not put in $ or commas, just type 12345)
Assets
$1,200,000
Liabilities
$800,000
Net income
$100,000
Retained earnings
$250,00
400000
The definition of a liability is: something we ___________
owe
In a three line heading, the third line is the:
Time period of the statement
Financial Accounting in 3 words (second word is and)
Measure and communicate
Which of the following is possible for a particular business transaction?
Decrease assets; Increase assets
Which of the following is a balance sheet item?
Cash
One of the conditions of an asset is that it must have ___________ _______________
future value
If the liabilities of a company increased by $55,000 during a month and the stockholders’ equity decreased by $21,000 during that same month, did assets increase or decrease and by how much?
$34,000 increase
In a three line heading, the second line is the:
Name of the statement
Current Assets are Assets that will be gone by the end of the ____________
year
Which of the following is not a balance sheet item?
Expenses
When the company pays stockholders a dividend, what is the effect on the accounting equation for that company?
Decrease assets and decrease stockholders’ equity.
If someone subscribes to a magazine, on the company books, which liability account goes up?
Unearned Revenue
Following are transactions of ABC, a new company, during the month of January:
Issued 10,000 shares of common stock for $15,000 cash.
Purchased land for $12,000, signing a note payable for the full amount.
Purchased office equipment for $1,200 cash.
Received cash of $14,000 for services provided to customers during the month.
Purchased $300 of office supplies on account.
Paid employees $10,000 for their first month’s salaries.
How many of these transactions decreased ABC’s total assets?
1
If everything is in balance
some account balances may be wrong
A company:
Issued common stock for cash.
Purchased equipment by signing a note payable.
Paid rent for the current month.
Collected cash from customers on account.
How many of these four transactions increased the given company’s total assets?
2
On January 1, ABC started the year with a $400,000 balance in Retained Earnings and a $550,000 balance in Common Stock. During the year, the company reported net loss of $25,000, paid a dividend of $15,000, and issued more common stock for $30,500. What is total stockholders’ equity at the end of the year? (just type numbers)
940500
In a Balanced set of Accounting Records, EVERY Account must balance.
False
Which of the following would increase assets and increase liabilities?
Purchase office supplies on account.
If a company has stockholders’ equity of $60,000 at the end of the year, which of the following statements must be true?
The company’s assets exceed liabilities by $60,000.
Consider the following transactions:
Issued common stock for cash.
Purchased equipment by signing a note payable.
Provided services to customers on account.
Collected cash from customers on account.
How many of these four transactions increased the given company’s total liabilities?
1
Prepaid Rent is what kind of account?
Asset
Given the information below about ABC, how much dividends did the company paid in the current period? (just type numbers)
Beginning retained earnings
$45,000
Ending retained earnings
$110,000
Decrease in cash
$10,000
Net income
$85,000
Change in stockholders’ equity
$15,000
20000
ABC had the following net income (loss) the first three years of operation:
$7,000,
($1,600), and
$3,600.
If the Retained Earnings balance at the end of year three is $1,000, what was the total amount of dividends paid over these three years?
$8000
ABC buys widgets for $5 cash and sells them on account for $8. At collection, what is the effect on the net income of ABC?
No effect
ABC sold $500 in widgets to a customer on account on January 1. On January 11 ABC collected the cash from that customer. What is the impact on ABC’s accounting equation from the collection of cash?
No net effect to the accounting equation.
Unearned Revenue is what kind of account?
Liability
Purchasing office equipment on account has what impact on the accounting equation?
Liabilities increase and assets increase.
ABC buys widgets for $5 cash and sells them on account for $8. At the point of sale, what is the effect on the net income of ABC?
Increase $3
Which of the following of ABC, a new company, decreased ABC’s total assets (may have more than one answer)?
Paid employees $10,000 for their first month’s salaries.
The ending balance of Retained Earnings can best be described as:
The amount of net income over the life of the company not paid to owners in the form of dividends.
The following table contains financial information for ABC before closing entries:
Cash
$12,000
Supplies
4,500
Prepaid Rent
2,000
Salaries Expense
4,500
Equipment
65,000
Service Revenue
30,000
Miscellaneous Expenses
20,000
Dividends
3,000
Accounts Payable
5,000
Common Stock
68,000
Retained Earnings
8,000
What is the amount of ABC’s total assets? (just type numbers)
83500
Which of these transactions increased the given company’s total liabilities (may have more than one answer)?
Purchased equipment by signing a note payable.
The following amounts are reported in the ledger of ABC:
Assets
$80,000
Liabilities
36,000
Retained Earnings
12,000
What is the balance in the Common Stock account? (just type number
32000
In a Balanced set of Accounting Records, EVERY Transaction must balance.
True
Which statement below best describes the accounting equation?
Resources of the company equal creditors’ and owners’ claims to those resources.
On January 1, ABC sold $30,000 in products to a customer on account. Then on January 10, ABC collected the cash on that account. What is the impact on ABC’s accounting equation from the collection of cash on January 10?
No net effect on the accounting equation.
Following are transactions of ABC, a new company, during the month of January:
Issued 10,000 shares of common stock for $15,000 cash.
Purchased land for $12,000, signing a note payable for the full amount.
Purchased office equipment for $1,200 cash.
Received cash of $14,000 for services provided to customers during the month.
Purchased $300 of office supplies on account.
Paid employees $10,000 for their first month’s salaries.
What was the total amount of ABC’s liabilities following these six transactions? (just type numbers)
12300
Is it possible to make an entry which changes only one account?
No
Accounts Payable
$4,400
Salaries Expense
12,800
Cash
1,700
Common Stock
2,400
Service Revenue
8,300
Supplies
4,300
Retained Earnings
1,100
Utilities Expense
5,000
How many of these accounts would appear in a year-end balance sheet?
5
