Week 6

Question 1

Question 1
If you collect cash for a $500 sale, what accounts increase by $500? a=l+e

Answer 1

Assets and Equity

Question 2

Your company had a beginning cash balance of $10,000 in October. You sold $5,500 in services for cash, and invoices worth $4,000. What is your company’s cash balance at the end of October?

Answer 2

15,500

Question 3

Your company had a beginning equity balance of $8,000 in November. You sold $6,000 in services for cash, and invoices worth $3,500. What is your company’s equity balance at the end of November?

Answer 3

17,500

Question 4

How is the accounting equation useful for detecting entry or calculation errors?

Answer 4

An unbalanced equation can tip you off that an error exists somewhere

Question 5

Big Boss Building Company purchased some construction equipment to keep up with demand. The new bookkeeper booked this as an expense. Is this correct?

Answer 5

Correct! Equipment purchases should be booked as noncurrent assets.

Question 6

Aubergine’s Antiques took out a capital lease for a moving van to transport heavier antiques. Will they be able to depreciate this equipment?

Answer 6

Yes

Question 7

Adé just purchased $75 worth of new staplers for her Honey Helpers Bees business. She wants to book this as a noncurrent asset. Is that the correct way to book it?

Answer 7

NoIncorrect. General office supplies are considered a current asset when purchased new and should be booked accordingly.

Question 8

Question 4
Jason’s Medicinal Juniper Farm recently leased a stump drilling machine for 12 months on an operating lease. Will he be able to account for disposition of this equipment at the end of the lease?

Answer 8

No! This is an operating lease, Jason must return the equipment to the Lessor at the end of the lease. Therefore there is no disposition.