Exam 1 practice question revised docx PDF

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1, Use the following information as of December 31 to determine equity. Liabilities $ 200,000 Cash 50,000 Equipment 300,000 Buildings 150,000

Answer: Assets = $50,000 + $300,000 + $150,000 = $500,000 Equity = $500,000 - $200,000 = $300,000 2, The Assets of a company total $760,000, the liabilities, $210,000. What are the net assets? Answer: Assets =Liabilities + Equity $760,000 = $210,000 + Equity =$550,000

2, Determine the net income of a company for which the following information is available:

Employee salaries expense Interest expense Rent expense Consulting revenue

$ 200,000 20,000 30,000 600,000

Answer: Expenses: $200,000 + $20,000 + $30,000 = $250,000 Net income = $600,000 - $250,000 = $350,000

3, If net income for the period was $150,000, dividends distributed were $80,000 and ending retained earnings was $900,000, what was the beginning retained earnings for the period?

Answer: 900,000 + 80,000 – 150,000 = 830,000

4, Beginning assets were $439,600, beginning liabilities were $263,360, common stock issued during the year totaled $45,800, revenue for the year was $415,850, expenses for the year were $280,800, dividends declared was $23,500, and ending liabilities is $ $352,000.What is net income for the year?

Answer:

415,850 – 280,800 = 135,050

5, Below is accounting information for ABC Company for 20163: Revenue Cash Common stock Expenses Equipment Accounts receivable Notes payable Notes receivable

$ 500,000 120,000 70,000 300,000 100,000 30,000 60,000 80,000

What were the total assets at year-end? Answer: 120,000 + 30,000 + 80,000 + 100,000 = 330,000

6, What is IASB?

7. What is FASB? 8, The following transactions occurred during July: a. Received $3,150 cash for services provided to a customer during July. b. Received $4,450 cash investment from Barbara Hanson, the owner of the business. c. Received $900 from a customer in partial payment of his account receivable, which arose from sales in June. d. Provided services to a customer on credit, $650. e. Signed a promissory note for a $10,000 bank loan. f. Received $3,375 cash from a customer for services to be rendered next year. What was the amount of revenue for July?

Answer: 3,150 + 650 = 3800

8. A company had the following account balances at year-end:

Cash Accounts receivable Accounts payable Fees earned Rent expense Insurance expense Supplies Common stock Retained earnings Dividends

$50,000 60,000 40,000 100,000 20,000 8,000 9,000 6,000 31,000 30,000

If all of the accounts have normal balances, what are the total debits on the trial balance?

Answer: Debits Cash Accounts receivable Rent expense Insurance expense Supplies Dividends

$50,000 60,000 20,000 8,000 9,000 30,000 $177,000

Credits Accounts payable Fees earned Common stock Retained earnings

$40,000 100,000 6,000 31,000 $177,000

9, XYZe has total assets of $500 million. Its total liabilities are $150 million. Its equity is $350 million. Calculate the debt ratio.

Answer: $150 / $500 = 30% 10, On April 30, XYZ Company had an Accounts Receivable balance of $20,000. During the month of May, total credits to Accounts Receivable were $60,000 from customer payments. The May 31 Accounts Receivable balance was $14,200. What was the amount of credit sales during May?

Answer: Normal balance = debit $20,000 − $60,000 + credit sales = $14,200 Credit sales = $54,200

11, Define Unearned revenues, 12, The appropriate journal entry if a company performs a service and then bills the customer:

Answer: Debit to Accounts Receivable and Credit to Service Revenue

13. Define Double-entry accounting is an accounting system 14, What is the main purpose of adjusting entries? 15. Define accrued revenues?

16, ABC Co. leased a portion of its store to another company for eight months beginning on October 1, 2014, at a monthly rate of $1,600. This other company paid the entire $12,800 cash on October 1, which ABC Co. recorded as unearned revenue. The journal entry made by ABC Co. at year-end on December 31, 2014, would include: Answer

$12,800 x 3/8 = $4,800 rent earned 17. On June 30, 2014, ABC Co. paid $8,500 cash for management services to be performed over a two-year period. ABC follows a policy of recording all prepaid expenses in asset accounts at the time of cash payment. On June 30, 2014 What should ABC record? Answer A debit to Prepaid Expense for $8,500.

18, On April 1, 2014, a company paid $3,800 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2014? Answer $3800 x 9/36 = $950.00 19. A company had no office supplies at the beginning of the year. During the year, the company purchased $600 worth of office supplies. On December 31, $250 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$600 - $250 = $350

20, On September 1, Kennedy Company loaned $150,000, at 9% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end

$150,000 * 0.09 * 4/12 = $4,500 Debit Interest Receivable, 4,500; credit Interest Revenue, $4,500....