Financial Accounting Set 2 – Flashcards
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(T/F) Collection on an account receivable will increase both cash and accounts receivable.
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False
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(T/F) The normal balance of the dividend account is a credit.
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False
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(T/F) Adjusting entries are often made because some business events are not recorded as they occur.
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True
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(T/F) Accrued revenues are revenues that have been received but not yet recognized.
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False
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(T/F) When closing entries are prepared, each income statement account is closed directly to retained earnings.
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False - Can be closed income summary account, not income statement.
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If total liabilities decreased by $4,000, then
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b.) assets must have decreased by $4,000, or stockholders equity must have increased by $4,000.
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The purchase of an asset for cash
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d.) leaves total assets unchanged.
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Powers Corporation received a cash advance of $500 from a customer. As a result of this event,
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a.) assets increased by $500
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At December 1, 2014, Orear Company's Accounts Receivable balance was $5,600. During December, Orear had credit sales of $15,000 and collected accounts receivable of $12,000. At December 31, 2014, the Accounts Receivable balance is
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b.) $8,600 debit 5600 + 15000 -12000 = 8,600
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Oakville Inc. purchased a 12-month insurance policy on March 1, 2014 for $1,800. At March 31, 2014, the adjusting journal entry to record expiration of this asset will include:
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c.) a debit of Insurance Expense and a credit to Prepaid Insurance for $150. 1800/12=150
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A company purchased office supplies costing $3,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:
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c.) debit Supplies Expense, $2,100; credit Supplies, $2,100. If 3000 is purchased and 900 left, then 2100 should be expensed. Debits increase expenses & credit 2100 would decrease asset account of office supply.
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Which one of the following is not justification for adjusting entries?
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d.) Adjusting entries are necessary to bring general ledger accounts in line with the budget.
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On April 1, 2013, nPropel Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $48,000 for the calendar year ending December 31, 2013. Which accounting principle has been violated.?
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Expense recognition principle.
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Walton Company collected $9,600 in May of 2013 for 4 months of service which would take place from October of 2013 through January 2014. The revenue reported from this transaction during 2013 would be:
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b.) $7,200. October, November, December = 3 months 9600/4=2400 * 3 = $7200
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Wang Company had the following transactions during 2013: * Sales of $10,800 on account * Collected $4,800 for services to be performed in 2014 * Paid $3,100 cash in salaries for 2013 * Purchased airline tickets for $600 in December for a trip to take place in 2014 What is Wang's 2013 net income using accrual accounting?
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d.) $7,700
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There are usually how many closing journal entries?
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b.) 4
