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Exam 2: Understanding the Accounting Cycle

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Question 1

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Stahl Company paid $7,800 on May 1,2012 for insurance coverage for a one year period beginning that date.The adjusting entry required to recognize insurance expense on December 31,2012 would have what effect on the financial statements?

A) Choice A
B) Choice B
C) Choice C
D) Choice D

E) B) and C)
F) A) and B)

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Question 2

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If a company purchases supplies on account,this transaction would cause

A) total assets to decrease.
B) liabilities to increase.
C) equity to decrease.
D) Retained Earnings to increase.

E) A) and C)
F) All of the above

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Question 3

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Meyer Co.,in its first year of operations,purchased $6,000 of office supplies on account.A count of office supplies at the end of the year revealed that only $1,000 were still on hand.Show the effects of the adjusting entry that Meyer Co should make at the end of the year.

At the end of the accounting period,Sefcik Company made an adjusting entry for supplies consumed.Which of the following choices reflects how this event would affect the company's financial statements?

Blankers Co.purchased $6,000 of office supplies on account.

The balance in the Prepaid Rent account at the end of the year,before adjustments,was $18,000.This amount represented six months' rent paid on November 1,2012. a)What amount,if any,of Rent Expense will be shown on the 2012 income statement? b)What amount,if any,would be shown on the statement of cash flows for 2012? In which section would that amount appear?

Hardt Corporation began business operations and experienced the following transactions during 2012: 1)Issued common stock for $10,000 cash. 2)Provided services to customers for $40,000 on account. 3)Incurred $18,000 of operating expenses on credit. 4)Collected $23,000 cash from customers. 5)Paid $15,000 on accounts payable. Required: a)Record the above transactions in a horizontal financial statements model to reflect their effect on Hardt's financial statements. b)Prepare an income statement,balance sheet and statement of cash flows for 2012.

On May 1,2012,Perez Company paid $12,000 rent for a one year lease on equipment it uses in its operations.The adjusting entry at the end of the year

Which of the following accounts would not appear on a balance sheet?

Which of the following would be included in the "cash flows from investing activities" section of the statement of cash flows?

Which of the following accounts is a permanent account (an account that is not closed) ?

The following transactions apply to Fort Bend Corporation: 1)Issued common stock for $21,000 cash 2)Provided services to customers for $28,000 on account 3)Purchased land for $18,000 cash 4)Incurred $9,000 of operating expenses on credit 5)Collected $15,000 cash from customers 6)Paid $7,000 on accounts payable 7)Paid $2,500 dividends to stockholders Required: a)Identify the effect on the Statement of Cash Flows,if any,for each of the above transactions.Indicate whether each transaction involves operating,investing,or financing activities and the amount of increase or decrease. b)Classify the above accounting events into one of four types of transactions (asset source,asset use,asset exchange,claims exchange).

Remsen Co.incurred $700 of expenses on account.

Which of the following financial statement elements is closed at the end of an accounting cycle?

When cash is paid in advance for an insurance policy that covers the next year,how is the accounting equation affected by the cash payment for the insurance?

Recording accrued salary expense at the end of an accounting period causes an increase in Salaries Expense and

Grace's net income was:

The amounts of revenue that would appear on the 2012 and 2013 income statements would be:

Bloomfield Company issued stock for $30,000 cash on January 20,2012.During 2012,the company recorded revenue on account of $12,000 and expenses on account of $5,500.Bloomfield received $8,200 cash from accounts receivable and paid $4,500 on the accounts payable.The company also purchased land for $5,000 cash.The beginning cash balance was zero.Based on this information,the amount of cash at the end of the year is:

What type of account is Unearned Revenue?