6. Total assets on Hibbs' balance sheet would be: a. $28,000 b. $30,000 C. $35,000 d. $60,000 7. Total liabilities on Hibbs balance sheet would be: a.$ 2,000 b. $12,000 c. $22,000 d.$32,000 8. Hibbs' net income would be: a.$ 3,000 b.$ 5,000 c. $13,000 d. $15,000 9. Retained earnings on Hibbs' balance sheet would be: a. $18,000 b.$ 9,000 c.$ 7,000 d.$ 3,000 10. At the beginning of Year 1 Pollak Co. had $1,000 of supplies. During the year it purch ased an additional $4,000 of supplies on account. Later, Pollak paid $3,000 on accounts payable related to the supplies. A count of supplies at the end of Year 1 showed that su pplies worth $500 were still on hand. Pertaining to supplies, how much expense and cas h flow from operating activities would be shown on Pollak's Year 1 financial statements? Expense Cash Flow $ 4,500 3,000 b. $ 3,000 S 3,000 $ 3,000 $ 4,000 d. $ 4,500 $ 4,000 a. C. 11. On January 1, Year 1, Harris Co. purchased equipment that cost $18,000 and had an expected life of six years and estimated salvage value of $3,000. For Year 2, the amount of expense that should be shown on Harris' income statement and accumulated depreci ation that should be shown on its balance sheet would be: a. b. Expense $ 3,000 $ 3,000 $ 2,500 $ 2,500 Depreciation $ 3,000 $ 6,000 $ 2,500 $5,000 C. d. 2. Which of the following is not an example of a deferral type item? a. Supplies inventory b. Prepaid rent c. Unearned revenue d. Interest expense 13. Rhoads Co. Purchased land by issuing a note payable. The journal entry to record thi transaction would require a: a. b. Debit to land and a credit to notes payable. Debit to notes payable and a credit to land. Debit to land and a debit to notes payable. Credit to land and a credit to notes payable. c. d. 14. How would the following journal entry affect the accounting equation? Prepaid Rent 500 Cash 500 a. Assets would increase and equity would decrease. b.Liabilities would increase and assets would decrease. c. Liabilities would decrease and assets would decrease. d. There would be no effect on total assets, liabilities, or equity. . C. 15. Debit entries act to: Decrease assets. b. Increase retained earnings. Increase expenses. d. Increase liabilities. 16. Which of the following is true? a) If the perpetual inventory method is used, a physical inventory count is not r equired. perating activities will be the same whether it uses the perpetual or periodic inve ntory method c) The payments of transportation-in and transportation-out costs both tendt o decrease the total assets of a company. d) A company's gross margin will decrease if it makes a purchase of merchandi se inventory at the end of the year. 17. The records at Johnson Co. indicate that $125,000 of inventory should be on hand on December 31. A physical count of the inventory reveals that $122,000 of inventor y exists. The entry to reconcile these differences will cause: 18. a) cost of goods sold to decrease by $3,000. b) net earnings to decrease by $3,000. c) net cash flows from operating activities to decrease by $3,000. d) total assets to remain the same. Which of the following is an expense? a) Accumulated depreciation. b) Sales discount c) Cost of goods sold. d) Transportation-in cost. Lafayette Co. purchased merchandise inventory for cash. Lafayette uses the per petual inventory method. Which of the following choices reflects how this event would affect the company's financial statements? 19. Assets = Liab. Rev. Exp. = Net Inc. Cash a N N N 1 D D b. N + Equity D N D N N N N N N N I C N D N N D N D d. N N D 20. are ing: a) Cost of goods sold will be higher if LIFO is used instead of FIFO. b) Inventory will be higher if LIFO is used instead of FIFO. c) A company's gross margin will be higher if LIFO is used instead of FIFO. d) Cash flows, including the effect of taxes, will be the same whether a com pany uses LIFO or FIFO. 6. Total assets on Hibbs' balance sheet would be: a. $28,000 b. $30,000 C. $35,000 d. $60,000 7. Total liabilities on Hibbs balance sheet would be: a.$ 2,000 b. $12,000 c. $22,000 d.$32,000 8. Hibbs' net income would be: a.$ 3,000 b.$ 5,000 c. $13,000 d. $15,000 9. Retained earnings on Hibbs' balance sheet would be: a. $18,000 b.$ 9,000 c.$ 7,000 d.$ 3,000 10. At the beginning of Year 1 Pollak Co. had $1,000 of supplies. During the year it purch ased an additional $4,000 of supplies on account. Later, Pollak paid $3,000 on accounts payable related to the supplies. A count of supplies at the end of Year 1 showed that su pplies worth $500 were still on hand. Pertaining to supplies, how much expense and cas h flow from operating activities would be shown on Pollak's Year 1 financial statements? Expense Cash Flow $ 4,500 3,000 b. $ 3,000 S 3,000 $ 3,000 $ 4,000 d. $ 4,500 $ 4,000 a. C. 11. On January 1, Year 1, Harris Co. purchased equipment that cost $18,000 and had an expected life of six years and estimated salvage value of $3,000. For Year 2, the amount of expense that should be shown on Harris' income statement and accumulated depreci ation that should be shown on its balance sheet would be: a. b. Expense $ 3,000 $ 3,000 $ 2,500 $ 2,500 Depreciation $ 3,000 $ 6,000 $ 2,500 $5,000 C. d. 2. Which of the following is not an example of a deferral type item? a. Supplies inventory b. Prepaid rent c. Unearned revenue d. Interest expense 13. Rhoads Co. Purchased land by issuing a note payable. The journal entry to record thi transaction would require a: a. b. Debit to land and a credit to notes payable. Debit to notes payable and a credit to land. Debit to land and a debit to notes payable. Credit to land and a credit to notes payable. c. d. 14. How would the following journal entry affect the accounting equation? Prepaid Rent 500 Cash 500 a. Assets would increase and equity would decrease. b.Liabilities would increase and assets would decrease. c. Liabilities would decrease and assets would decrease. d. There would be no effect on total assets, liabilities, or equity. . C. 15. Debit entries act to: Decrease assets. b. Increase retained earnings. Increase expenses. d. Increase liabilities. 16. Which of the following is true? a) If the perpetual inventory method is used, a physical inventory count is not r equired. perating activities will be the same whether it uses the perpetual or periodic inve ntory method c) The payments of transportation-in and transportation-out costs both tendt o decrease the total assets of a company. d) A company's gross margin will decrease if it makes a purchase of merchandi se inventory at the end of the year. 17. The records at Johnson Co. indicate that $125,000 of inventory should be on hand on December 31. A physical count of the inventory reveals that $122,000 of inventor y exists. The entry to reconcile these differences will cause: 18. a) cost of goods sold to decrease by $3,000. b) net earnings to decrease by $3,000. c) net cash flows from operating activities to decrease by $3,000. d) total assets to remain the same. Which of the following is an expense? a) Accumulated depreciation. b) Sales discount c) Cost of goods sold. d) Transportation-in cost. Lafayette Co. purchased merchandise inventory for cash. Lafayette uses the per petual inventory method. Which of the following choices reflects how this event would affect the company's financial statements? 19. Assets = Liab. Rev. Exp. = Net Inc. Cash a N N N 1 D D b. N + Equity D N D N N N N N N N I C N D N N D N D d. N N D 20. are ing: a) Cost of goods sold will be higher if LIFO is used instead of FIFO. b) Inventory will be higher if LIFO is used instead of FIFO. c) A company's gross margin will be higher if LIFO is used instead of FIFO. d) Cash flows, including the effect of taxes, will be the same whether a com pany uses LIFO or FIFO