Boost LTE Done PRINCIPLES OF ACCOUNTIN... 1. Accounting is thought to be the language of business" because 6:28 PM business information is communicated to users. a. True b. False 2. A business is an organization that provides goods or services to their customers in exchange for money or other items of value. . True b False a. If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000. a. True False 4. Purchasing supplies on account increases liabilities and decreases equity a. True b False s. The Balance Sheet represents t the accounting equation. a. True b False 6 Accounts Payable are accounts that you expect will be paid to you. a. True b. False 7. Unearned Revenues are an example of a liability. a. True b False s. Liability accounts are increased by debits. a. True b False Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue. a. True b False 10. The right hand side of a T account is known as a debit and the left hand side is known as a credit. a True Boost LTE 6:28 PM Done PRINCIPLES OF ACCOUNTIN... 10. The right hand side of a T account is known as a debit and the left hand side is known as a credit. . True b False Multiple Choice (2 points each) Please circle the correct answer 1. Kris Jones Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for 107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records? a $107,000 b $1 15,000 $ 120,000 d $122,000 2. Owned resources of a business are referred to as a Assets b Liabilities e Equities d Revenues s. The assets and liabilities of the company are S175,000 and $40,000, respectively. Owner's equity should equal a $215,000 b S135,000 $175,000 d S40,000 4. Which of the fixed assets accounts listed below will not have a related contra asset account? Office Equipment Land e Delivery Equipment d Building For each of the following, determine the amount of net income or net loss for the year. Please indicate whether amount represents income or a loss and show your work. Revenues for the year totaled $88,500 and expenses totaled $40,500. The owner made an additional investment of $15,000 during the year. Revenues for the year totaled $175,000 and expenses totaled Boost LTE 6:28 PM 12% Done PRINCIPLES OF ACCOUNTIN... s. For each of the following, determine the amount of net income or net loss for the year. Please indicate whether amount represents income or a loss and show your work. a Revenues for the year totaled S88,500 and expenses totaled S40,500. The owner made an additional investment of S15,000 during the year. 220,500. The owner withdrew $40,000 during the year. $46,000. The owner invested an additional $12,000 and b Revenues for the year totaled S175,000 and expenses totaled e Revenues for the year totaled S109,000 and expenses totaled withdrew S16,000 during the year d Revenues for Konner Co. totaled $223,800 and expenses totaled S221,300. Cash withdrawals of S35,000 were paid during the 6 Which of the following describes the classification and normal balance of the fees earned account? a Asset, credit Liability, credit e Owner's equity, debit Amir Designs purchased a one-year liability insurance policy on March 1 of this year for $5,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense and prepaid expense during the closing process at the end of Amir's first month of operation on March 319 d S500 . Using accrual accounting, expenses are recorded and reported only Boost LTE 6:28 PM Done PRINCIPLES OF ACCOUNTIN... s. Using accrual accounting, expenses are recorded and reported only a When they are incurred, whether or not cash is paid When they If they are paid before they are incurred are incurred and paid at the same time d If they are paid after they are incurred 9. Generally accepted accounting principles requires that companies use the of accounting. a Cash basis Deferral basis e Accrual basis d Account basis 1o All adjusting entries always involve Only income statement accounts Only balance sheet accounts e. The cash account d At least one income statement account and one balance sheet account Short Problem (10 pts) Show your calculation . For the following, mark a "D" if the following account normally has a debit balance and mark a "C" if the following account normally has a credit balance. 1. Notes Payable 2. Mortgage Payable 3. Drawing 4. Accounts Receivable S. Capital 6. Rent Revenue 7. Unearned Income 8. Utility Expense 9. Automobiles 10 Fees Earned Short Problem (20 pts.) 2. Record the following selected transactions for April, identifying each entry by letter a Received $12,000 from Katie Long, owner. b. Purchased equipment for $25,000 paying $10,000 in cash and giving a note payable for the remainder. Boost LTE 6:28 PM 12% Done PRINCIPLES OF ACCOUNTIN... 2. Record the following selected transactions for April, identifying each entry Received S12,000 from Katie Long, owner. b. Purchased equipment for $25,000 paying $10,000 in cash and giving a note payable for the remainder. c Paid S1,800 for rent for April. d. Purchased $9,800 of supplies on account. e. Recorded $2,250 of fees earned on account. Received $9,000 in cash for fees earned. . Paid S300 to creditors on account. h. Paid salaries of $1,650. i. Received $1,190 from customers on account. . Recorded owner's withdrawal of S2,350. PROBLEM (Worth 30 pts): 3. The following is the adjusted trial balance for Nadia Company. OR 300 Nadi Porter Earned 9930 s Expense Prepare and Income Statement, Statement of Owner's Equity, and Balance Sheet. Assume that the capital account includes a beginning balance of S10,000 and investments of $3,000. Boost LTE 6:28 PM Done PRINCIPLES OF ACCOUNTIN. Prepare and Income Statement, Statement of Owner's Equity, and Balance Sheet. Assume that the capital account includes a beginning balance of $10,000 and investments of $3,000. Boost LTE Done PRINCIPLES OF ACCOUNTIN... 1. Accounting is thought to be the language of business" because 6:28 PM business information is communicated to users. a. True b. False 2. A business is an organization that provides goods or services to their customers in exchange for money or other items of value. . True b False a. If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000. a. True False 4. Purchasing supplies on account increases liabilities and decreases equity a. True b False s. The Balance Sheet represents t the accounting equation. a. True b False 6 Accounts Payable are accounts that you expect will be paid to you. a. True b. False 7. Unearned Revenues are an example of a liability. a. True b False s. Liability accounts are increased by debits. a. True b False Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue. a. True b False 10. The right hand side of a T account is known as a debit and the left hand side is known as a credit. a True Boost LTE 6:28 PM Done PRINCIPLES OF ACCOUNTIN... 10. The right hand side of a T account is known as a debit and the left hand side is known as a credit. . True b False Multiple Choice (2 points each) Please circle the correct answer 1. Kris Jones Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for 107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records? a $107,000 b $1 15,000 $ 120,000 d $122,000 2. Owned resources of a business are referred to as a Assets b Liabilities e Equities d Revenues s. The assets and liabilities of the company are S175,000 and $40,000, respectively. Owner's equity should equal a $215,000 b S135,000 $175,000 d S40,000 4. Which of the fixed assets accounts listed below will not have a related contra asset account? Office Equipment Land e Delivery Equipment d Building For each of the following, determine the amount of net income or net loss for the year. Please indicate whether amount represents income or a loss and show your work. Revenues for the year totaled $88,500 and expenses totaled $40,500. The owner made an additional investment of $15,000 during the year. Revenues for the year totaled $175,000 and expenses totaled Boost LTE 6:28 PM 12% Done PRINCIPLES OF ACCOUNTIN... s. For each of the following, determine the amount of net income or net loss for the year. Please indicate whether amount represents income or a loss and show your work. a Revenues for the year totaled S88,500 and expenses totaled S40,500. The owner made an additional investment of S15,000 during the year. 220,500. The owner withdrew $40,000 during the year. $46,000. The owner invested an additional $12,000 and b Revenues for the year totaled S175,000 and expenses totaled e Revenues for the year totaled S109,000 and expenses totaled withdrew S16,000 during the year d Revenues for Konner Co. totaled $223,800 and expenses totaled S221,300. Cash withdrawals of S35,000 were paid during the 6 Which of the following describes the classification and normal balance of the fees earned account? a Asset, credit Liability, credit e Owner's equity, debit Amir Designs purchased a one-year liability insurance policy on March 1 of this year for $5,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense and prepaid expense during the closing process at the end of Amir's first month of operation on March 319 d S500 . Using accrual accounting, expenses are recorded and reported only Boost LTE 6:28 PM Done PRINCIPLES OF ACCOUNTIN... s. Using accrual accounting, expenses are recorded and reported only a When they are incurred, whether or not cash is paid When they If they are paid before they are incurred are incurred and paid at the same time d If they are paid after they are incurred 9. Generally accepted accounting principles requires that companies use the of accounting. a Cash basis Deferral basis e Accrual basis d Account basis 1o All adjusting entries always involve Only income statement accounts Only balance sheet accounts e. The cash account d At least one income statement account and one balance sheet account Short Problem (10 pts) Show your calculation . For the following, mark a "D" if the following account normally has a debit balance and mark a "C" if the following account normally has a credit balance. 1. Notes Payable 2. Mortgage Payable 3. Drawing 4. Accounts Receivable S. Capital 6. Rent Revenue 7. Unearned Income 8. Utility Expense 9. Automobiles 10 Fees Earned Short Problem (20 pts.) 2. Record the following selected transactions for April, identifying each entry by letter a Received $12,000 from Katie Long, owner. b. Purchased equipment for $25,000 paying $10,000 in cash and giving a note payable for the remainder. Boost LTE 6:28 PM 12% Done PRINCIPLES OF ACCOUNTIN... 2. Record the following selected transactions for April, identifying each entry Received S12,000 from Katie Long, owner. b. Purchased equipment for $25,000 paying $10,000 in cash and giving a note payable for the remainder. c Paid S1,800 for rent for April. d. Purchased $9,800 of supplies on account. e. Recorded $2,250 of fees earned on account. Received $9,000 in cash for fees earned. . Paid S300 to creditors on account. h. Paid salaries of $1,650. i. Received $1,190 from customers on account. . Recorded owner's withdrawal of S2,350. PROBLEM (Worth 30 pts): 3. The following is the adjusted trial balance for Nadia Company. OR 300 Nadi Porter Earned 9930 s Expense Prepare and Income Statement, Statement of Owner's Equity, and Balance Sheet. Assume that the capital account includes a beginning balance of S10,000 and investments of $3,000. Boost LTE 6:28 PM Done PRINCIPLES OF ACCOUNTIN. Prepare and Income Statement, Statement of Owner's Equity, and Balance Sheet. Assume that the capital account includes a beginning balance of $10,000 and investments of $3,000