Part 1 - Case #1: Ricky Rock Wrestling for Fun

Questions 1 to 30 are based on this case

Richard Brandt graduated from York University with his BAS although he spent more time in the gym than in the classrooms and libraries. His parents and grandparents were very proud and happy of this achievement. As a graduation gift, Richards Grandparents gave him $50,000 to start his own business.

So, on September 1, 2015, Richard started a small business called Ricky Rock Wrestling for Fun. Ricky Rock offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks.

As a student, he learn and practiced Greco-Roman wrestling and built an impressive body. Now graduated from university he has decided to continue with his passion of wrestling but added a spin to make money. In one tournament in 2013 Richard meet Linda who was competing for a US university team and she mentioned that she was working on girls birthday parties focused on wrestling. In June 2015 Richard contacted Linda and told her about his idea and Linda shared with him all documentation she has prepared in these years including: brochure to be distributed to potential customers, personal cards, party themes, parties activities, schedules and agendas, etc. During August Richard has completed hisbusiness plan and was ready to launch Ricky Rock Wresting for Fun in the GTA.

The following is a list of transactions that occurred during the first month of operations:

Accrual accounting:

Cash accounting:

Revenue
Car rent expenses
Car rent insurance expense Costumes expense Telephone Expense Owners Equity
Advances from Customers

Expense on Website
Insurance Expense
Gym membership expense Brochures Expense
Cash
Costumes Depreciation Expense Accounts Payable

A 3 At the end of the accounting period (Sep 30th, T account after AJE), what is the balance of Costumes Expense Account? Use accrual accounting.
A) $ 0
B) $ 300

C) $ 575
D) $ 600
E) None of the above is correct

B 2 At the end of the accounting period (Sep 30th, T account after AJE), what is the balance of Web Site (intangible Asset)? Use accrual accounting.
A) $ 0
B) $ 1,000

C) $ 1,917
D) $ 2,000
E) None of the above is correct

B 3 At the end of the accounting period (Sep 30th, T account after AJE), what is the balance of Brochures? Use accrual accounting.
A) $ 100
B) $ 150

C) $ 200
D) $ 300
E) None of the above is correct

A 6 At the end of the accounting period (Sep 30th, T account after AJE), what is the balance of Car rent Expense? Use accrual accounting.
A) $ 0
B) $ 100

C) $ 200
D) $ 400
E) None of the above is correct

A B 13 At the end of the accounting period (Sep 30th, T account after AJE), what is the Net income/Net Loss? Use accrual accounting
A) more than $5,800
B) Between $5,800 and 5,026

C) Between $5,025 and 3,901
D) Between $3,900 and $3,700
E) less than $3,700
A 14 At the end of the accounting period (Sep 30th, T account after AJE), what is the total of Current Assets? Use cash accounting.

A) Less than $48,000
B) Between $48,000 and $48,999 C) Between $49,000 and $54,999 D) Between $55,000 and $55,500 E) More than $55,500

B 15 At the end of the accounting period (Sep 30th, T account after AJE), what is the total of Current Liabilities? Use accrual accounting.
A) More than $20,000
B) Between $15,000 and $20,000

C) Between $5,000 and $14,999 D) Between $2,500 and $4,999 E) Less than $2,500

B 16 At the end of the accounting period (Sep 30th, T account after AJE), what is
the total of Owner's Equity including the Net Income/Net Loss of the period? Use accrual accounting.
A) More than $60,000
B) Between $55,000 and $60,000
C) Between $50,000 and $54,999
D) Between $40,000 and $49,999
E) Less than $40,000

B18 At the end of the accounting period (Sep 30th, T account after AJE), what is The net balance of Costumes account? Use accrual accounting.
A) $ 0
B) $ 300

C) $ 575
D) $ 600
E) None of the above is correct

B 25 At the end of the accounting period (Sep 30th, T account after AJE), what is the balance of Revenues? Use cash accounting.
A) more than $8,000
B) Between $6,000 and $ 8,000

C) Between $5,000 and $5,999 D) Between $3,000 and $4,999 E) less than $3,000