Question 1

During its first three months of operations, Cari's Bakery, Inc. purchased supplies such as plates, napkins, bags, and cutlery for $7,200 and recorded this as supplies inventory. Supplies on hand at the end of the first quarter, amount to $4,480. To prepare a financial statement for the first quarter, the company must record which of the following accounting adjustments?

Select one:

a.Increase Supplies expense by $2,720 and decrease Supplies inventory by $2,720

b.Increase Supplies inventory by $2,720 and decrease Supplies expense by $2,720

c.None of the above

d.Increase Supplies inventory by $4,480 and decrease Supplies expense by $4,480

e.Increase Supplies expense by $4,480 and decrease Supplies inventory by $4,480

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Examine the financial statements effects template below. Then select the answer that best describes the transaction.

Balance Sheet	Income Statement
Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
(240)		240	=							-		=

Select one:

a.None of these are correct

b.Repay accounts payable of $240 with cash

c.Purchase inventory of $240 on account

d.Purchase inventory of $240 for cash

e.Collect cash for accounts receivable of $240

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Examine the financial statements effects template below. Then select the answer that best describes the transaction.

Balance Sheet	Income Statement
Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
(96)		480	=	384						-		=

Select one:

a.None of these are correct

b.Record accounts receivable of $480 and cash collected of $96

c.Purchase inventory of $480 partially on account

d.Purchase $480 of equipment on account

e.Repay accounts payable of $96 , net

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During the month of March, Weimar World, a tax-preparation service, had the following transactions. Billed $396,800 in revenues on credit Received $131,200 from customers' accounts receivable Incurred expenses of $155,200 but only paid $70,160 cash for these expenses Prepaid $25,776 for computer services to be used next month What was the company's accrual basis net income for the month?

Select one:

a.$326,640

b.$241,600

c.None of these are correct

d.$215,824

e.$44,384

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Cash collected on accounts receivable would produce what effect on the balance sheet?

Select one:

A.Increase liabilities and decrease equity

B.Decrease liabilities and increase equity

C.Increase assets and decrease assets

D.Decrease assets and decrease liabilities

E.None of the above

6. How would a sale of $320 of inventory on credit affect the balance sheet if the cost of the inventory sold was $128 ?

Select one:

a.It would increase noncash assets by $320 and increase equity by $320

b.It would decrease noncash assets by $128 and decrease equity by $128

c.It would increase cash by $320 and increase equity by $320

d.Both A and B, above happen simultaneously

e.None of the above

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During the year, Decker Corporation reported Net income of $1,448.0 million and paid dividends of $496.4 million. Which of the following describes how these transactions would affect Decker's equity accounts? (in millions)

Select one:

a.Increase earned capital by $951.6

b.Increase contributed capital by $1,448.0 and decrease earned capital by $496.4

c.Decrease contributed capital by $496.4 and increase earned capital by $1,448.0

d.Increase contributed capital by $951.6

e.None of the above

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Weimar World, a tax-preparation service, had a cash balance of $245,000 as of March 1. During the month of March, Weimar World had the following transactions. Billed $992,000 in revenues on credit Received $328,000 from customers' accounts receivable Incurred expenses of $388,000 but only paid $175,400 cash for these expenses Prepaid $64,400 for computer services to be used next month What was the company's cash balance on March 31?

Select one:

a.$604,000

b.$849,000

c.None of these are correct.

d.$397,600

e.$333,200

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Financial Statement EffectsCost of Goods Sold (Numerical calculation required) During the year, Shoe Productions recorded inventory purchases on credit of $270.2 million. Inventory at the start of the year was $30.6 million and at the end of the year was $42.4 million. Which of the following describes how these transactions would be entered on the financial statement effects template?

Select one:

a.Increase noncash assets (Inventory) by $11.8 million

b.Increase expenses (Cost of goods sold) by $258.4 million

c.Increase liabilities (Accounts payable) by $258.4 million

d.None of these are correct

e.Increase expenses (Cost of goods sold) by $270.2 million

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An accrual of wages expense would have what effect on the balance sheet?

Select one:

A.Decrease liabilities and increase equity

B.Increase assets and increase liabilities

C.Increase liabilities and decrease equity

D.Decrease assets and decrease liabilities

E.None of the above

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Sales on account would produce what effect on the balance sheet?

Select one:

A.Increase the Revenue account

B.Increase noncash assets (Accounts receivable)

C.Increase cash assets

D.A and B

E.A, B and C

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How would a purchase $320 of inventory on credit affect the income statement?

Select one:

a.It would increase cost of goods sold by $320 .

b.It would decrease net income by $320 .

c.It would decrease liabilities by $320 .

d.It would decrease noncash assets by $320 .

e.None of these are correct.