Question
Under cash-basis accounitng, which of the following would be recorded as an expense? a. Insurance that expires in the current period that was paid for
Under cash-basis accounitng, which of the following would be recorded as an expense?
a. | Insurance that expires in the current period that was paid for in the previous period. | |
b. | Cash paid for dividends in the current period. | |
c. | Cash paid for rent in the current period. | |
d. | Employee salaries in the current period that will be paid next period. | |
e. | Two of the other answers are correct. |
At the time a company purchases land using cash, which of the following is true?
a. | The value of the company does not change. | |
b. | Total resources of the company increase. | |
c. | The amount owed to creditors increases. | |
d. | There is a reduction in retained earnings. | |
e. | The total resources claimed by owners increase. |
The balance of Service Revenue can best be described as:
a. | The cost of providing services to customers in the current period. | |
b. | The value generated for owners over the life of the company. | |
c. | The amount of services provided to customers over the life of the company. | |
d. | The amount of services provided to customers in the current period. | |
e. | The profit earned by the company in the current period. |
Total revenues | $100,000 |
Total cash paid for operating activities | 70,000 |
Total liabilities | 90,000 |
Total cash received from customers | 110,000 |
Total expenses | 80,000 |
Total assets | 120,000 |
a. | $30,000 | |
b. | $50,000 | |
c. | $20,000 | |
d. | $40,000 | |
e. | $10,000 |
When a company pays cash for an expense, what is the effect on the accounting equation for that company?
a. | Decrease assets and increase liabilities | |
b. | Decrease assets and decrease stockholders equity | |
c. | Increase stockholders equity and decrease assets | |
d. | Increase assets and increase stockholders equity | |
e. | Decrease liabilities and decrease assets |
Which of the following describes dividends?
a. | Dividends reduce the balance of retained earnings. | |
b. | Two of the other answers are correct. | |
c. | Dividends reduce the amount of total liabilities. | |
d. | None of the other answers are correct. | |
e. | Dividends reduce the reported amount of net income. |
Below are amounts for the first three years of operations:
| Revenues | Cash Inflows | Expenses | Cash Outflows |
Year 1 | $10,000 | $8,000 | $8,000 | $5,000 |
Year 2 | $15,000 | $18,000 | $10,000 | $11,000 |
Year 3 | $20,000 | $17,000 | $14,000 | $15,000 |
Total | $45,000 | $43,000 | $32,000 | $31,000 |
The company paid no dividends. What is the balance of retained earnings at the end of the third year?
a. | $12,000 | |
b. | $25,000 | |
c. | $6,000 | |
d. | $13,000 | |
e. | $2,000 |
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