Intro to Accounting Week 2 Notes
Intro to Accounting Week 2 Notes ACCT - 23020 - 002
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ACCT - 23020 - 002
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This 8 page Class Notes was uploaded by Alyssa Brutsche on Wednesday February 10, 2016. The Class Notes belongs to ACCT - 23020 - 002 at Kent State University taught by Wendy M. Tietz (P) in Fall 2015. Since its upload, it has received 197 views. For similar materials see INTRODUCTION TO FINANCIAL ACCOUNTING in Accounting at Kent State University.
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Date Created: 02/10/16
If equity is 3,500 and assets are 5,700, how much is total debt? -$2,200 Which of the following business events would not be recorded in a company’s accounting records? a.) the company paid a monthly utility bill b.) the company issued 100 shares of common stock c.) the company purchased two acres of land for future plant expansion d.) the company signed a contract to provide services in the next account period. -Answer D Which of the following is a liability account? a.)Retained earnings b.)Accrued liabilities c.) Accounts receivable d.)Prepaid expenses -Answer B Goods purchased on account for future use in the business, such as store supplies, are called: a.)Accrued liabilities b.)Expenses c.) Revenues d.)Prepaid expenses -Answer D All of the following accounts would be considered assets except for a.)Cash b.)Retained earnings c.) Prepaid expenses d.)Notes receivable -Answer: B Any event that has a financial impact on the business and can be measured reliably is an: a.)Expense b.)Transaction c.) Asset d.)Journal -Answer B Dr. Luke Example -What are total assets? $155,000 -How much does the business expect to collect from patients? $2,800 -How much does the business owe in total? $51,200 -How much of the business’s assets does Luke really own? $103,800 -How much net income or net loss did the business experience during its first month of operations? $3,800 S2-2 Cathey’s Catering began with cash of $15,000. Cathey then bought supplies for $4,400 on account. Separately, Cathey paid $7,500 for equip How much in total assets does Cathey have? $19,400 How much in liabilities does Cathey owe? $4,400 Asset: Cash beginning balance = $1,500 Asset:supplies 4400 Liability:accounts payable 4400 Asset:cash (7500) asset:computer 7500 Which of the following transactions will increase one asset and decrease another asset? a.)The purchase of office supplies on account (asset and liability) b.)The performance of services on account (equity liability) c.) The purchase of equipment for case (asset) d.)The performance of services for cash (liability asset) -Answer C Which of the following is an asset account? a.)Retained earnings b.)Accrued liabilities c.) Accounts receivable d.)Accounts payable -Answer C When services are performed on account a.)Cash is increased b.)Revenue will not be recorded until the cash is received from the customer c.) Accounts receivable is increased d.)Accounts payable is increased -Answer C Choose all the accounts that would be listed on the income statement: a.)Revenue b.)Losses c.) Assets d.)Liabilities e.)Expenses f.) Stockholders’ equity g.)Gains -Answers A, B, E, G Choose all of the accounts that would be listed on the balance sheet a.)Revenue b.)Losses c.) Assets d.)Liabilities e.)Expenses f.) Stockholders’ equity g.)Gains -Answers C, D, F S2-3 Dora Patel, MD, opened a medical practice. The business completed the following transactions. After the following transactions, how much cash does the business have to work with? Use a T-account to show your answer: July 1, Patel invested $60,000 cash to start her medical practice. The business issued common stock to Patel (Cash increased by $60,000) July 1, Purchased medical supplies on account totaling $12,000 (No cash involved) July 2, Paid monthly office rent of $4,700 (Cash decreased by $4,700) July 3, Recorded $10,300 revenue for service rendered to patients, received cash of $4,200, and sent bills to patients for the remainder (Cash increased by $4,200) -$60,000-$4,700+$4,200=$59,500 A company paid cash for an amount owed to a creditor. This transaction decreased cash and: a.)Decreased revenues b.)Decreased liabilities c.) Decreased expenses d.)Increased expenses -Answer B If Borne Compay buys a new machine for $8,000 cash, what is the journal entry? Date Accounts and explanation Debit Credit May 5 Equipment 8,000 Cash 8,000 Purchased a machine If Seifert Company buys office supplies on account for $4,000, what is the journal entry? Date Accoutns and Explanation Debit Credit May 5 Office Supplies 4,000 Accounts Payable 4,000 Purchased supplies on account Which of the following statements about the rules of debits and credits is correct? a.)An asset is increased by a debit b.)Dividends are decreased by debits c.) A liability is increased by a debit d.)Revenue is increased by a debit -Answer A S2-9 Net Income 11 Million (38-27) First mortgage company Trial Balance December 31,2014 Account Debit Credit Cash 5 Other assets 20 Accounts 6 payable Other liabilities 2 Stockholders 6 equity Revenues 38 Expenses 27 Total 52 52 In 2014, revenues for the year totaled $300, while expenses totaled $100. Dividends declared and paid were $25. What was NET INCOME? -$200 A trial balance is one of a company’s major financial statements. -False The trial balance is used to determine if a.)Total assets equal total liabilities b.)Total debits equal total credits c.) Total revenues equal total expenses d.)Total increases in accounts equal total decreases in accounts -Answer B