ACC 201 Exam 1 (Ch1-4)
University of Kentucky Chong Wang
Terms in this set (66)
Accounting can be defined as?
The language of business & A measurement/communication process
Amounts earned from sales of products or services
Owners' claims to resources
Distributions to stockholders
Costs of selling products or services
What is Rent Expense?
What is Interest Revenue?
What is Dividends?
What is Land?
What is Accounts Payable?
Eagle Corp. operates Magnetic Resonance Imaging (MRI) clinics throughout the Northeast. At the end of the current period, the company reports the following amounts: Assets = $50,000; Liabilities = $27,000; Dividends = $3,000; Revenues = $14,000; Expenses = $9,000.
Calculate Net Income
Calculate stockholders' equity at the end of the period
Emmitt had the following final balances after the first year of operations: assets, $35,800; stockholders' equity, $13,100; dividends, $2,400; and net income, $10,700. What is the amount of Emmitt's liabilities?
Sooner Company has had a net income of $6,800, $4,400, $8,100, and $10,800 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $2,500, what is the ending retained earnings balance?
What is the equation for Net Income?
Revenue - Expenses = Net Income
What is the equation for Change in Stockholders' Equity?
Issue Common Stock + Net Income - Dividends = Change in Stockholders' Equity
What is the equation for Assets?
Liabilities + Stockholders' Equity = Assets
What is the equation for Total Change in Cash?
Operating Cash Flows + Investing Cash Flows + Financing Cash Flows = Total Change in Cash
Record the Following Transaction
Purchase a truck and sign a note payable, $14600
Debit Equipment for $14600
Credit Notes Payable for $14600
Record the Following Transaction
Purchase office supplies for cash, $560
Debit Supplies for $560
Credit Cash for $560
Record the Following Transaction
Pay $760 in rent for the current month
Debit Rent expense for $760
Credit Cash for $760
External transactions are transactions the firm conducts with a separate economic entity, such as selling products to a customer, purchasing supplies from a vendor, paying salaries to an employee, and borrowing money from a bank. (True/False)
If a transaction causes total assets of the company to increase by $2,000, then liabilities plus stockholders' equity also increases by $2,000. (True/False)
Revenues have the effect of increasing retained earnings. (True/False)
It's possible to increase liabilities and decrease assets. (True/False)
Purchasing office supplies on account will:
Increase assets and increase liabilities
It's possible to decrease assets and increase assets. (True/False)
On September 30, MFP Co. paid employee salaries of $7,000, including $1,000 it owed to its employees last month. What are the effects of this transaction on the accounting equation?
Assets decreased, liabilities decreased, and expenses increased
Hoya Corporation reports the following amounts: Assets = $17,400; Liabilities = $2,400; Stockholders' equity = $15,000; Dividends = $2,400; Revenues = $15,800; and Expenses = $11,400.
What amount is reported for net income?
The ending retained earnings balance of Juan's Mexican Restaurant chain increased by $7.5 million from the beginning of the year. The company declared a dividend of $1.5 million during the year. What was the net income earned during the year?
The ending retained earnings balance of Juan's Mexican Restaurant chain increased by $5.5 million from the beginning of the year. The company declared a dividend of $1.5 million during the year. What was the net income earned during the year?
Bourne Incorporated reports a cash balance at the end of the month of $2,620. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($85), an NSF check from a customer ($350), a customer's note receivable collected by the bank ($1,000), and interest earned ($35).
Calculate the reconciled company balance for cash
Separation of duties
Recording transactions/physical control
Money should be placed in the bank
Only cashier are allowed to access cash
Provide employees with appropriate guidance
Only authorized should have passwords to conduct E-business
Management periodically checks that physical assets match accounting records
Actual performance of individuals should be checked
attest to quality of Internal control procedures
McGregor Company allows customers to pay with credit cards. The credit card company charges McGregor 2% of the sale. When a customer uses a credit card to pay McGregor $500 for services provided, McGregor would:
Debit service fee expense for $10
The following information was taken from the bank reconciliation for Mooner Sooner Inc. at the end of the year:
Bank balance: $8,600
Checks outstanding: $8,500
Note collected by the bank: $1,700
Service fee: $25
Deposits outstanding: $4,300
NSF check (bad check) returned for $340
What is the correct cash balance that should be reported in Mooner Sooner's balance sheet at the end of the year?
The act of collusion refers to:
Two or more people acting in coordination to circumvent internal controls
What key piece of legislation was passed in response to corporate accounting scandals by Enron, WorldCom, and others?
The statement of cash flows reports cash flows from the activities of:
Financing, investing, and operating
The closing entry for expense accounts includes a debit to Retained Earnings and a credit to all expense accounts. (True/False)
Closing entries transfer the balances of all temporary accounts (revenues, expenses and dividends) to the common stock account. (True/False)
Retained Earnings a permanent account (True/False)
When preparing a closing entry what do you do?
Debit the assets and credit the retained earnings. Debit the retained earnings and credit the expenses. Debit the retained earnings and credit the dividends.
Providing services and receiving cash will:
Increase assets and increase stockholders' equity
Sell Shares of common stock for $30000 to obtain cash will:
Debit cash $30000, credit Common Stock $30000
Which of the accounts are decreased on the debit side and increased on the credit side?
Liabilities, stockholders' equity and revenues
When a company pays utilities of $1800 in cash, the transaction is recorded as:
Debit Utilities Expense $1800, credit Cash $1800
When a company received revenue $1200 in advance, the transaction is recorded as:
Debit Cash; credit Unearned Revenue
Five Components of Internal Control (Coso)
2. Control activities
3. Risk Assessment
4. Control Environment
5. Information and Communication
accidental errors in recording transactions or applying accounting principles
A person intentionally deceives another person for personal gain or to damage that person
What equation do you use for the Income Statement?
Revenue - Expenses = Net Income = Dividends + Retained Earnings
What equation do you use for the Statement of Stockholders' Equity?
Stockholders equity = Common Stock + Retained Earnings
What equation do you use for the Balance Sheet?
Assets = Liabilities + Stockholders' Equity
What equation do you use for the Cash Flow Statement?
Net Change in Cash = Operating Cash Flows + Investing Cash Flows + Financing Cash Flows
ABC had the following final balances after the first year of operations: assets, $35,200; stockholders' equity, $13,300; dividends, $2,300; and net income, $11,000.
What is the amount of ABC's Liabilities
Sooner Company has had a net income of $7,400, $4,400, $9,200, and $10,400 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $1,700, what is the ending retained earnings balance?
Paying dividends to its stockholders causes a company's stockholders' equity to decrease. (True/False)