accounting 1-3
Cage Company had income of $396 million and average total assets of $2,120 million.
Its return on assets (ROA) is:
18.7%.
Explanation
Return on Assets = Net Income/
Average Total AssetsReturn on
Assets = $396 million/$2,120 million =
0.187 = 18.7%
Alpha Company has assets of $622,000, liabilities of $261,000, and equity of $361,000. It buys office equipment on credit for $86,000. What would be the effects of this transaction on the accounting equation?
Assets increase by $86,000 and liabilities increase by $86,000.
Explanation
Assets = Liabilities + Owner's
Equity$622,000 = $261,000 +
$361,000Assets increase by $86,000
(Equipment) due to the purchase.Liabilities also increase by $86,000 (Accounts Payable) due to the purchase on credit.
Zapper has beginning equity of $259,000, net income of $52,000, withdrawals of $41,000 and investments by owners of $7,000. Its ending equity is:
Explanation
ム
Ending Equity = Beginning Equity +
Investments by Owners + Net Income
- WithdrawalsEnding Equity =
$259,000 *$7,000 + $52,000 -
$41,000; Ending Equity = $277,000
Determine the net income of a company for which the following information is available for the month of July.
Employee salaries expense $
183,000
Interest expense 13,000
Rent expense 23,000
Consulting revenue 412,000
$193,000.
Explanation
Netincome= (Consultingrevenue-Em ployeesalariesexpense-Interestexpe nse-Rentexpense)
Net Income = Revenues -
ExpensesNet Income = Consulting
Revenue - Employee Salaries
Expense - Interest Expense - Rent
ExpenseNet Income = $412,000 -
$183,000 - $13,000 - $23,000; Net
Income = $193,000
Visit Chick-fil-A® Restaurant
If Houston Company billed a client for $10,000 of
consulting work completed, the accounts receivable asset increases by $10,000 and:
Revenue increases $10,000.
If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be?
Assets increase $12,000 and equity increases $12,000.
If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be?
One asset increases $1,300 and another asset decreases $1,300, causing no effect.
Increases in equity from a company's sales of products or services to customers are?
Revenues.
If assets are $350,000 and liabilities are $195,000, then equity equals?
$155,000.
Assets= Liabilities + Equity.
Resources a company owns or controls that are expected to yield future benefits are?
Assets.
Saddleback Co paid off
$30,000 of its account payable in cash. What would be the effects of this transaction on the accounting equation?
assets $30,000 decrease; liabilities $30,000 decrease
net worth is?
the diffrence between assets and liabilities
fixed expenses are?
costs that do not change from month to month
Liabilities are?
debts you owe to others
diffrence between a companys assets and liabilities?
Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties.
what is a balance sheet?
financial statement that reports whether the business earned a profit and also lists the revenues and
expenses
balance sheet lists are?
the type and amounts of assets liabilities and equity of a business at a point in time
If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be?
One asset increases $1,300 and another asset decreases $1,300, causing no effect.
A business uses credit to
record what ?
a decrease in an asset
account
A debit is used to
record what ?
An increase in the dividends account
what is a dividend?
a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves).
A credit entry does what?
Decreases asset and
expense accounts, and increases liability, owner's capital, and revenue accounts.
A credit is used to record an increase in all of the following accounts except ?
Wages Expense
a debit is used to record which of the following?
an increase in the dividends account
a credit always decreases what ?
the balance of an account
The right side of a T-account is ?
credit
A double-entry
accounting system is an accounting system that does what?
That records the effects
of transactions and
other events in at least
two accounts with equal debits and credits.
An account balance is?
The difference between
the total debits and
total credits for an
account including the beginning balance.
GreenLawn Co. provides landscaping services to clients. On May 1, a
customer paid GreenLawn $60,000 for 6-months services in advance.
GreenLawn's general journal entry to record this transaction will
include what ?
Credit it Unearned
Revenue for $60,000
Green Cleaning purchased $670 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?
Debit Office supplies, $670; credit Accounts payable, $670
The left side of the Account is always the ?
always the debit side
Prepaid accounts are what?
assets that represent prepayments of future expenses
Ted catering received $1300
cash in advance from a customer for catering services to be provided in three months. Determine the journal entry
debit cash, credit unearned revenue
Sharp Services provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries did Sharp Services make to record the billing of the customer?
Accounts Receivable 900
Consulting Revenue 800
Design Revenue 100
GiGi's dance studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100.
What is the journal entry from these transactions?
Debit Cash $250
Credit Rental Revenue $100
Credit Instruction Revenue $150
Process to go from transactions and events to
financial statements
include?
1.sourced documents
2. Analyze each transaction and event using accounting equation.
3. Record relevant transactions and events in a journal.
4. Post journal into to ledger accounts.
5. Prepare and analyze the trial balance and financial statements.
a credit is used to record an increase amount in which of the following accounts?
Accounts Payable
A law firm billed a client $1,800 for work performed in the current month.
DEBIT accounts receivable
CREDIT legal fees revenue
To increase Land
debit
to decrease cash
credit
to increase consulting revenue
credit
to increase salaries expense
debit
to decrease unearned revenue
debit
to decrease prepaid rent
credit
to increase notes payable
credit
to decrease accounts recivable
credit
to increase accounts payable
credit
to increase store equipment
debit
to record revenue earned that was previously received as cash in advance?
debiting the account
Unearned Revenue and crediting the account Revenues.
To record revenue earned that was previously received as cash in advance?
debiting the account
To record wages expenses incurred but not yet paid or recorded?
Wages payable
To record revenue earned but not yet billed or recorded?
Accrued revenue
To record expiration of prepaid insurance?
prepaid expenses
To record annual depreciation expenses?
prepaid expense
a company pays its employees 4000 each
Friday, which amounts to 800 per day for the five day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries
earned but unpaid at the end of the accounting period is?
3200
A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $3,000, has been completed as of December 31, but the customer has not yet been billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company would need to make on December 31, the calendar year-end?
Debit Accounts Receivable, $3,000; credit Roofing Fees
Revenue, $3,000.
a trial balance prepared after adjustments have been made?
adjusted trial balance
a trial balance prepared before any adjustments ?
unadjusted trial balance
adjusting entries affect what?
AT LEAST ONE INCOME STATEMENT
ACCOUNT AND ALSO A BALANCE SHEET ACCOUNT.
financial statements are typically prepared in which order?
1.Income Statement.
2.Statement of Retained Earnings - also called Statement of Owners Equity.
3. The Balance Sheet.
financial statements can be prepared directly from?
adjusted trial balance.
Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000
that is being depreciated at $15,000
per year using the straight-line depreciation method. How much is the depreciation for each year?
★
$18,000 ($95,000 - $5,000 / 5
years = yearly depreciation)
A company purchased equipment that has an invoice price of $18,000. It also paid freight charges of $500 and installation costs of $2,500. The estimated salvage value and useful life are $3,000 and five years, respectively. Under the straight-line method, how much is annual depreciation expense?
3600
18000+500+2500 =21000
21000-3000/5
if accrued salaries were recorded on december 31 with a debit to salaries expense and a credit to salaries payable the entry to record payment of these wages on the following january 5th would include?
Debit to salaries payable and a credit to the cash.
On April 1, Griffith Publishing Company received $29,880 from Santa Fe, Inc. for 36-month subscriptions to several different magazines.
The company credited Unearned Fees for the
amount received and the
subscriptions started immediately. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?
debit Unearned Fees, $7,470; credit Fees Earned, $7,470.
on december 1, simpson marketing company received $8,100 from a customer for a 2-month marketing plan to be completed january 31 of the following year. the cash receipt was recorded as unearned revenue. the adjusting entry for the year ended december 31 would include?
Unearned revenue has a credit balance as of December 31. This credit balance will be debit, and earned income for the period ending December 31 will be credited.
Thus, the total unearned fees for the two months from 1 December to 31 January is $8,100
The total revenue for the year ended December 31= $8,100/2*1
=$4,050
On December 1, Casualty Insurance Company borrowed $50,000 at a 6.0% interest rate from One Mutual Bank. The note payable plus interest will not be paid until April 1 of the following year. The company's annual accounting period ends on December 31 and adjustments are only made at year-end. The adjusting entry needed on December 31 is?
interest expense 250 debit
interest payable 250 credit
to record accrued interest
explanation:
on December 31th the company will recognize the accrued interest from December 1st to December 31th year-end date
principal x rate x time = interest
Is always important to notice that rate and time must be expressed on the same metric. generally the rate are annual, so we will express time as fraction of a 12 months year
50,000 × 6% x 1/12 = 250
This will be the amount for accrued interest at december 31th
interest formula
principal x rate x time = interest
On December 1, Milton Company borrowed $480,000, at 8% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date.
What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?
debit Interest Expense, $3,200; credit Interest Payable, $3,200.
$480,000 0.08 30/360 = $3,200
Annual deperciation formula
(cost – salvage value) / useful life.
annual intrest you divide by what?
divide by 4
quatey intrest you divide by what
by 12
in yearly interest you divide by what?
the number of monthly payments you'll make in one year.
Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of ?
Items that require adjusting entries.
The correct adjusting entry
for accrued and unpaid employee salaries of $9,800
on December 31st
Debit Salary Expense, $9800; Credit
Salaries Payable $9800