Homework #1
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0/1 points
1. Which of the following is a required 巛nancial statement? Statement of Assets and Liabilities Statement of Tangible Equity Statement of Auditor Independence Statement of Cash Flows Statement of Revenues and Expenditures Incorrect Response
The Statement of Revenues and Expenditures sounds like the Income Statement, except that the Income Statement has Expenses, not Expenditures.
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2. Which of the following is an asset? (check all that apply) Prepaid Rent Correct Response
Prepaid Rent is an asset.
Common Stock Incorrect Response
Common Stock is Stockholders' Equity
Retained Earnings Incorrect Response
Retained Earnings is Stockholders' Equity
Notes Payable Incorrect Response
Notes Payable is a Liability.
Cash Correct Response
Cash is an asset.
3.
1/1 points
What are Ending Retained Earnings in the table below?
Total Assets
300
Total Liabilities
120
Total Stockholder's Equity Beginning Retained Earnings
30
Ending Retained Earnings
?
Dividends
10
Revenues
190
Expenses
140
Net Income Cash
50
Not enough information 50 -20 70 Correct Response
Net Income = Revenues – Expenses => 190 – 140 = 50; Ending Retained Earnings = Beginning Retained Earnings + Net Income – Dividends => End RE = 30 + 50 – 10 => End RE = 70
20
1/1 points
4. Which of the following transactions transactions violates the balance sheet equation? (check all that apply) Increase a liability and increase a revenue Correct Response
All of these transactions would violate the balance sheet equation: Cash + Non-Cash Assets = Liabilities + Contributed Capital + Prior Retained Earnings + Revenues - Expenses Dividends
Increase retained earnings and increase a liability Correct Response
All of these transactions would violate the balance sheet equation: Cash + Non-Cash Assets = Liabilities + Contributed Capital + Prior Retained Earnings + Revenues - Expenses Dividends
Increase an expense and reduce a liability Correct Response
All of these transactions would violate the balance sheet equation: Cash + Non-Cash Assets = Liabilities + Contributed Capital + Prior Retained Earnings + Revenues - Expenses Dividends
Reduce cash and reduce an expense Correct Response
All of these transactions would violate the balance sheet equation: Cash + Non-Cash Assets = Liabilities + Contributed Capital + Prior Retained Earnings + Revenues - Expenses Dividends
Increase cash and reduce contributed capital
Correct Response
All of these transactions would violate the balance sheet equation: Cash + Non-Cash Assets = Liabilities + Contributed Capital + Prior Retained Earnings + Revenues - Expenses Dividends
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5. Which of the following are liabilities? liabilities? (check all that apply) Retained Earnings Incorrect Response
Stockholders' Equity
Prepaid Rent Incorrect Response
Asset
Common Stock Incorrect Response
Stockholders' Equity
Salaries Payable Correct Response
Liability
Employment Contracts Incorrect Response
Employment Contracts are not liabilities because there is no obligation based on bene巛ts already received.
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6. Which of the following accounts would be increased with a Debit? (check all that apply) Prepaid Insurance Correct Response
Debit balance
Advertising Expense Correct Response
Debit balance
Accounts Payable Incorrect Response
Credit balance
Land Correct Response
Debit balance
Cash Correct Response
Debit balance
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7. Which of these journal entries represent paying cash to reduce a liability? (check all that apply) Dr. Cash
300
Cr. Accounts Payable
300
Incorrect Response
Both parts of the entry are incorrect.
Dr. Income Taxes Payable Cr.
500
Cash
500
Correct Response
A correct entry must debit a liability and credit cash. This is correct!
Dr. Cash
1000
Cr. Notes Payable
1000
Incorrect Response
Both parts of the entry are incorrect.
Dr. Retained Earnings Cr. Cash
500 500
Incorrect Response
The Dr. to Retained Earnings is incorrect
Dr. Land Cr. Cash
100 100
Incorrect Response
The Dr. to Land is incorrect
1/1 points
8. Which journal entry reects the following transaction?: transaction?: BOC bought a $300,000 building with $50,000 cash and a mortgage taken from a bank. Dr. Building
300,000
Cr. Mortgage
250,000
Cr. Cash
50,000
Correct Response
We must debit building to increase the asset, credit cash to reduce it, and credit mortgage payable to recognize the liability for the di耀erence between the purchase price and the cash paid.
Dr. Mortgage
250,000
Dr. Cash
50,000
Cr. Building Dr. Cash Cr. Building Dr. Building Cr. Cash Dr. Building Cr. Cash
1/1 points
300,000 50,000 300,000 300,000 50,000 300,000 300,000
9. Which journal entry reects the following transaction?: transaction?: BOC bought a $75,000 piece of equipment with cash. Dr. Prepaid Prepaid Expense 75,000 Cr. Cash
75,000
Dr. Inventory
75,000
Cr. Cash Dr. Cash
75,000 75,000
Cr. Equipment Dr. Cash
75,000
75,000
Cr. Inventory
75,000
Dr. Equipment
75,000
Cr. Cash
75,000
Correct Response
The correct debit is to increase Equipment, not Inventory (since we are not buying the equipment to resell at a pro巛t). We credit cash to reduce it.
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10. Which journal entry reects the following transaction?: transaction?: BOC paid $3,000 upfront for next year's rent. Dr. Prepaid Rent Cr. Cash Correct Response
3,000 3,000
We need to create (debit) an asset called Prepaid Rent since this is a future bene巛t, not a current cost. Cash is credited to reduce it.
Dr. Cash
3,000
Cr. Rent Expense Dr. Rent Expense
3,000
Cr. Cash
3,000
Dr. Rent Revenue
3,000
Cr. Cash Dr. Cash
3,000
3,000 3,000
Cr. Prepaid Rent
3,000
