Financial Accounting Quiz 1 Key

14 June 2024
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question
On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of equity as of May 31 of the current year? A) $49,700. B) $13,050. C) $20,500. D) $31,100. E) $40,400.
answer
Answer: D Explanation: Assets = Liabilities + Equity Cash + Accounts Receivable + Supplies + Equipment = Accounts Payable + Equity $20,500 + $7,250 + $650 + $12,000 = $9,300 + Equity $40,400 = $9,300 + Equity; Equity = $31,100
question
Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? A) Assets, $30,000 increase; equity, $30,000 increase. B) Assets, $30,000 decrease; liabilities, $30,000 decrease. C) Assets, $30,000 decrease; liabilities, $30,000 increase. D) Liabilities, $30,000 decrease; equity, $30,000 increase. E) Assets, $30,000 decrease; equity $30,000 decrease.
answer
Answer: B Explanation: Assets = Liabilities + Equity Assets would decrease by $30,000 in Cash due to the payment of the accounts payable. Liabilities would also decrease by $30,000 in Accounts Payable due to the payment of an obligation. There is no effect on Equity.
question
Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are: A) Total assets decrease and equity increases. B) Both total assets and total liabilities decrease. C) Total assets, total liabilities, and total equity are unchanged. D) Both total assets and equity are unchanged and liabilities increase. E) Total assets increase and equity decreases.
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Answer: C
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If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets? A) Assets would have increased $55,000. B) Assets would have decreased $55,000. C) Assets would have increased $19,000. D) Assets would have decreased $19,000. E) None of the choices are correct.
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Answer: A Explanation: Assets = Liabilities + Equity Change in Assets = Change in Liabilities + Change in Equity Change in Assets = + $74,000 āˆ’ $19,000 Change in Assets = + $55,000
question
Identify the account below that is classified as an asset account: A) Unearned Revenue B) Accounts Payable C) Supplies D) Common Stock E) Service Revenue
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Answer: C
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A business uses a credit to record: A) An increase in an expense account. B) A decrease in an asset account. C) A decrease in an unearned revenue account. D) A decrease in a revenue account. E) A decrease in a common stock account.
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Answer: B
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A debit is used to record which of the following: A) A decrease in an asset account. B) A decrease in an expense account. C) An increase in a revenue account. D) An increase in the common stock account. E) An increase in the dividends account.
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Answer: E
question
Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Which of the following general journal entries will Pine Consulting make to record this transaction? A) Debit Telephone Expense, $300; Credit Cash, $300. B) Debit Telephone Expense, $300; Credit Accounts Payable, $300. C) Debit Cash, $300; Credit Telephone Expense, $300. D) Debit Accounts Payable, $300; Credit Telephone Expense, $300. E) Debit Prepaid Expense, $300; Credit Cash, $300.
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Answer: A
question
Spafford Services, Inc. provides services to clients. On May 1, a client prepaid Spafford Services $30,000 for 6-months services in advance. Spafford Services' general journal entry to record this transaction will include a: A) Debit to Unearned Management Fees for $30,000. B) Credit to Management Fees Earned for $30,000. C) Credit to Cash for $30,000. D) Credit to Unearned Management Fees for $30,000. E) Debit to Management Fees Earned for $30,000.
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Answer: D
question
Willow Rentals purchased $800 of office supplies on credit. Which of the following general journal entries will Willow Rentals make to record this transaction? A) Debit Accounts Payable, $800; credit Office Supplies, $800. B) Debit Accounts Receivable, $800; credit Office Supplies, $800. C) Debit Office Supplies, $800; credit Accounts Receivable, $800. D) Debit Office Supplies, $800; credit Accounts Payable, $800. E) Debit Cash, $800; credit Office Supplies, $800.
answer
Answer: D