Exam 2: Understanding the Accounting Cycle

The following transactions apply to Kellogg Company. 1)Issued common stock for $20,000 cash 2)Provided services to customers for $38,000 on account 3)Purchased land for $15,000 cash 4)Incurred $29,000 of operating expenses on account 5)Collected $35,000 cash from customers for services provided in event #2 6)Paid $27,000 on accounts payable 7)Paid $2,000 dividends to stockholders Required: a)Identify the dollar amount effect on the Statement of Cash Flows,if any,for each of the above transactions.Precede a cash outflow amount with a minus sign.Enter NA for items not affected. b)Indicate whether each transaction involves operating,investing,or financing activities.Enter NA for items not affected. c)Classify the above accounting events into one of four types of transactions (asset source,asset use,asset exchange,claims exchange).

The term "recognition" means to report an economic event in the financial statements.

The entry to recognize depreciation expense incurred on equipment involves which of the following?

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

Which of the following correctly states the proper order of the accounting cycle?

The recognition of an expense may be accompanied by which of the following?

Osage Corporation began business operations and experienced the following transactions during 2016: 1)Issued common stock for $25,000 cash. 2)Issued a $20,000,6% 4-year note to the bank on February 1. 3)Provided services to customers for $80,000 cash. 4)Paid $38,000 for operating expenses. 5)Accrued interest expense on the note. 6)Paid a $4,000 dividend to shareholders. Required: Record the above transactions on a horizontal statements model to reflect their effect on Osage's financial statements.Precede the amount with a minus sign if the transaction reduces that section of the equation.Enter 0 for items not affected.Precede a cash outflow amount with a minus sign.In the last column,enter OA,IA,FA for the type of cash flow activity,or NA if there is no activity.

Which of the following is a claims exchange transaction?

Vanguard Company uses accrual accounting.Indicate whether each of the following statements regarding Vanguard's accounting system is true or false. _____ a)The recognition of accounting events and the realization of cash consequences must occur in different accounting periods. _____ b)The cash consequence of a transaction sometimes precedes its accounting recognition. _____ c)Expenses may either be matched to revenues they produce or to periods in which they are incurred. _____ d)Vanguard may record accrual transactions,but may not record deferral transactions. _____ e)Vanguard is not permitted to make cash sales.