Exam 3: The Accounting Cycle: Capturing Economic Events

A CEO or CFO associated with fraudulent financial reporting could be fined but not imprisoned under the Sarbanes Oxley Act.

The following transactions occurred during March, the first month of operations for Quality Galleries, Inc. * Capital stock was issued in exchange for $360,000 cash. * Purchased $180,000 of equipment by making a $60,000 cash down payment and signing a note payable for the balance. * Made a $35,000 cash payment on the note payable from the purchase of equipment. * Sold a piece of equipment for cash of $18,000. The equipment was sold at cost, so there is no gain or loss on the sale. -What is the total owners' equity at the end of March?

The following trial balance of Brian's Pickle Co for June 30, 2010 does not balance. The following errors were discovered: 1. A purchase of supplies for cash was posted as $40 when it should have been $400. 2. The first two numbers of the amount for notes payable were transposed while being copied from the account balance to the trial balance. The correct amount of Notes Payable should be $51,500. 3. A collection of cash was debited to the cash account in the amount of $5,500 but was not credited to the revenue account. 4. A purchase of supplies for $725 on account was not recorded. Instructions: Prepare a corrected trial balance Cash \ 21,860 Accounts Receivable 35,000 Supplies 3,640 Building 51,000 Note Payable \ 15,500 Owners' Equity 30,000 Retained Earnings 10,000 Revenue 39,500 Expenses 25,000 Total

The account balances for Creative Band, Inc. as of May 31, 2009, are listed below in alphabetical order: Accounts Payable $12,000 Equipment $18,000 Accounts Receivable $14,000 Land $52,000 Building $42,000 Notes Payable $30,000 Cash $8,000 Capital Stock $92,000 On June 3, Creative Band, Inc collected $4,000 of its accounts receivable and paid $7,000 of its accounts payable. In addition, 2,000 of additional shares of capital stock are issued for $5,600. -In a trial balance prepared on May 31, 2009, the sum of the debit column is:

Double-entry accounting is characterized by which of the following?

Which of the following explains the debit and credit rules relating to the recording of revenue and expenses?

Green Systems sold and delivered modems to Blue Computers for $660,000 to be paid by Blue in three equal installments over the next three months. The journal entry made by Blue Computers to record the last of the three installment payments will include:

The matching principle:

The credit side of an account is the right side, while the debit side is the left side.

The left-hand side of an account is used for recording debits and the right-hand side for recording credits.

The following transactions occurred during March, the first month of operations for Quality Galleries, Inc. * Capital stock was issued in exchange for $360,000 cash. * Purchased $180,000 of equipment by making a $60,000 cash down payment and signing a note payable for the balance. * Made a $35,000 cash payment on the note payable from the purchase of equipment. * Sold a piece of equipment for cash of $18,000. The equipment was sold at cost, so there is no gain or loss on the sale. -What is the balance in the Note Payable account at the end of March?

The rules of debit and credit may be summarized as follows:

If the trial balance has a smaller debit balance than credit balance, it signifies:

The following transactions occurred during May, the first month of operations for Hunter Products, Inc: * Issued 50,000 shares of capital stock to the owners of the corporation in exchange for $600,000 cash. * Purchased a piece of land for $400,000, making a $150,000 cash down payment and signing a note payable for the balance. * Made a $60,000 cash payment on the note payable from the purchase of land. * Purchased equipment on credit from BBW, Inc. for $63,000. -Master Equipment has a $17,400 liability to Arrow Paint Co. When Master Equipment makes a partial payment of $7,600 on this liability, which of following is true about the journal entry made by Master to record this transaction?

Recording transactions journal entry grid A list of accounts for Harding Company is given below, followed by a series of transactions. Indicate the accounts that would be debited and credited in recording each transaction by placing the appropriate number (or numbers) in the space provided. 1 Cash 5 Office Equipment 2 Accounts Receivable 6 Notes Payable 3 Land 7 Accounts Payable 4 Building 8 Capital Stock 9 Retained Earnings Transaction Account(s) Debited Account(s) Credited Example: Purchased office equipment, paying part cash, with the balance due on account 5 1,7 A. Purchased land and a building paying part cash and issuing a note payable for the balance of the purchase price B. Sold a piece of the company's office equipment at cost, received part of the proceeds in cash, with the balance due in 30 days C. Collected an account receivable D. Borrowed money from a bank and signed a note payable due in one year E. Paid an account payable F. Issued capital stock in exchange for cash

The reason that revenue is recorded by a credit entry to a revenue account is:

Each business transaction is initially recorded in a journal and later transferred to the appropriate accounts in the general ledger.

The running balance form or the T account form is typically used in the trial balance to display the accounts and their amounts.

Wilson Trucking, Inc. reports these account balances at January 1, 2012 (shown in alphabetical order): On January 5, Wilson Trucking collected $175,000 of its accounts receivable, paid $150,000 on its accounts payable, and paid $11,000 on its note payable. Accounts Payable \ 220,000 Accounts Receivable \ 200,000 Buildings \ 480,000 Capital Stock \ 680,000 Cash \ 160,000 Equipment \ 320,000 Land \ 400,000 Notes Payable \ 520,000 Retained Earnings \1 40,000 -In a trial balance prepared for Wilson Trucking on January 1, 2012, the total of the credit column is:

Indirect Oil Co. reports these account balances at December 31, 2011 On January 2, 2012, Indirect Oil collected $25,000 of its accounts receivable and paid $20,000 of its accounts payable. Accounts Payable \ 55,000 Land \ 100,00 0 Notes Payable \ 130,00 0 Equipment \ 80,000 Cash \ 40,000 Accounts Receivable \ 50,000 Buildings \ 120,00 0 Capital Stock \ 170,00 Retained Earnings 0 -On January 3, 2012, total liabilities are: