Exam 2: Understanding the Accounting Cycle

What is unearned revenue? Give an example.

Treat each part of this problem as independent of the others. a)At January 1,2012,the amount of accounts receivable was $20,000.Cash collected on accounts receivable during the year was $75,000.At December 31,2012,the amount of accounts receivable was $30,000.What were the revenues earned on account during 2012? b)At January 1,2012,accounts payable was $17,000.During 2012,expenses on account were $28,000.At December 31,2012,accounts payable was $15,000.What was the amount of cash paid on accounts payable during 2012? c)At January 1,2012,the balance in the Retained Earnings account was $7,200.During the year,revenue earned was $19,800 and expenses incurred were $7,400.At December 31,2012,the balance in the retained earnings account was $14,200.What was the amount of cash dividends paid to stockholders during 2012?

Hico Co.performed services and earned $2,000 of a $5,000 cash advance it had previously received from a customer.

What is "Retained Earnings?"

Steve Sims started a consulting business on January 1,2012,and the business engaged in the following transactions during the year: 1.Issued $7,000 of common stock for cash 2.Provided services on account,$25,500 3.Incurred $11,500 of operating expense,but only paid $5,000 of this amount 4.Collected $9,000 of the revenue that was previously recorded on account 5.Paid a cash dividend of $4,000 to the stockholders Required: a)Show the effects of the above transactions on the accounting equation. b)Prepare an income statement and statement of cash flows for 2012.

Jones Company started the accounting period with $500 in supplies.During the period the company purchased $1,100 of supplies on account.At the end of the accounting period there were $700 of supplies on hand.Based on this information,the amount of supplies expense appearing on the end-of-period income statement would be

Define the "accounting cycle" and list the stages of the cycle.

When are revenues and expenses recognized under accrual accounting?

The conservatism principle

Assets are listed on the balance sheet in order of amount.

Expenses that are matched with the period in which they are incurred are frequently called:

Give an example of a claims exchange transaction.

The amount of cash flow from operating activities would be:

The balance in the Office Supplies account on May 1 was $1,500,supplies purchased during May totaled $6,000,and the amount of supplies on hand at May 31 was $3,600. a)What amount of Supplies Expense will be shown on the income statement for May? b)What amount of supplies will be shown on the balance sheet at the end of May?

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

The matching concept refers to the "matching" of:

A transaction that decreases cash and decreases notes payable is a/an

What effect does the payment to a creditor have on total assets?

Joe's Messenger Service provided $200 of services to customers on account.How does this transaction affect the statement of cash flows? The income statement?

An adjusting entry to accrue salary expense is a claims exchange transaction.