Deck 2: Accounting for Accruals and Deferrals

Question 1

Asset use transactions always involve the payment of cash.

Answer 1

False

Question 2

An adjusting entry that decreases unearned revenue and increases service revenue is a claims exchange transaction.

Answer 2

True

Question 3

Providing services to customers on account is an asset exchange transaction.

Answer 3

False

Question 4

Sometimes the recognition of revenue is accompanied by an increase in liabilities.

Question 5

Addison Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Addison's financial statements?

A) Issued common stock
B) Earned revenue on account
C) Earned cash revenue
D) Collected cash from accounts receivable

Question 6

Revenues and expenses are temporary accounts.

Question 7

Companies that use accrual accounting recognize revenues and expenses at the time that cash is paid or received.

Question 8

Which of the following illustrates how the recognition of revenue earned on account affects the financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 9

Bledsoe Company received $31,000 cash from the issue of stock on January 1, Year 1. During Year 1, Bledsoe earned $10,100 of revenue on account. The company collected $9,200 cash from accounts receivable and paid $7,000 cash for operating expenses. Based on this information alone, during Year 1, which of the following statements is true?

A) Total assets increased by $43,300.
B) Total assets increased by $2,200.
C) Total assets increased by $34,100.
D) Total assets did not change.

Question 10

The term "accrual" describes an earnings event that is recognized before cash is paid or received.

Question 11

An increase in an expense may be accompanied by a decrease in a liability.

Question 12

Accrual-basis accounting often fails to match expenses with revenues.

Question 13

After closing the accounts, all income statement accounts have non-zero balances.

Question 14

A payment to an employee in settlement of salaries payable decreases an asset and decreases stockholders' equity.

Question 15

A company may recognize a revenue or expense without a corresponding cash collection or payment in the same accounting period.

Question 16

Accounts that are closed include expenses, dividends, and unearned revenues.

Question 17

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

Question 18

In the closing process, the amounts in temporary accounts are moved to net income, a permanent account.

Question 19

Bledsoe Company received $17,000 cash from the issue of stock on January 1, Year 1. During Year 1, Bledsoe earned $8,500 of revenue on account. The company collected $6,000 cash from accounts receivable and paid $5,400 cash for operating expenses. Based on this information alone, during Year 1, which of the following statements is true?

A) Total assets increased by $20,100.
B) Total assets increased by $600.
C) Total assets increased by $26,100.
D) Total assets did not change.

Question 20

Adjusting entries never affect a business's cash account.

Question 21

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

A) An increase in liabilities
B) A decrease in liabilities
C) A decrease in revenue
D) An increase in assets

Question 22

Stannous Company earns $10,000 of revenue on account in Year 1. Cash collections of receivables amount to $3,500 in Year 1 with the remainder being collected in Year 2. Which of the following shows how the collection of cash will affect the company's accounting equation in Year 1?
A. $\quad3,500 \quad-3,500$
B. $\quad3,500 \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad-3,500$
C. $\quad10,000 \quad10,000\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad-4,000$
D. $\quad\quad\quad\quad\quad10,000 \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad-10,000$

A) Option A
B) Option B
C) Option C
D) Option D

Question 23

Leece Company experienced an accounting event that affected its financial statements as indicated below:
$+/- \quad\quad\quad \text{n/a}\quad\quad\quad\quad\quad \text{n/a}\quad\quad\quad \text{n/a}\quad\quad\quad\quad \text{n/a}\quad\quad \text{n/a}\quad\quad \text{+QA}$ Which of the following accounting events could have caused these effects on the company's financial statements?

A) Provided consulting services on account
B) Provided consulting services for cash
C) Collected cash in partial settlement of its account receivable
D) The information provided does not represent a completed event.

Question 24

Which of the following shows how a payment made to settle an accrued expense, such as the salaries payable, will affect a company's financial statements?
A. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-FA}$
B. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$
C. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-QA}$
D. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-IA}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 25

Which of the following transactions does not involve an accrual?

A) Recording interest earned that will be received in the next period
B) Recording operating expense incurred but not yet paid
C) Recording salary expense incurred but not yet paid
D) Recording the pre-payment of two years' worth of insurance

Question 26

During Year 1 China Enterprises experienced the following events:(1)Earned $10,000 of revenue on account(2)Incurred $9,000 of expenses on accountBased on this information, which of the following describes the combined effects of both events on the amounts of total assets, net income, and cash flows from operating activities shown on the Year 1 financial statements? $\begin{array}{l}\text { Total Assets }&\text {Net Income}&\text { cash Flow trom operating } \\&&\text { Activities } \\\end{array}$
A. $\begin{array}{rrrr}& \$ 1,000 &&&& \$ 1,000 &&&&&& 0 \\\end{array}$
B. $\begin{array}{rrrr} & \$ 10,000 &&&& \$ 1,000 &&&&&& 0 \\\end{array}$
C. $\begin{array}{rrrr}& \$ 10,000 &&&& \$ 1,000 &&&&& \$ 1,000 \\\end{array}$
D. $\begin{array}{rrrr}& \$ 10,000 &&&& \$ 10,000 &&&&& \$ 1,000\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 27

Mary Company collected cash from an account receivable. Which of the following financial statements are affected by this accounting event?

A) Income statement and the statement of cash flows
B) Statement of changes in stockholders' equity
C) Balance sheet and the statement of cash flows
D) Income statement and the balance sheet

Question 28

How will accounts payable appear on the following financial statements?

A) Expense on the income statement
B) Revenue on the income statement
C) Liability on the balance sheet
D) Asset on the balance sheet

Question 29

Amber Company recognized accrued salary expense. Which of the following financial statements are affected by this accounting event?

A) Statement of cash flows
B) Income statement
C) Balance sheet
D) Income statement and the balance sheet

Question 30

Stanley Company earns $8,000 of revenue on account in Year 1. Cash collections of receivables amount to $4,500 in Year 1 with the remainder being collected in Year 2. Which of the following shows how the recognition of revenue in Year 1 will affect the company's accounting equation?
A.
$\quad4,500 \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad4,500$
B.
$\quad\quad\quad\quad\quad\quad4,500\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad4,000$
C.
$\quad\quad\quad\quad\quad\quad8,000\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad8,000$
D.
$\quad8,000\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad8,000$

A) Option A
B) Option B
C) Option C
D) Option D

Question 31

Ash Company experienced a business event that affected its financial statements as indicated below. Which of the following events could have caused these effects on the company's financial statements?

A) Collecting cash from customers as payment of accounts receivable
B) Earning cash for providing services to customers
C) Paid cash to purchase land
D) Purchased supplies on account

Question 32

Paying cash to settle a salaries payable obligation will affect which section of the statement of cash flows?

A) Financing activities
B) Operating activities
C) Noncash activities
D) Investing activities

Question 33

Revenue on account amounted to $5,000. Cash collections of accounts receivable amounted to $2,300. Expenses for the period were $2,100. The company paid dividends of $450. What was the amount of net income for the period?

A) $1,200
B) $2,900
C) $2,850
D) $2,450

Question 34

In Year 1, Dale Company incurred $4,000 of utility expense on account. Dale paid cash for these expenses in Year 2. Which of the following shows how paying cash for utility expense will affect Dale's accounting equation in Year 2?
A. $(4,000) \quad\quad\quad\quad\quad\quad\quad\quad\quad (4,000)$
B. $\quad4,000 \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad(4,000)$
C. $\quad\quad\quad\quad\quad (4,000)\quad\quad \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \quad(4,000)$
D. $\quad (4,000)\quad\quad \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \quad\quad \quad\quad \quad(4,000)$

A) Option A
B) Option B
C) Option C
D) Option D

Question 35

What happens when a company collects cash from accounts receivable?

A) The asset accounts receivable increases.
B) Stockholders' equity increases.
C) Liabilities decrease.
D) Total assets are not affected.

Question 36

Greg Company recognized revenue on account. Which of the following financial statements are affected by this accounting event?

A) Balance sheet
B) Income statement
C) Statement of cash flows
D) Income statement and the balance sheet

Question 37

Jantzen Company recorded employee salaries earned but not yet paid. Which of the following represents the effect of this transaction on the financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 38

Which of the following answer choices accurately reflects how the recording of accrued salary expense at the end of the year affects the financial statements of a business?
A. $\quad\quad\quad\quad\quad+\quad\quad\quad\quad-\quad\quad\quad\quad\quad\quad+\quad\quad\quad\quad\quad-\quad\quad\quad\text{-QA}$
B. $\quad\quad -\quad\quad\quad\quad\quad\quad\quad-\quad\quad\quad\quad\quad\quad+\quad\quad\quad\quad\quad\quad-$
C. $\quad\quad\quad\quad\quad+\quad\quad\quad\quad-\quad\quad\quad\quad\quad\quad+\quad\quad\quad\quad\quad\quad-\quad$
D. $\quad\quad-\quad\quad\quad\quad\quad\quad\quad-\quad\quad\quad+\quad\quad\quad\quad\quad\quad\quad\quad\quad+\quad\quad\quad\text{-QA}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 39

How will accounts receivable appear on the following financial statements?

A) Asset on the balance sheet
B) Expense on the income statement
C) Liability on the balance sheet
D) Revenue on the income statement

Question 40

Revenue on account amounted to $4,200. Cash collections of accounts receivable amounted to $2,450. Expenses for the period were $2,200. The company paid dividends of $500. What was the amount of net income for the period?

A) $250
B) $1,950
C) $1,500
D) $2,000

Question 41

Which of the following statements about accrual accounting is true ?

A) Revenue is recorded only when cash is received.
B) Expenses are recorded when they are incurred.
C) Revenue is recorded in the period when it is earned.
D) Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.

Question 42

How would purchasing prepaid rent be classified?

A) Asset source transaction
B) Asset use transaction
C) Asset exchange transaction
D) Claims exchange transaction

Question 43

Prior to closing the accounts, Syracuse Company's accounting records showed the following balances: $\begin{array}{lr}\text { Retained earnings } & \$ 16,800 \\\text { Service revenue } & 21,750 \\\text { Interest revenue } & 1,800 \\\text { Salaries expense } & 12,300 \\\text { Operating expense } & 3,450 \\\text { Interest expense } & 900 \\\text { Dividends } & 2,700\end{array}$
After closing the accounts, Syracuse's retained earnings balance would be

A) $16,800.
B) $23,700.
C) $21,000.
D) $26,400.

Question 44

Which of the following shows how paying cash to lease office space for one year affects the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 45

Sheldon Company began Year 1 with $1,900 in its supplies account. During the year, the company purchased $5,600 of supplies on account. The company paid $2,800 on accounts payable by year end. At the end of Year 1, Sheldon counted $3,300 of supplies on hand. Sheldon's financial statements for Year 1 would show:

A) $4,700 of supplies; $5,600 of supplies expense
B) $3,300 of supplies; $4,200 of supplies expense
C) $3,300 of supplies; $2,300 of supplies expense
D) $4,700 of supplies; $1,400 of supplies expense

Question 46

Mize Company provided $45,500 of services on account, and collected $38,000 from customers during the year. The company also incurred $37,000 of expenses on account, and paid $32,400 against its payables. Which of the following statements about the result of these events is true?

A) Total assets would increase.
B) Total liabilities would increase.
C) Total stockholders' equity would increase.
D) All of these answer choices are correct.

Question 47

On October 1, Year 1 Allen Company paid $24,000 cash to lease office space for one year beginning immediately. How would the adjustment on December 31, Year 1 to recognize rent expense affect the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 48

Jack's Snow Removal Company received a cash advance of $14,400 on December 1, Year 1 to provide services during the months of December, January, and February. The year-end adjustment on December 31, Year 1, to recognize the partial expiration of the contract will

A) increase stockholders's equity by $4,800
B) increase assets by $4,800
C) increase liabilities by $4,800
D) increase assets by $4,800 and increase stockholders's equity by $4,800

Question 49

The following account balances were drawn from the financial statements of Grayson Company: $\begin{array}{llll}\text { Cash } & \$ 6,000 & \text { Accounts payable } & \$ 2,050\\\text { Accounts receivable } & \$ 3,100 & \text { Common stock } &? \\\text { Land } & \$ 9,600 & \text { Retained earnings, } & \$ 4,300\\ && \text {January 1}\\ && \text {Revenue}& \$ 11,100 \\ && \text {Exmenses}&\$8,050\end{array}$
Based on the above information, what is the balance of Common Stock for Grayson Company?

A) $12,350
B) $9,300
C) $1,250
D) $12,000

Question 50

Jack's Snow Removal Company received a cash advance of $6,000 on December 1, Year 1 to provide services during the months of December, January, and February. The year-end adjustment on December 31, Year 1, to recognize the partial expiration of the contract will

A) increase assets by $2,000
B) increase stockholders' equity by $2,000
C) increase liabilities by $2,000
D) increase assets by $2,000 and increase stockholders' equity by $2,000

Question 51

Which of the following events would not require an end-of-year adjusting entry?

A) Purchasing supplies for cash
B) Paying for one year's rent on July 1
C) Providing services for cash
D) Each of these answer choices would require an end-of-year adjusting entry.

Question 52

Which of the following show how purchasing supplies for cash will affect a company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 53

Sheldon Company began Year 1 with $1,200 in its supplies account. During the year, the company purchased $3,400 of supplies on account. The company paid $3,000 on accounts payable by year end. At the end of Year 1, Sheldon counted $1,400 of supplies on hand. Sheldon's financial statements for Year 1 would show:

A) $1,600 of supplies; $200 of supplies expense
B) $1,400 of supplies; $2,000 of supplies expense
C) $1,400 of supplies; $3,200 of supplies expense
D) $1,600 of supplies; $3,400 of supplies expense

Question 54

Jason Company paid $5,400 for one year's rent in advance beginning on October 1, Year 1. Jason's Year 1 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

A) $5,400; $5,400
B) $900; $5,400
C) $1,350; $5,400
D) $1,350; $1,350

Question 55

The following account balances were drawn from the financial statements of Grayson Company: $\begin{array}{llll}\text { Cash } & \$ 8,800 & \text { Accounts payable } & \$ 2,050\\\text { Accounts receivable } & \$ 3,000 & \text { Common stock } &? \\\text { Land } & \$ 16,000 & \text { Retained earnings, } & \$ 5,400\\ && \text {January 1}\\ && \text {Revenue}& \$ 19,000 \\ && \text {Exmenses}&\$14,500\end{array}$

Based on the above information, what is the balance of Common Stock for Grayson Company?

A) $15,400
B) $19,900
C) $900
D) $20,800

Question 56

The adjusting entry to recognize work completed on unearned revenue involves which of the following?

A) An increase in assets and a decrease in liabilities
B) An increase in liabilities and a decrease in stockholders' equity
C) A decrease in liabilities and an increase in stockholders' equity
D) A decrease in assets and a decrease in liabilities

Question 57

Jason Company paid $7,200 for one year's rent in advance beginning on October 1, Year 1. Jason's Year 1 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

A) $7,200; $7,200
B) $1,800; $1,800
C) $1,800; $7,200
D) $1,200; $7,200

Question 58

Prior to closing the accounts, Syracuse Company's accounting records showed the following balances: $\begin{array}{lr}\text { Retained earnings } & \$ 7,400 \\\text { Service revenue } & 8,450 \\\text { Interest revenue } & 1,200 \\\text { Salaries expense } & 5,300 \\\text { Operating expense } & 1,750 \\\text { Interest expense } & 900 \\\text { Dividends } & 1,500\end{array}$
After closing the accounts, Syracuse's retained earnings balance would be

A) $7,400.
B) $7,600.
C) $9,100.
D) $10,600.

Question 59

Which of the following shows how the year-end adjustment to recognize supplies expense will affect a company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 60

Recognition of revenue may be accompanied by which of the following?

A) A decrease in a liability
B) An increase in a liability
C) An increase in an asset
D) An increase in an asset or a decrease in a liability

Question 61

Nelson Company experienced the following transactions during Year 1, its first year in operation.Issued $8,400 of common stock to stockholdersProvided $4,700 of services on accountPaid $2,200 cash for operating expensesCollected $3,100 of cash from accounts receivablePaid a $220 cash dividend to stockholdersWhat is the total amount of assets shown on the balance sheet prepared as of December 31, Year 1?

A) $9,080
B) $10,680
C) $10,900
D) $9,520

Question 62

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: $$\begin{array} { l lll} \text { Cash } & \$ 3,400& \text { Accounts receivable } & \$ 1,450 \\\text { Dividends} & 1,700& \text { common stock } & 2,175 \\\text { Land } & 2,000 &\text { Revenue } & 2,000 \\\text { Accounts payable } & 1,050 &\text { Expense } & 1,150\end{array}$$ What is the amount of total assets on Carolina's December 31, Year 1 balance sheet?

A) $6,850
B) $5,400
C) $8,550
D) $8,850

Question 63

Revenue on account amounted to $6,200. Cash collections of accounts receivable amounted to $5,900. Cash paid for expenses was $4,100. The amount of employee salaries accrued at the end of the year was $1,900. What is the net cash flow from operating activities for the year?

A) $1,800
B) $1,900
C) $2,100
D) $7,700

Question 64

Nelson Company experienced the following transactions during Year 1, its first year in operation.Issued $12,000 of common stock to stockholdersProvided $4,600 of services on accountPaid $3,200 cash for operating expensesCollected $3,800 of cash from accounts receivablePaid a $200 cash dividend to stockholders What is the net income that will be reported for Year 1?

A) $1,400
B) $800
C) $1,000
D) $1,200

Question 65

Warren Enterprises had the following events during Year 1:The business issued $40,000 of common stock to its stockholders.The business purchased land for $24,000 cash.Services were provided to customers for $32,000 cash.Services were provided to customers for $10,000 on account.The company borrowed $32,000 from the bank.Operating expenses of $24,000 were incurred and paid in cash.Salary expense of $1,600 was accrued.A dividend of $8,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, what is the amount of retained earnings as of December 31, Year 1?

A) $10,000
B) $8,400
C) $16,400
D) $42,000

Question 66

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: $$\begin{array} { l lll} \text { Cash } & \$ 2,200& \text { Accounts receivable } & \$1,150\\\text { Dividends} &1,100& \text { common stock } & 1,575 \\\text { Land } & 1,400 &\text { Revenue } &1,400 \\\text { Accounts payable } & 750 &\text { Expense } & 850\end{array}$$

What is net income that will be shown on Carolina's Year 1 income statement?

A) $1,400
B) $850
C) $350
D) $550

Question 67

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 2: $$\begin{array} { l lll} \text { Cash } & \$ 3,800& \text { Accounts receivable } & \$1,550\\\text { Dividends} &1,900& \text { common stock } &2,375 \\\text { Land } &2,200 &\text { Revenue } &2,200 \\\text { Accounts payable } & 1,150 &\text { Expense } & 1,250\end{array}$$

What is the amount of retained earnings that will be shown on the balance sheet at December 31, Year 2?

A) $3,075
B) $4,975
C) $6,000
D) $4,025

Question 68

Nelson Company experienced the following transactions during Year 1, its first year in operation.Issued $7,000 of common stock to stockholdersProvided $3,300 of services on accountPaid $1,850 cash for operating expensesCollected $2,400 of cash from accounts receivablePaid a $150 cash dividend to stockholdersWhat is the net income that will be reported for Year 1?

A) $1,050
B) $1,450
C) $900
D) $1,300

Question 69

Nelson Company experienced the following transactions during Year 1, its first year in operation.Issued $8,000 of common stock to stockholdersProvided $4,300 of services on accountPaid $2,100 cash for operating expensesCollected $2,900 of cash from accounts receivablePaid a $200 cash dividend to stockholdersWhat is the of net cash flow from operating activities shown on the Year 1 statement of cash flows?

A) $600
B) $800
C) $2,000
D) $2,200

Question 70

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: $$\begin{array} { l lll} \text { Cash } & \$ 4,000& \text { Accounts receivable } & \$3,400\\\text { Dividends} &2,000& \text { common stock } & 3,900 \\\text { Land } & 3,200 &\text { Revenue } &3,200 \\\text { Accounts payable } & 1,800 &\text { Expense } & 2,200\end{array}$$

What is net income that will be shown on Carolina's Year 1 income statement?

A) $2,200
B) $3,200
C) $1,000
D) $200

Question 71

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: $$\begin{array} { l lll} \text { Cash } & \$ 4,000& \text { Accounts receivable } & \$3,400\\\text { Dividends} &2,000& \text { common stock } & 3,900 \\\text { Land } & 3,200 &\text { Revenue } &3,200 \\\text { Accounts payable } & 1,800 &\text { Expense } & 2,200\end{array}$$
What is the amount of total assets on Carolina's December 31, Year 1 balance sheet?

A) $12,600
B) $13,800
C) $7,200
D) $10,600

Question 72

Revenue on account amounted to $9,000. Cash collections of accounts receivable amounted to $8,100. Cash paid for expenses was $7,500. The amount of employee salaries accrued at the end of the year was $900. What is the net cash flow from operating activities for the year?

A) $900
B) $600
C) $1,500
D) $8,700

Question 73

Nelson Company experienced the following transactions during Year 1, its first year in operation.Issued $12,000 of common stock to stockholdersProvided $4,600 of services on accountPaid $3,200 cash for operating expensesCollected $3,800 of cash from accounts receivablePaid a $200 cash dividend to stockholders What is the of net cash flow from operating activities shown on the Year 1 statement of cash flows?

A) $400
B) $600
C) $1,400
D) $1,200

Question 74

Rushmore Company provided services for $16,500 cash during Year 1. Rushmore incurred $13,000 expenses on account during Year 1, and by the end of the year, $3,500 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Rushmore during Year 1, which of the following statements is true?

A) The amount of net income shown on the income statement is $9,500.
B) The amount of net cash flow from operating activities shown on the statement of cash flows is $7,000.
C) The amount of net income shown on the income statement is $3,500.
D) The amount of net loss shown on the income statement is $3,500.

Question 75

Warren Enterprises had the following events during Year 1: The business issued $23,000 of common stock to its stockholders.The business purchased land for $15,000 cash.Services were provided to customers for $19,000 cash.Services were provided to customers for $8,000 on account.The company borrowed $19,000 from the bank.Operating expenses of $15,000 were incurred and paid in cash.Salary expense of $1,100 was accrued.A dividend of $7,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, What is the amount of retained earnings as of December 31, Year 1?

A) $3,900
B) $3,700
C) $13,900
D) $27,000

Question 76

Rushmore Company provided services for $45,000 cash during Year 1. Rushmore incurred $36,000 expenses on account during Year 1, and by the end of the year, $9,000 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Rushmore during Year 1, which of the following statements is true?

A) The amount of net loss shown on the income statement is $9,000.
B) The amount of net income shown on the income statement is $27,000.
C) The amount of net income shown on the income statement is $9,000.
D) The amount of net cash flow from operating activities shown on the statement of cash flows is $18,000.

Question 77

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 2: $$\begin{array} { l lll} \text { Cash } & \$ 4,000& \text { Accounts receivable } & \$3,400\\\text { Dividends} &2,000& \text { common stock } &3,900 \\\text { Land } &3,200 &\text { Revenue } &3,200 \\\text { Accounts payable } & 1,800 &\text { Expense } & 2,200\end{array}$$

What is the amount of retained earnings that will be shown on the balance sheet at December 31, Year 2?

A) $5,900
B) $7,200
C) $3,900
D) $4,900

Question 78

Which of the following accounts would not appear on a balance sheet?

A) Service Revenue.
B) Salaries Payable.
C) Unearned Revenue.
D) Neither Service Revenue nor Unearned Revenue would appear on a balance sheet.

Question 79

Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) the amount of net cash flow for operating activities on the statement of cash flows?

A) Purchased land for cash
B) Purchased supplies for cash
C) Paid advertising expense
D) Paid dividends to stockholders

Question 80

Nelson Company experienced the following transactions during Year 1, its first year in operation.Issued $12,000 of common stock to stockholdersProvided $4,600 of services on accountPaid $3,200 cash for operating expensesCollected $3,800 of cash from accounts receivablePaid a $200 cash dividend to stockholdersWhat is the total amount of assets shown on the balance sheet prepared as of December 31, Year 1?

A) $12,400
B) $12,600
C) $13,400
D) $13,200