Question 1

The balance sheet begins with a list of assets and then lists liabilities and shareholders' equity.

Accepted Answer

A) True 
 B)False  True

Question 2

Journal entries

Accepted Answer

A)  show all the accounts affected by a single event or transaction.
B)  provide a record of transactions.
C)  have the characteristics presented in choices a and b.
D)  summarize the effects of transactions on specific accounts.
E)  none of the above C

Question 3

You've been asked to review the following balance sheet which has been prepared by a new staff member.

a.Prepare the journal entries for the following transactions:
1.Merchandise purchased on account and costing $5,000 was received but not recorded.
2.Payments by clients for previously billed invoices were found in the receptionist's desk drawer. The checks totaled $2,100.
3.Written checks totaling $2,700 for payment of accounts payable, were found in the treasurer's desk drawer. He was going to mail them out next Monday.
4.It was discovered that the company president had hired a new secretary for an annual salary of $18,250.
5.Upon further investigation, you found that the company had paid but incorrectly recorded next year's fire insurance policy, totaling $3,600. The payment was recorded as an expense.

b.Prepare a corrected balance sheet.

Accepted Answer

a. 1.Merchandise Inventory 5,000
Accounts Payable 5,000
2.Cash 2,100
Accounts Receivable 2,100
3.Cash 2,700
Accounts Payable 2,700
4.No effect
5.Prepaid Insurance 3,600
Insurance Expense 3,600
(Retained Earnings)
b.

Question 4

Many firms, especially in their first years of operation and growth, face a variety of challenges obtaining funds to finance their growth.
Required:
Discuss how a small, young manufacturing firm that has a relatively unpredictable revenue stream might approach financing a new manufacturing line.

Accepted Answer

The answer of Many firms, especially in their first years...

Question 5

On April 1, Year 1, Colonial Bookstore bought an insurance policy costing $24,000 that would insure the retail building for two years against fire loss.What asset account and what amount are recorded on the balance sheet at December 31, Year 1?

Accepted Answer

A)  Prepaid Insurance, $15,000
B)  Insurance Expense, $15,000
C)  Prepaid Insurance, $9,000
D)  Insurance Expense, $9,000
E)  Prepaid Insurance, $12,000

Question 6

Klothing Company, a U.S.clothing designer, manufacturer, and retailer, reported a balance in prepaid insurance of $90.7 million, based on its financial reports dated March 31, 2013, the end of its fiscal year.Assume that of this balance, $24 million relates to an insurance policy with two remaining months of coverage.Select the correct journal entries that Klothing would make on April 30, 2013 (Assume that the firm closes its books monthly.Klothing applies U.S.GAAP, and reports its results in millions of U.S.dollars.)

Accepted Answer

A)  Insurance Expense $ 24 million Prepaid Insurance $24 million
B)  Prepaid Insurance $24 million Insurance Expense $24 million
C)  Insurance Expense $12 million Prepaid Insurance $12 million
D)  Prepaid Insurance $12 million Insurance Expense $12 million
E)  none of the above

Question 7

Conrad Company reports the following: $\begin{array}{ll}
\text { Total Assets } & \$ 800 \
\text { Contributed Capital } & \$ 300 \
\text { Total Revenues } & \$ 600 \
\text { Beginning Retained Earnings } & \$ 200 \
\text { Total Expenses } & \$ 700 \
\text { Dividends } & \$ 100
\end{array}$ What are Total liabilities?

Accepted Answer

A)  $600
B)  $500
C)  $400
D)  $300
E)  $200

Question 8

What does the word "marketable" imply as far as "marketable securities"?

Accepted Answer

A)  It implies that the securities should be classified as a temporary account.
B)  It implies that a firm owes money on the securities.
C)  It implies that the securities are considered to be goodwill.
D)  It implies that the firm can readily buy and sell the securities on an exchange.
E)  It implies that the firm has signed a formal written contract called an indenture.

Question 9

The beginning balance of the shareholders' equity account Retained Earnings plus net income from the income statement less dividends equals the ending balance of Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is/are true regarding the T-account?

Accepted Answer

A)  the name or title of the account appears on the horizontal line.
B)  dates and other information can appear in T-accounts.
C)  one side of the space formed by the vertical line records increases in the item and the other side records decreases.
D)  all of the above
E)  none of the above

Question 11

ABC Group (ABC), headquartered in Switzerland, is one of the world's largest engineering companies.ABC applies U.S.GAAP, and reports its results in millions of U.S.dollars.Based on ABC's financial reports for fiscal 2013, at January 1, 2013, ABC reported a balance in its Prepaid Rent account of $247 million; assume that this amount reflects its prepayments of rent on factory and office space for the next month.Assume also that on January 31, 2013, ABC paid $3,200 million as the annual rent for the period from February 1, 2013, to January 31, 2014.ABC has a calendar year reporting period.Select the correct journal entries that ABC Group would make during January 2013 that affect the Prepaid Rent account.

Accepted Answer

A)  Rent Expense $3,200 million Cash $3,200 millionPrepaid Rent $247 millionRent Expense $247 million
B)  Rent Expense $3,200 million Prepaid Rent $3,200 millionPrepaid Rent $247 millionCash $247 million
C)  Rent Expense $3,200 million Prepaid Rent $3,200 millionPrepaid Rent $247 millionCash $247 million.
D)  Rent Expense $247 million Prepaid Rent $247 millionPrepaid Rent $3,200 millionCash $3,200 million.
E)  none of the above

Question 12

The transactions listed below relate to the JB Corporation.Indicate whether or not each transaction immediately gives rise to an asset or liability of JB Corporation under generally accepted accounting principles.If accounting recognizes an asset or a liability, give the account title and amount.
 a. JB Corporation issues $1 par value common stock for $10,000,000, its market value.
b. JB Corporation purchases a machine for $20,000, freight of $675, and installation costs of $1,500.
c. JB Corporation owes $5,000 for utilities at the end of the year. The firm has 10 days before payment is due without paying a late fee.
d. JB Corporation receives a 30-day, 10% loan of $10,000 from a local bank.
e. JB Corporation acquires property with an appraised value of $2,000,000 for its stock.
f. JB Corporation receives an order for merchandise totaling $5,000 from a customer. The merchandise will be shipped next week.

Accepted Answer

The answer of The transactions listed below relate to the...

Question 13

Prepaid assets are valued on the balance sheet at

Accepted Answer

A)  cost paid to acquire the asset.
B)  acquisition cost less accumulated depreciation.
C)  cost less expired portion.
D)  replacement cost.
E)  present value of future cash flows.

Question 14

Explain the order of assets and liabilities in the balance sheet under U.S.GAAP and IFRS.

Accepted Answer

The answer of Explain the order of assets and liabilities...

Question 15

Retained Earnings measures the cumulative excess of _____ for the life of a firm

Accepted Answer

A)  dividends over net income
B)  net income over dividends
C)  assets over liabilities
D)  liabilities over shareholders' equity
E)  shareholders' equity over liabilities

Question 16

Firms that use International Financial Reporting Standards (IFRS) may, but need not, list their assets from least liquid to most liquid, with the same ordering used to list liabilities.

Accepted Answer

A) True 
 B)False

Question 17

The balance sheet equation underlies the recording of transactions and events.It captures the financial statement effects of operating, investing, and financing transactions-three key activities of business firms.

Accepted Answer

A) True 
 B)False

Question 18

The date of the balance sheet appears at the bottom of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Tokyo Motor Company (Tokyo), a Japanese car manufacturer, reported Sales of Products of ¥22,670 billion for the year ended March 31, 2014.The Cost of Products Sold was ¥18,356 billion.Assume that Tokyo made all sales on credit.Select the correct journal entries that Tokyo made during the fiscal year ended March 31, 2014, related to these transactions.[Tokyo applies U.S.GAAP, and reports its results in millions of yen (¥).]

Accepted Answer

A)  Accounts Receivable ¥22,670 billion Inventories ¥22,670 billionCost of Goods Sold ¥18,356 billionRevenues ¥18,356 billion
B)  Accounts Receivable ¥18,356 billion Inventories ¥18,356 billionCost of Goods Sold ¥22,670 billionRevenues ¥22,670 billion
C)  Accounts Receivable ¥18,356 billion Revenues ¥18,356 billionCost of Goods Sold ¥22,670 billionInventories ¥22,670 billion
D)  Accounts Receivable ¥22,670 billion Revenues ¥22,670 billionCost of Goods Sold ¥18,356 billionInventories ¥18,356 billion
E)  none of the above

Question 20

Retained earnings measures the cumulative excess of net income over dividends for the life of a firm.Cumulative means that retained earnings aggregates all undistributed earnings.

Accepted Answer

A) True 
 B)False

Exam 2: The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The balance sheet begins with a list of assets and then lists liabilities and shareholders' equity.

Journal entries

Many firms, especially in their first years of operation and growth, face a variety of challenges obtaining funds to finance their growth. Required: Discuss how a small, young manufacturing firm that has a relatively unpredictable revenue stream might approach financing a new manufacturing line.

On April 1, Year 1, Colonial Bookstore bought an insurance policy costing $24,000 that would insure the retail building for two years against fire loss.What asset account and what amount are recorded on the balance sheet at December 31, Year 1?

What does the word "marketable" imply as far as "marketable securities"?

The beginning balance of the shareholders' equity account Retained Earnings plus net income from the income statement less dividends equals the ending balance of Retained Earnings.

Which of the following is/are true regarding the T-account?

Prepaid assets are valued on the balance sheet at

Explain the order of assets and liabilities in the balance sheet under U.S.GAAP and IFRS.

Retained Earnings measures the cumulative excess of _____ for the life of a firm

Firms that use International Financial Reporting Standards (IFRS) may, but need not, list their assets from least liquid to most liquid, with the same ordering used to list liabilities.

The balance sheet equation underlies the recording of transactions and events.It captures the financial statement effects of operating, investing, and financing transactions-three key activities of business firms.

The date of the balance sheet appears at the bottom of the balance sheet.

Retained earnings measures the cumulative excess of net income over dividends for the life of a firm.Cumulative means that retained earnings aggregates all undistributed earnings.