Sometimes a(n) _________ is offered to buyers as a means of encouraging them to pay before the end of the credit period.
In October, cash is received in advance of rendering services. Assuming that half of the services have been performed by December 31, the year-end adjustment would:
decrease Unearned Service Revenue and decrease Cash
increase Accounts Receivable and increase Service Revenue
increase Cash and increase Service Revenue
decrease Unearned Service Revenue and increase Service Revenue
Which of the following statements is true about liabilities?
Liabilities include insurance premium paid in advance
Liabilities arise when a company sells goods on account
Liabilities equal assets plus stockholders’ equity
Liabilities are the debt owed by a company
ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation. This transaction would affect which two financial statement elements?
Assets and stockholders’ equity
Assets and liabilities
Liabilities and stockholders’ equity
None of these
XYZ Co. paid $1,000 in dividends to stockholders. How does this transaction affect the accounts of XYZ?
Cash will decrease by $1,000 and retained earnings will decrease by $1,000.
Cash will decrease by $1,000 and expenses will increase $1,000
Cash will decrease by $1,000 and revenues will decrease $1,000
Net income will decrease by $1,000
The accrual basis of accounting recognizes:
revenues when cash is received and expenses when cash is paid
revenues when earned and expenses when cash is paid
revenues when cash is received and expenses when incurred
revenues when earned and expenses when incurred
When a business borrows money, it incurs a(n):
Johnson, Inc. paid rent expense of $3,500 for the month of October. How are the accounts affected due to this transaction?
Increase in cash $3,500 and increase in retained earnings $3,500
Increase in cash $3,500 and decrease in retained earnings $3,500
Decrease in cash $3,500 and decrease in retained earnings $3,500
Decrease in cash $3,500 and increase in retained earnings $3,500
The difference between sales and cost of merchandise sold for a merchandising business is:
Johnson, Inc. purchased land for cash. What effect does this transaction have?
Increase in Cash and decrease in Land
Decrease in Cash and decrease in Land
Increase in Cash and increase in Land
Decrease in Cash and increase in Land
If Johnson, Inc. sold $800,000 worth of merchandise, had $100,000 returned, and then the balance paid during the 1% discount period, how much was Johnson’s net sales?
Stockholders’ equity will be increased by:
increase in revenues
increase in expense
payment of dividends
issuance of bonds
Which of the following accounts is a stockholders’ equity account?
Shares of ownership are evidenced by issuing:
shares of stock
Rights to payments from customers are:
For a merchandising firm, the inventory sold is shown on the income statement as:
cost of merchandise sold
purchases returns and allowances
The unearned rent account has a balance of $60,000. If $4,000 of the $60,000 is unearned at the end of the accounting period, the amount of the adjusting entry is:
Orange Co. sells merchandise on credit to Zea Co. in the amount of $9,000. The invoice is dated on September 15 with terms of 1/15, net 45. What is the amount of the discount, and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?
$180, September 30
$180, September 25
$90, September 30
$90, September 25
A sales invoice included the following information: merchandise price, $6,000; terms 2/10, n/eom. Assuming that a credit for merchandise returned of $600 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?
Accrued expenses are ordinarily reported on the balance sheet as:
An increase in Stockholders’ Equity from revenues earned will also result in an increase in:
none of these
A corporation is __________.
an entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock
an entity that is owned by an individual
an entity which has unlimited liability to creditors for the debts of the company
an entity which has limited access to capital
Stockholders’ equity will be reduced by:
payment of dividends.
increase in revenues.
issuance of bonds
BNC Company earns revenues and as a result collects cash. Which of the following financial statement elements increased?
Stockholders’ equity only
Cash and stockholders’ equity
Fees receivable would appear on the balance sheet as a(n):
Buying equipment for cash affects which account/ accounts?
Retained earnings only
Equipment and retained earnings
Cash and equipment
Merchandise not sold at the end of the period is reported as:
cost of goods sold
Which of the items below is not a business organization form?
Which of the following is not reported as revenue on the income statement?
The balance in the office supplies account on May 1 was $6,380, supplies purchased during May were $4,740, and the supplies on hand at May 31 were $2,360. The amount to be used for the appropriate adjusting entry is: