BUS 214
1.
Test No. 1
Mon, Oct. 13, 2014
Name .
.
Write the definition of accounting.
2. What is the branch of accounting that provides information to external users?
What is the branch of accounting that provides information to internal users?
3. What do the following acronyms stand for?
FASB
GAAP
IFRS
4. Indicate whether each of the following types of business structure does or does
not limit investors’ liability and whether each type of business structure is
required to pay income tax.
Limits
does not
investors limit
' liability liability
pays
income
tax
does not
pay inc
tax
corporation
LLC
partnership
sole proprietor
5. Indicate on which financial statement each type of account would appear.
Ba l a nce s heet
Income s ta tement
Sta tement of Reta i ned Ea rni ngs
Ba l a nce s heet
Income s ta tement
Sta tement of Reta i ned Ea rni ngs
Ba l a nce s heet
Income s ta tement
Sta tement of Reta i ned Ea rni ngs
Ba l a nce s heet
Income s ta tement
Sta tement of Reta i ned Ea rni ngs
Ba l a nce s heet
Income s ta tement
Sta tement of Reta i ned Ea rni ngs
Assets
Expenses
Liabilities
Revenues
Stockholders' equity
6. Indicate whether an increase in each of the following accounts would (1)
increase assets, (2) increase net income, (3) increase both assets and net
income, or (4) have no effect on either assets or net income.
Increase
Assets
Increase
Net
Income
Increase
both
no effect
Accounts payable
Accounts receivable
Cash
Equipment
Sales revenue
7. Indicate whether each of the following transactions (INC) increases net
income, has (NO) no effect on net income, or (DEC) decreases net income.
Lyle invested $25,000 cash to start a corporation
the corp. purchased medical supplies totaling $9,000 on account
The corp. paid office rent of $4,000
Received $6,000 cash for services provided
Provided $2,000 of services on account
INC
INC
INC
INC
INC
NO
NO
NO
NO
NO
DEC
DEC
DEC
DEC
DEC
8. Indicate whether each of the following transactions (INC) increases total
assets, has (NO) no effect on total assets, or (DEC) decreases total assets.
purchased a computer on account
paid casn to purchase furniture
paid office rent expense of $4,000
provided $10,000 of services on account
received $3,000 cash from the customers above
INC
INC
INC
INC
INC
9. Define “asset.”
10. Describe when it is appropriate for a company to record revenue.
NO
NO
NO
NO
NO
DEC
DEC
DEC
DEC
DEC
Use the following information to answer problems 11 through 13
 On September 28th, Miller Motor Co. purchased 5 cars costing $20,000 each, on
account.
 On October 11th MMC wrote a check for $100,000 to pay for the 5 cars they
purchased in September.
 On November 13th MMC sold 3 of those cars for $22,000 each, on account.
 On December 4th MMC received checks totaling $66,000 as payment for the cars
they sold.
11. In which month would MMC record revenue
Sep
Oct
Nov
Dec
Sep
Oct
Nov
Dec
Sep
Oct
Nov
Dec
How much revenue would they record
12. In which month(s) would MMC record an expense
How much expense would they record
13. In which month would MMC first record a liability
How much would that liability be
14. What are the three types of activities reported on the Statement of Cash Flows?
Miller Motor Co.
Trial Balance
Oct 31st for the month of October
Cash
Accounts receivable
Supplies
Equipment
Accumulated depreciation
Accounts payable
Salaries payable
Unearned revenue
Common stock
Retained earnings
Dividends
Revenue
Rent expense
Salary expense
Depreciation expense
Supplies expense
Miller Motor Co.
Income Statement
for the month ending Jan. 31, 2012
1,700
2,100
300
9,000
15. Using the information in the above Trial
Balance, compute Total Assets.
300
6,000
700
600
5,000
Using the information in the above Trial
Balance, compute Net Income.
Miller Motor Co.
Statement of Retained Earnings
1,000
3,800
700
700
300
600
16,400
Using the information in the above Trial
Balance, compute Total Liabilities.
16,400
16. Match the accounting definitions in the left-hand column with the accounting
terms in the right-hand column.
a record of all transactions
A. Posting
always an asset
B. Debit
left side of an account
the side of an account where increases are recorded
C. Receivable
D. Journal
copying data from the Journal to the Ledger
E. Normal balance
17. Prepare journal entry when you performed services for a client and received cash
for the full amount of $800.
18. Prepare journal entry when you purchased supplies on account for $900.
19. Prepare journal entry when you paid $200 telephone expense for the month of
April.
20. During 2014 SLO Town Sales earned revenues of $1,350. $150 of which was on
account and they collected $1,200. Expenses totaled $1,250, and related cash
payments for the year totaled $1,150. Prepare the 2014 income statement for
SLO Town Sales.
SLO Town Sales
Income Statement
21. On Nov. 30, 2014, XYZ Corp. made the following entry when they prepaid $4,800
for 6 months rent. Prepare the adjusting entry to record rent expense on
Dec. 31st
Prepaid Rent Expense
Cash
4,800
4,800
22. On Dec. 1, 2014, AST paid $800 for supplies. At Dec. 31st, they have $500 of
supplies on hand. Make the required adjusting journal entry at Dec. 31st.
23. Some customers pay Audi Car Co. in advance of performing the services. During
2014, Audi Car Co. made the following entry when they collected $2,800 cash in
advance from customers. Prepare the adjusting entry they need to make if they
have earned $1,800 of that amount by Dec. 31st.
Cash
2,800
Unearned Service Revenue
2,800
24. On Jan. 1, 2014, the Prepaid Insurance account had a $600 balance. On Mar.
31st we paid $4,800 for 2 years worth of insurance at $200 per month. How much
Insurance Expense should we report for 2014? And what should the balance in
the Prepaid Insurance Account on the Balance Sheet as of Dec. 31?
25. Our employees are paid each Friday. Weekly payroll is $9,000. What adjusting
entry should we make if Dec. 31st falls on Wednesday?
Miller Motor Co.
Trial Balance
Oct 31st for the month of October
Cash
Accounts receivable
Supplies
Equipment
Accumulated depreciation
Accounts payable
Salaries payable
Unearned revenue
Common stock
Retained earnings
Dividends
Revenue
Rent expense
Salary expense
Depreciation expense
Supplies expense
26. Prepare an Income
Statement, with proper dating, from
Miller Motor Co.’s trial balance.
1,700
2,100
300
9,000
300
6,000
700
600
5,000
1,000
3,800
700
700
300
600
16,400
16,400
27. Prepare a Statement of
Retained Earnings, with proper
dating, from Miller Motor Co.’s trial
balance.
28. Prepare a Balance Sheet,
with proper dating, from Miller
Motor Co.’s trial balance.