BUS 214
1.
Test No. 1
Mon., Jan. 26, 2015
Name .
Write the definition of accounting.
2. Describe Financial Accounting and describe Management Accounting.
3. Describe Generally Accepted Accounting Principles.
4. List the four common means by which businesses are organized.
Circle each type of business organization for which the owners have limited
liability.
Put an asterisk next to each type of business organization which is required to
pay income tax.
5. Balance Sheet List types of accounts (financial statement elements) that
appear on the balance sheet.
6. Liabilities
7. Revenue
Write the definition of “liabilities.”
Write the definition of “revenue.”
8. Current Assets
Write the definition of “current assets.”
9. Accounting Equation Determine ABC Co.’s liabilities if it has stockholders’
equity totaling $180 and assets of $300.
10. Financial Statements The following table counts as 2 questions (10 points instead of 5)
11. Financial Statement Indicate the financial statement(s) on which each of the
following accounts would appear.
Income
State
State of
Ret Earn
Balance
Sheet
Inc State
& State RE
State RE
& Bal Sh
Inc State
& Bal Sh
Accounts payable
Accounts receivable
Cash
Common stock
Depreciation expense
Dividends
Land
Prepaid insurance
Salary expense
Service revenue
Unearned revenue
12. This problem does not address transactions, it only addresses
accounts. Indicate whether an increase in each of the following accounts
would (1) increase or decrease assets, (2) INC or DEC liabilities (3) INC or
DEC net income, or (4) have no effect on assets, liabilities or net income.
Assets
Liabilities
Net
Income
no effect
Notes payable
Revenue
Cash
Utilitiy expense
Dividends
13. Indicate whether each of the following transactions (INC) increases net
income, has (NO) no effect on net income, or (DEC) decreases net income.
Borrowed $31,000 and signed a Note Payable
Performed services for clients onaccount totaling $8,900
Received $5,600 cash on account from the above clients
Received a $900 utilitly bill which will be paid in November
Paid $2,600 salary to employee on Friday, the 31st
14. Match the accounting definitions in the left-hand column with the accounting
terms in the right-hand column.
C
a grouping of the accounts
A. Expense
E
assets minus liabilities
B. Journal
D
B
the side of an account where increases are recorded
a record of transactions
C. Ledger
D. Normal balance
A
The cost of operating a business which decreases stockholers' equity
E. Owners' Equity
Miller Motor Co.
Trial Balance
As of January 31st and for the month of January
Cash
Accounts receivable
Supplies
Prepaid Rent expense
Equipment
Accumulated depreciation
Accounts payable
Unearned revenue
Common stock
Retained earnings
Dividends
Service revenue
Depreciation expense
Salaries expense
Supplies expense
24,800
2,200
700
3,000
30,000
6,000
13,100
400
20,000
18,800
3,200
7,000
600
700
100
65,300
Miller Motor Co.
Income
15.
What Statement
are the three types
for the month ending Sep. 30, 2012
of activities
reported on the Statement of Cash Flows?
Operating activiti
16.
Using the information in the above Trial
Balance, compute Total Assets.
Using the information in the above Trial Balance,
compute Total Liabilities.
of Retained
Earnings
Using theStatement
information
in the
above Trial Balance,
compute Net Income.
65,300
Whenever you prepare a Journal Entry, please label the accounts: (A)
asset, (L) liability, (SE) stockholders’ equity, (R) revenue or (E)
expense
17. Prepare journal entry when you and a few friends invest $50,000 to open KAR
Wash Inc.
18. Prepare journal entry when KAR Wash Inc. earns $7,000 by providing services
for customers on account, KAR Wash Inc. expects to be paid in November.
19. Revenue Principle Describe when it is appropriate for a company to record
revenue.
Use the following information to answer problems 20 through 22
 On Aug. 24th, Miller Motor Co. purchased supplies $2,500, on account.
 On Sep. 17th MMC wrote a check for $2,500 to pay for the supplies they
purchased in August. As of Sep. 30th MMC had not used any of the supplies.
 In October, MMC used half of the supplies.
20. In which month would MMC record supplies expense
How much expense would they record
21. In which month(s) would MMC record a liability
How much liability would they record
22. In which month would MMC record an asset
How much would that asset initially be
Aug
Sep
Oct
Aug
Sep
Oct
Aug
Sep
Oct
23. During 2014 SLO Town Sales had sales of $850. Of this amount, they collected
all but $27 (i.e. 823). Cost of goods sold was $290 and all other expenses
totaled $325. During 2014, SLO Town paid $380 for inventory and $255 for
everything else. On Jan. 1st, SLO Town Sales had $50 in their cash account.
a. Prepare an Income Statement for SLO Town Sales
b. Show how much cash SLO Town Sales would have on hand at 12/31.
Income Statement
Cash balance 1/1
$
50
please label accounts: (A) asset, (L) liability, (SE) stockholders’ equity, (R) revenue or (E) expense
24. On Oct. 31, 2014, ABC Inc. made the following entry when they paid $2,100 for
3 months rent. Prepare the adjusting entry to record rent expense on Dec. 31st
Prepaid Rent
Cash
2,100
2,100
please label accounts: (A) asset, (L) liability, (SE) stockholders’ equity, (R) revenue or (E) expense
25. On Oct. 1, 2014, ABC Inc. paid $2,400 for supplies. Supplies had a $0 balance
prior to the Oct. 1st purchase. At Dec. 31st, they have $410 of supplies on hand.
Make the required adjusting journal entry at Dec. 31st.
26. On Sep. 1, Miner’s Hardware paid Genie Car Wash $4,800 to wash their
delivery trucks for the next year and Genie Car Wash made the following entry.
Prepare the adjusting entry they need to make on Dec. 31st.
Cash
Unearned Service Revenue
4,800
4,800
27. On Sep. 1, Miner’s Hardware paid Genie Car Wash $4,800 to wash their
delivery trucks for the next year and Miner’s Hardware made the following entry.
Prepare the adjusting entry they need to make on Dec. 31st.
(E)
Prepaid auto expense
Cash
Auto expense
4,800
4,800
1,600
28. Our employees are paid each Friday. Weekly payroll is $7,500. What adjusting
entry should we make if Dec. 31st falls on Thursday?
221
231
301
311
321
401
501
502
503
504
505
income tax payable
unearned revenue
common stock
retained earnings
dividends
revenue
depreciation expense
income tax expense
miscellaneous exp
salary expense
supplies expense
35
13
100
193
65
29.
Prepare an Income
Statement, with proper title and dating,
from Goldsmith’s trial balance.
330
30
35
13
177
4
1,256
30.
Prepare a Statement of
Retained Earnings, with proper dating.
1,256
31.
Prepare a Balance Sheet,
with proper dating.