ACCT 2113 1st Edition Final Exam Self Study Questions Chapters 1 12 1 2 Independent private sector group that is primarily responsible for setting financial reporting standards in the United States a FASB c SEC b IASB d IRS Consider the following account balances of Rexing Rexroat Liquidators as of December 31 2009 Accounts Payable 4 400 Cash 1 700 Common Stock 2 400 Office Supplies Customer Advances Retained Earnings 4 300 2 300 1 100 Salaries Expense 12 800 Service Revenue 8 300 Utilities Expense 5 000 How many of these accounts would appear on the company s 2009 income statement a Five d Two b Four e Six c Three These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute 3 From 2005 through 2009 Dexter Consulting Services reported the following annual net income and dividend amounts Year Net Income 2005 22 000 2 000 2006 17 000 2 000 2007 9 000 1 000 2008 14 000 3 000 2009 25 000 Dividends 4 000 If Dexter had Retained Earnings of 88 000 at the end of 2009 what was the company s Retained Earnings at the beginning of 2005 4 a 13 000 d 41 000 b 23 000 e some other amount c 37 000 Consider the following account balances of the Alfonso Bunker Company ABC as of December 31 2009 Accounts Payable 4 400 Cash 1 700 Common Stock 2 400 Equipment 4 300 Retained Earnings 1 100 Land 12 800 Long term Debt 8 300 Construction Revenue 5 000 Salaries Expense 4 200 How many of these accounts would appear on ABC s December 31 2009 balance sheet 5 a Five b Four c Three d Six e Seven Consider the following cash flow items Pay amount owed to bank for previous borrowing Pay utility costs Purchase equipment to be used in operations Purchase office supplies to be used the next month Purchase one year of rent in advance Pay workers salaries Pay for research and development costs Pay taxes to the IRS Sell common stock to investors How many of these cash flow items involve investing activities a None b One c Two d Three e 6 7 Four Refer to the list of cash items in Question 5 How many of those items involve financing activities a None c Two b One d Three e Four Consider the following accounts Common Stock Research Expense Interest Payable Salaries Payable Land Service Revenue Prepaid Rent Utilities Expense How many of the above accounts are temporary accounts 8 9 a Two c b Three d Five Four e Six A trial balance can best be explained as a list of a The income statement accounts used to calculate net income b Revenue expense and dividend accounts used to show the balances of the components of retained earnings c The balance sheet accounts used to show the equality of the accounting equation d All accounts and their balances at a particular date Assume that Youmba Surfboards had a retained earnings balance of 10 000 on April 1 2009 and that the company had the following transactions during April 2009 Issued common stock for cash 5 000 Provided services to customers on account 2 000 Provided services to customers in exchange for cash 900 Paid April rent 800 Paid workers salaries for April 700 What was Youmba s retained earnings at the end of April 10 a 11 400 c 16 400 b 12 100 d Some other amount Consider the follow list of accounts Cash Retained Earnings Service Revenue Utilities Expense Accounts Payable Common Stock Equipment Treasury Stock How many of these accounts have a normal debit balance 11 a Four c Six b Five d Seven e Eight Consider the follow list of accounts Notes Payable Additional Paid In Capital Salaries Expense Retained Earnings Accounts Receivable Bonds Payable Depreciation Expense How many of these accounts have a normal debit balance 12 a Two c b Three d Five Four e Six Consider the following accounts Insurance Expense Cash Interest Receivable Service Revenue Accumulated Depreciation How many of these accounts are increased with credits a b 13 One Two c d Three e Four Five Following are transactions of Cary Conwell Inc a new company during the month of January 2010 A B C D E F Issued 10 000 shares of common stock for 15 000 cash Purchased land for 12 000 signing a note payable for the full amount Purchased office equipment for 1 200 cash Received cash of 14 000 for services provided to customers during the month Purchased 300 of office supplies on account Paid employees 10 000 for their first month s salaries How many of these transactions decreased this company s total assets 14 a One c Three b Two d Four e Five Which of the following transactions causes a decrease in stockholders equity 15 a Pay dividends to stockholders b Obtain cash by borrowing from a local bank c Provide services to customers on account d Write off an account receivable e a d Which best describes the purpose s of closing entries a Adjust the balances of asset and liability accounts for activity during the period 16 b Transfer the balances of temporary accounts to common stock c Reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period d Both b and c Which of the following accounts is not listed in a post closing trial balance a b c d e 17 unrecorded Equipment Allowance for Uncollectible Accounts Retained Earnings Accumulated Depreciation Equipment All of the above are included in a post closing trial balance Received a 300 telephone bill in July 2009 The bill was for the month of June 2009 The bill was paid in August 2009 This transaction resulted in an expense being recognized in July 2009 a True b False Facts for Questions 18 21 Pollard Inc prepares monthly financial statements for its bank The company s November 30 and December 31 adjusted trial balances included the following amounts November 30 December 31 Debit Supplies Prepaid Insurance 2 200 Unearned Rent Revenue 18 Credit 8 400 4 000 5 000 5 000 4 000 Assume that Pollard purchased supplies of 1 700 during December The company s adjusting entry for supplies used during the month of December included a a b c d e 19 Debit 2 800 9 600 Salaries Payable Credit debit of 1 700 to Supplies Expense debit of 600 to Supplies credit of 2 200 to Supplies credit to Supplies Expense of 1 100 None of the above Assume that Pollard did not purchase any additional insurance during December The company s December 31 adjusting entry related to insurance included a a debit to Insurance Expense of 1 200 b credit to Prepaid Insurance of 1 200 c credit to Insurance Payable of 1 200 d both a b e both a c 20 21 Assume that Pollard paid 4