Acct 230 1st Edition Lecture 12Outline of Last Lecture II. The Financial Reporting Processa. Adjusting Entriesi. Posting Adjusting Entriesb. The Reporting Processc. The Closing ProcessOutline of Current Lecture III. Exam Review answersCurrent Lecture1. A revenue has what effect on the accounting equation? A. Increase liabilities. B. Decrease assets. C. Increase stockholders' equity. D. No effect. 2. If a company provides services on account, which of the following is true? A. Expenses increase. B. Liabilities increase. C. Stockholders' equity increases. D. Assets decrease. 3. Purchasing office equipment on account has what impact on the accounting equation? A. Stockholders' equity decreases and assets increase. B. Liabilities increase and assets increase. C. Assets decrease and liabilities decrease. D. Assets increase and stockholders' equity increases. 4. Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January 2012: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 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.4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. What was the balance of Gotebo's Cash account following these six transactions? A. $29,800. B. $19,300. C. $17,800. D. $22,400. Cash = ($15,000 - $1,200 + $14,000 - $10,000) = $17,800. 5. Which of the following accounts would normally have a debit balance? A. Accounts Payable, Service Revenue, Common Stock. B. Salaries Payable, Unearned Revenue, Utilities Expense. C. Income Tax Payable, Service Revenue, Dividends. D. Cash, Delivery expense, Dividends. 6. Consider the following list of accounts:How many of these accounts have a normal debit balance? A. Four. B. Five. C. Six. D. Seven. Cash, Salaries Expense, Equipment, Utilities Expense, Accounts Receivable, Dividends.7. A company received a bill for newspaper advertising services received, $400. The bill will be paid in 10 days. How would the transaction be recorded today? A. Debit Advertising Expense $400, credit Accounts Payable $400. B. Debit Accounts Payable $400, credit Advertising Expense $400. C. Debit Accounts Payable $400, credit Cash $400. D. Debit Advertising Expense $400, credit Cash $400.8. On July 31, ALOE Inc. received $5,000 cash from a customer who previously purchased ALOE's products on account. What should ALOE Inc. record at the time it receives cash? A. Debit Accounts Receivable, $5,000; credit Cash, $5,000. B. Debit Cash, $5,000; credit Accounts Receivable, $5,000. C. Debit Cash, $5,000; credit Accounts Payable, $5,000. D. Debit Cash, $5,000; credit Service Revenue, $5,000.9. On July 5, Harris Company purchased supplies from the hardware store for $600 on account. On July 10, Harris receives a bill from the hardware store as a reminder about the account balance. On July 17, Harris pays the account in full. How does Harris record the transaction on July 17? A. B. C. D. 10. The Accounts Payable account has a beginning balance of $12,000 and the company purchased $50,000 of supplies on account during the month. The ending balance was $10,000. How much did the company pay to creditors during the month? A. $50,000. B. $52,000. C. $60,000. D. $62,000. $12,000 + $50,000 - $10,000 = $52,000. 11. Lithuanian Motors has the following balance sheet accounts: If the company has total assets of $288,000, what is the balance of the company's Salaries Payable account? A. $15,000. B. $25,000. C. $12,000. D. Cannot be determined given the information provided. Total liabilities + Stockholders' equity = ($288,000) = Accounts Payable (?) + Salaries Payable (?) +Notes Payable ($88,000) + Common Stock ($100,000) + Retained Earnings ($40,000); therefore, with two unknowns there is not enough information to solve the problem. 12. The matching principle is the principle that states: A. All costs that are used to generate revenue are recorded in the period the revenue is recognized. B. All transactions are recorded at the exchange price. C. The business is separate from its owners.D. The business will continue to operate indefinitely unless there is evidence to the contrary. 13. A customer purchased a drill press on November 14 on account from Sears. The drill press was delivered two weeks later. The customer paid for the drill press on December 5. When should Searsrecord the revenue for this transaction according to the revenue recognition principle? A. November. B. December. C. Evenly in each of the two months. D. One-third in November and two-thirds in December.14. Consider the following events for Betterment Incorporated: Under cash-basis accounting, what is the appropriate day to record the expenses related to the gasoline? A. January 1. B. January 9. C. January 12. D. January 13. Cash-basis expenses are recorded at the time cash is paid. 15. Consider the following events for Sophia Incorporated: Under cash-basis accounting, what is the appropriate day to record the revenues related to the sandvolleyball camp? A. April 5. B. April 12. C. April 21. D. April 23. Cash-basis revenues are recorded at the time cash is received. 16. Pawn Shops Unlimited recorded the following four transactions during April. Which of these transactions would have the same income statement impact in April regardless of whether the company used accrual-basis or cash-basis accounting? A. Purchased $500 of office supplies on account (supplies were used in May and paid for in May). B. Paid $1,800 for a six-month insurance policy covering the period July 1—December 31. C. Paid $700 for an advertisement that appeared in the May 17 edition of the Las Vegas Sun newspaper. D. Received $300 from customers for services performed in March.17. The following events pertain to Bills Company:Using cash-basis accounting, on which date should Bills Company record revenue for the accounting and tax services? A. December 30, 2012. B. December 31, 2012. C. January 4, 2013. D. January 11, 2013. 18. Making insurance payments in advance is an example of: A. An accrued revenue. B. An accrued expense. C. An unearned revenue. D. A prepaid expense. 19. On April 1, a $4,800 premium on a one-year insurance