Chapter 1
Liabilities = 5,300
How much is Equity?
11,200
Identify an account that would appear on the left side of the accounting equation
Any asset account (cash, accounts receivable, prepaid rent, etc).
The normal balance of an owner's drawing account (debit or credit)
Debit
The Cash account has a $15,000 debit balance. A $5,000 credit entry and a $7,000 debit entry are posted to the account. The final balance of the Cash account is:
$17,000
OVO Records Inc paid $1,200 to its landlord for rent for the next 3 months. The journal entry to record this transaction is
Credit Cash $1,200
GAAP stands for
Generally Accepted Accounting Principles
Withdrawals are reported on which financial statement?
Statement of Owner's Equity
A business earned $4,000 on account from clients. The journal entry is...
DR A/R $4K
CR Fees Income/Revenue $4K
On December 1, the Accounts Receivable account had a $22,000 debit balance. During December the business earned $10,500 in revenue on account and collected $13,200 from its charge-account customers. After posting these transactions, the balance in the Accounts Receivable account on December 31 is:
$19,300 debit balance
What happens after the trial balance is prepared?
Preparation of the financial statements
Owners of a corporation are called
Stockholders or shareholders
Which financial statement is a representation of the accounting equation?
Balance Sheet
The total of figures on the debit side of the Accounts Receivable T-account is $35,800. The total figures on the credit side is $16,100. The balance of this account is...
$19,700
Lion King Corporation reported net income for the year to be $17,200 for 12/31/2025. Then, they discovered an entry for revenue earned on 12/31/2025 in the amount of $1,800 had not been journalized and posted. What is the net income after the correcting journal entry is posted?
$19,000
At the end of the first month of operations for Lightning Delivery Service, the business had the following accounts: Accounts Receivable, $11,350; Prepaid Insurance, $400; Equipment, $26,200 and Cash, $21,650. On the same date, Lightning owed the following creditors: Simpson Supply Company, $17,000; Allen Office Equipment, $14,500.
The total amount of Liabilities is:
$31,500
The SEC (Security and Exchange Commissions) regulates accounting methods and financial reporting for this type of corporation
Publicly owned (public)
Cash - $9,800
Supplies - ???
Accounts Payable - $4,000
Spongebob Capital - $10,170
What is the missing Supplies balance?
$4,370
What is the journal entry to record the receipt of previously-owed cash from a customer
DR Cash
CR Accounts Receivable
Patrick Star incorporated purchased some shop equipment for $5,300 in cash. By mistake, the journal entry debited Office Equipment account rather than the Shop Equipment account. What correcting entry would be necessary?
Debit Shop Equipment $5,300
Credit Office Equipment $5,300
At the end of the first month of operations for Fieldstone’s Catering Service, the business had the following accounts: Cash, $21,000; Prepaid Rent, $500; Equipment, $7,500 and Accounts Payable $4,000. By the end of the month, Fieldstone’s had earned $32,000 of Revenues, and used $1,800 of Utilities Expenses, $4,000 of Rent Expense and $3,600 of Salaries Expenses. Calculate the net income to be reported by the company for this first month.
22,600
A firms financial records and owner's personal financial records should be kept separate. What is this assumption called?
Separate entity assumption
If the beginning capital balance for OVO Records is $23,000, net income is $4,000, and the ending capital balance is $20,000, what were the withdrawals for the period?
$7,000
A business purchases equipment costing $5,800. They pay $1,200 right away and charge the remaining amount. What is the journal entry?
DR Equipment 5,800
CR Cash 1,200
CR Accounts Payable $4,600
Bad Bunny earned $2,500 of revenue collecting $1,000 immediately and will collect the remaining amount in 30 days.
The journal entry to record this transaction is -
Debit Cash $1,000
Debit A/R $1,500
Credit Fees Income $2,500
At the end of its first year of operations, Shapiro’s Consulting Services reported net income of $27,000. They also had account balances of: Cash, $16,000; Office Supplies, $3,200, Equipment, $24,000 and Accounts Receivable, $8,000. The owner’s total investment for this first year was $15,000 and the owner withdrew $2,000 for personal use.
Calculate the ending balance to be reported on the Statement of Owner’s Equity in the Owner’s Capital account.
$40,000