Journal Entries
Retained Earn.
Balance Sheet
Cash Flow
Ratio
100
Are the following statements true or false? Journal Entry: -is a chronological record of transactions. -does not require a brief explanation of a transaction. -indicates the date a business decision was made.
-True -False -True
100
State the formula for Retained Earnings (RE)
Retained Earnings (RE) = Beg. RE + Net Income - Dividends
100
Does the balance sheet heading specify a: period of time or point in time?
point in time
100
Which cash flow activity will be affected from a decrease in the Income Taxes Payable?
Operating
100
State the formula for Current Ratio.
Current Ratio = Current Assets / Current Liabilities
200
What is the purpose of Journal Entries?
Its purpose is to keep a day-to-day record of a business and its transactions.
200
What financial statement do you use to create the Statement of Retained Earnings?
Income Statement
200
What is the normal balance for an asset account, liability account, stockholders' equity/owner's equity accounts?
Asset: Debit Liability: Credit Equity: Credit
200
Which cash flow activity will be affected from an increase in Bonds Payable?
Financing
200
State the formula for Quick (Acid-Test) Ratio.
Quick (Acid-Test) Ratio = (Cash + Short-term invest. + Net Curr. Receiv.) / Total Curr. Liab.
300
What represents the ledger for each account in the chart of accounts?
T-Account
300
Where is the Retained Earnings recorded on the Balance Sheet?
Under Shareholders' Equity
300
If a company has $50000 in revenues, $37000 in expenses, and $3000 in dividend payments, how much does the company have in net gain or net loss?
Net gain of $23,000
300
Will an increase in the balance of Prepaid Insurance have a POSITIVE or NEGATIVE effect on cash? Explain why.
Negative, because prepaid insurance is a current asset and an increase in any asset account is assumed to have used cash.
300
What is the Current Ratio used for?
To give an idea of a company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables).
400
Indicate whether to debit or credit the change in each account: Increase in asset Decrease in expense Increase in liability Decrease in equity Increase in revenue
Increase in asset: Debit Decrease in expense: Credit Increase in liability: Credit Decrease in equity: Debit Increase in revenue: Credit
400
Define Retained Earnings.
The percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its business or to pay debt.
400
With $8600 in cash, $7000 account payable, $3000 in land, $4000 for their building, and $1700 in notes payable, how much are the total assets and total liabilities?
$15600 in total assets and $8700 in total liabilities.
400
Net Income : $200,000 Depreciation Expense: $30,000 Gain on Sale of Truck: $5,000 Proceeds from Sale of Truck: $8,000 Decrease in Accounts Receivable: $10,000 Given the data above, what amount will be reported under Cash From Investing Activities?
$8,000
400
Prof. Voyles' company has an Acid-Test ratio of 0.4. Should Wells Fargo give loans to her company? Explain why or why not.
No, because companies with ratios of less than 1 cannot even pay their current liabilities and is considered a risky investment.
500
Which financial statement(s) is/are almost always involved when adjusting entries are made?
balance sheet income statement
500
When is the Retained Earnings general ledger account adjusted?
When a journal entry is made to an income or expense account.
500
Andre Co. performed services for Client Lisa in December and billed Lisa $4,000 with terms of net 30 days. Andre follows the accrual basis of accounting. In January, Andre received the $4,000 from Lisa. What account should ABC credit in the January entry?
Accounts Receivable
500
Net Income : $100,000 Depreciation Expense: $10,000 Increase in Accounts Receivable: $30,000 Decrease in Accounts Payable: $15,000 Based on the above information, what amount will the corporation report as Cash Provided by Operating Activities on the cash flow statement?
Net Income + Depreciation Expense - Accounts Receivable - Accounts Payable = Cash provided by operating activities $100,000 + $10,000 - $30,000 - $15,000 = $65,000
500
Calculate the debt ratio of a company given the following data: Current Assets = $500; Current Liabilities = $700; Total Assets = $1600; Total Liabilities = $800; Net Income = $2400; Net Current Receivables = $300.
Total Liabilities / Total Assets $800 / $1600 = 0.5
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