Chapter 1 & 2
Which of the following do not belong in the balance sheet?
Retained earning
Common stock
Notes payable
Bonds payable
Dividends
Dividends
Which of the following is not an adjustment?
a. Prepaying rent
b. Collecting cash for AR
c. Collecting cash in advance for a service
d. Recording a S & W expense to be paid late
b. Collecting cash for AR
True or false: The main purpose of internal controls is to help eliminate mistakes and calculation based errors.
False
How do we record the issuance of common stock ?
Debit Cash
Credit Common stock
On September 1, Year 1, Orion Co. paid $2,400 for a 12-month insurance policy. Orion prepares financial statements on December 31 each year.
What amount of insurance expense should Orion report on its Year 1 income statement?
A. $400
B. $800
C. $1,200
D. $2,400
B. $800
Which of the following is not a part of the fraud triangle?
Mistatement
Opportunity
Desire/motivation
Rationalization
Mistatement
We started off with no supplies. On Aug. 1 purchased 10,000 worth of supplies. By dec. 31 we had 3,100 left on hand. What journal entry would be required at year end?
Debit Supplies exp 6,900
Credit Supplies 6,900
On November 1, Year 1, Atlas Corp. paid $9,600 for 12 months of rent in advance.
How much rent expense should Atlas recognize in Year 1 under accrual accounting?
A. $800
B. $1,600
C. $2,400
D. $9,600
B. $1,600
Which procedure identifies and anaylyzes external and internal risk factors?
Control environment
Risk assessment
Monitoring
Control activies
Risk assessment
Prior to closing the accounts, Falcon Company reports the following balances at December 31:
Retained Earnings (beginning): $48,500
Service Revenue: $62,800
Interest Revenue: $2,200
Salaries Expense: $31,600
Rent Expense: $8,900
Utilities Expense: $2,300
Interest Expense: $1,400
Dividends: $6,700
After closing all temporary accounts, what will be Falcon Company’s ending Retained Earnings?
A. $62,600
B. $64,600
C. $65,900
D. $67,300
A. $62,600
On October 1, Year 1, Nova Services received $15,000 cash for services to be provided evenly over 10 months. The company recorded the entire amount as Unearned Revenue.
At December 31, Year 1, what adjusting entry amount should be recognized as Service Revenue?
A. $3,000
B. $4,500
C. $6,000
D. $9,000
B. $4,500
Name the three seperation of duties
Cash: Authorization, handling, recording
On June 1, 2025 a company takes out a 10 month loan for 20,000 at an interest rate of 6%. Record the following:
a. Journal entry on June 1
b. Adj. entry on year end 2025
c. What is the total amount of interest exp. to be paid in 2026?
a. Cash 20,000
Notes Payable 20,000
b. Int. Exp 700
Int. payable 700
c. 300
A company pays employees every two weeks. The last payday was Friday, March 7, and the next payday will be Friday, March 21. Employees earn total salaries of $6,000 per five-day workweek ($1,200 per business day).
When preparing financial statements on March 15 (Sunday), how much should the company accrue for salaries earned but not yet paid?
Salaries Payable — Increase | Salaries Expense — Increase
A. $12,000 | $12,000
B. $6,000 | $6,000
C. $4,800 | $4,800
D. $3,600 | $3,600
D. $3,600 | $3,600
Name the three types of cashflows and give an example of each
Financing, invetsting, operating