Account Detective
Cash, Accounts Receivable, and Equipment are all examples of what type of account?
Assets
A company issues Common Stock to owners and receives $5,000. Which two accounts are affected and how do they impact the accounting equation?
Cash and Common Stock
Assets increase and Stockholders' Equity increases
A company incurs an expense before cash is paid. Is the required adjusting entry a prepayment or an accrual?
Accrual
Revenues: $3500, Utilities Expense: $300, Rent Expense: $1000, Salaries Expense: $1200, Interest Expense: $100. Calculate Net Income.
Net Income = $900
Which 3 types of accounts are temporary? What do they get closed to?
Revenues, Expenses, and Dividends get closed to Retained Earnings
Credit or debit: What kind of balance does Service Revenue hold?
Credit
A company borrows $3,000 from a bank and signs a note to repay it later. For each account affected, state whether it increases or decreases.
Cash increases and Notes Payable increases
At the end of the month, employees have earned $800 but will not be paid until next month. What two accounts are included in the adjusting journal entry?
Salaries Expense and Salaries Payable
After net income is calculated on the Income Statement, which financial statement uses it to help calculate ending Retained Earnings?
Statement of Stockholders' Equity
Put these three financial statements into the order that they are prepared: Balance Sheet, Income Statement, Statement of Stockholders' Equity.
1. Income Statement 2. Statement of Stockholders' Equity 3. Balance Sheet
What is Deferred Revenue and what type of account is it?
Deferred revenue is a liability that arises when a customer has paid in advance for a good or service, but the company still has an obligation to provide that good or service (cannot recognize revenue yet).
At year-end, a company determines that $600 of depreciation expense should be recorded for its equipment. Prepare the adjusting journal entry and identify the types of accounts used.
Depreciation Expense 600
Accumulated Depreciation 600
Accumulated Depreciation is a contra-asset account, credited to reduce the net carrying amount of Equipment on the balance sheet.
On December 1, a company paid $2,400 cash for six months of rent in advance. What adjusting entry is needed on December 31?
Rent Expense 400
Prepaid Rent 400
After ending Retained Earnings is calculated on the Statement of Stockholders' Equity, on which financial statement is that ending balance reported?
Balance Sheet
What is the journal entry for closing a Service Revenue account with a $2,000 credit balance?
Service Revenue 2,000
Retained Earnings 2,000
Are accounts receivable and accounts payable current or long-term accounts?
Current
A company provides $1,500 of services to a customer on account. Prepare the journal entry and identify the effect on stockholders' equity.
Accounts Receivable 1,500
Service Revenue 1,500
On December 20, a customer paid $1,000 in advance for services. By December 31, the company had provided $750 of the services. Prepare the adjusting entry.
Deferred Revenue 750
Service Revenue 750
A company has a beginning retained earnings balance of $9000. At year end, they report a net loss of $700. What is their ending retained earnings?
$8300
At year end, Supplies Expense has a $900 balance and Salaries Expense has a $1,600 balance. Prepare the closing entry for expenses.
Retained Earnings 2,500
Supplies Expense 900
Salaries Expense 1,600
What type of account is Interest Payable and is it current or long term?
Current liability
Earlier this month, a company provided $900 of services on account. Today, the customer pays the $900 owed. Prepare today's journal entry. Does today's transaction create additional revenue?
Cash 900
Accounts Receivable 900
No, the revenue was recorded when the services were provided. Today's transaction simply records the company's collection of its receivable.
On April 1, a company borrowed $12,000 by signing a 9% note payable. Interest and principal will be paid on March 31 of the following year. Prepare the adjusting entry required on December 31.
Interest Expense 810
Interest Payable 810
Retained Earnings at the beginning of the year held a balance of $5000. Throughout the year, the company earned net income of $400, and paid dividends of $200. What is the balance of Retained Earnings at the end of the year?
$5200
Prepare all required closing entries using these adjusted trial balance amounts: Service Revenue: $12,000 credit, Rent Expense: $2,000 debit, Salaries Expense: $3,500 debit, Utilities Expense: $500 debit, and Dividends: $1,000 debit.
Service Revenue 12,000
Retained Earnings 12,000
Retained Earnings 7,000
Rent Expense 2,000
Salaries Expense 3,500
Utilities Expense 500
Dividends 1,000