Exam 2: Accounting for Accruals and Deferrals

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash \ 2,200 Accounts receivable \1 ,150 Dividends 1,100 common stock 1,575 Land 1,400 Revenue 1,400 Accounts payable 750 Expense 850 What is net income that will be shown on Carolina's Year 1 income statement?

For each of the following transactions, indicate the type by entering AS for asset source transactions, AU for asset use transactions, AE for asset exchange transactions, and CE for claims exchange transactions.Paid $2,000 in dividends to its stockholders.Recorded the accrual of $1,000 in salaries to be paid later.Issued common stock for $20,000 in cash.Earned revenue to be collected next year.Paid the salaries accrued in number 2 above.Received cash from customers in number 4 above.Purchased supplies on account.Received $500 from a customer for services to be provided later.

If retained earnings decreased during the year, and no dividends were paid, which of the following must be true?

Revenue on account amounted to $4,200. Cash collections of accounts receivable amounted to $2,450. Expenses for the period were $2,200. The company paid dividends of $500. What was the amount of net income for the period?

Maggie Stern started a consulting business, Stern Consulting, on January 1, Year 1 by issuing $9,000 of common stock. In addition, the following events occurred in Year 1:Provided services on account, $27,500Paid cash for $13,500 in operating expensesCollected $11,000 of the revenue that was previously recorded on accountPaid a cash dividend of $5,000 to the stockholdersRequired:Show the effects of the above transactions on the accounting equation.

How will accounts receivable appear on the following financial statements?

Grant Helton started a consulting business, Grant Consulting, on January 1, Year 1, and the business engaged in the following transactions during the year:Issued $40,000 of common stock for cashProvided services on account, $46,500Incurred $37,500 of operating expense, but only paid $32,000 of this amountCollected $39,000 of the revenue that was previously recorded on accountPaid a cash dividend of $4,000 to the stockholdersRequired:Show the effects of the above transactions on the accounting equation.

How will accounts payable appear on the following financial statements?

Bledsoe Company received $17,000 cash from the issue of stock on January 1, Year 1. During Year 1, Bledsoe earned $8,500 of revenue on account. The company collected $6,000 cash from accounts receivable and paid $5,400 cash for operating expenses. Based on this information alone, during Year 1, which of the following statements is true?

The term "accrual" describes an earnings event that is recognized before cash is paid or received.

Accrual-basis accounting often fails to match expenses with revenues.

Turner Company started its business by issuing $10,000 of common stock on January 1, Year 1. The company performed $38,000 of service for customers on account in Year 1. It collected $32,500 of this amount in Year 1, recorded expenses on account of $29,500, paid $21,000 of the payables owed, and paid a $500 dividend to the stockholders.Required:What is the amount of total assets at the end of Year 1?What is the amount of cash on hand at the end of Year 1?What is the net income for Year 1?Prepare a balance sheet for Year 1.

Mary Company collected cash from an account receivable. Which of the following financial statements are affected by this accounting event?

The temporary accounts are closed prior to the start of the next accounting cycle. In this closing process, the amounts in each of these accounts are transferred to what other account(s)?

Jason Company paid $5,400 for one year's rent in advance beginning on October 1, Year 1. Jason's Year 1 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

Which of the following financial statement elements is closed at the end of an accounting cycle?

Revenue on account amounted to $5,000. Cash collections of accounts receivable amounted to $2,300. Expenses for the period were $2,100. The company paid dividends of $450. What was the amount of net income for the period?

When is revenue recognized under accrual accounting?

When are expenses recognized under accrual accounting in relation to the payment of cash?

What is the effect on the accounting equation of a cash payment to creditors?