Financial Transactions Analysis: Unraveling Equations and Balances in Accounting Essays

1.If equity is $338,000 and liabilities are $188,000, then assets equal:

$150,000.

$188,000.

$338,000.

$526,000.

$864,000.

2:If assets are $320,000 and liabilities are $193,000, then equity equals:

Multiple Choice

$127,000.

$193,000.

$320,000.

$513,000.

$833,000.

3.The assets of a company total $734,000; the liabilities, $217,000. What is the amount of equity?

$951,000.

$734,000.

$517,000.

$217,000.

It is impossible to determine unless the amount of the stock issuances is known.

4: On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $24,500; Accounts Receivable, $7,700; Supplies, $1,050; Equipment, $12,550; Accounts Payable, $9,800. What is the amount of stockholders’ equity as of May 31 of the current year?

$55,600.

$13,250.

$24,500.

$36,000.

$45,800.

5: Saddleback Company paid off $46,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation

Assets, $46,000 increase; equity, $46,000 increase

Assets, $46,000 decrease; liabilities, $46,000 decrease.

Assets, $46,000 decrease; liabilities, $46,000 increase.

Liabilities, $46,000 decrease; equity, $46,000 increase.

Assets, $46,000 decrease; equity $46,000 decrease.

6: If Houston Company billed a client for $11,000 of consulting work completed, the accounts receivable asset increases by $11,000 and:

Accounts payable decreases $11,000.

Accounts payable increases $11,000.

Cash increases $11,000.

Revenue increases $11,000.

Revenue decreases $11,000.

7: If the assets of a business increased $105,000 during a period of time and its liabilities increased $75,000 during the same period, equity in the business must have:

Increased $30,000.

Decreased $30,000.

Increased $105,000.

Decreased $180,000.

Increased $180,000

8: If assets are $379,000 and equity is $127,000, then liabilities are:

$127,000.

$252,000.

$379,000.

$506,000.

$631,000

9: Zippy had cash inflows from operations of $71,500; cash outflows from investing activities of $56,000; and cash inflows from financing of $34,000. The net change in cash was:

$49,500 increase.

$49,500 decrease.

$161,500 decrease.

$161,500 increase.

$18,500 decrease

10: Zapper has beginning equity of $289,000, net income of $67,000, dividends paid of $56,000 and stockholder investments of $22,000. Its ending equity is:

$255,000.

$256,000.

$300,000.

$322,000.

$390,000

11: A company reported total equity of $173,000 at the beginning of the year. The company reported $238,000 in revenues and $179,000 in expenses for the year. Liabilities at the end of the year totaled $106,000. What are the total assets of the company at the end of the year?

$59,000.

$106,000.

$126,000.

$238,000.

$338,000.

12: Dawson Electronic Services had revenues of $96,000 and expenses of $58,000 for the year. Its assets at the beginning of the year were $408,000. At the end of the year assets were worth $458,000. Calculate its return on assets.

Question 2

8.8%

9.3%.

8.3%.

23.5%.

22.2%

13: Charlie's Chocolates' had stock issuances of $54,000 and dividends of $22,000. The company has revenues of $87,000 and expenses of $66,000. Calculate its net income.

$32,000.

$87,000.

$66,000.

$21,000.

$53,000.

14: Savvy Sightseeing had beginning equity of $73,000; revenues of $93,000, expenses of $66,000, and dividends to stockholders of $9,100; there were no stock issuances. Calculate the ending equity.

$90,900.

$27,000.

$100,000.

$36,900.

$46,000.

15: A company's balance sheet shows: cash $34,000, accounts receivable $40,000, equipment $70,000, and equity $82,000. What is the amount of liabilities?$144,000.

$126,000.

$62,000.

$78,000.

$226,000

16: GreenLawn Co. provides landscaping services to clients. On May 1, a customer paid GreenLawn $68,000 for 6-months services in advance. GreenLawn’s general journal entry to record this transaction will include a:

Debit to Unearned Revenue for $68,000.

Credit to Accounts Receivable for $68,000.

Credit to Cash for $68,000.

Credit to Unearned Revenue for $68,000.

Debit to Accounts Receivable for $68,000

17: A law firm billed a client $2,600 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?

Debit Accounts Receivable, $2,600; credit Unearned Legal Fees Revenue, $2,600.

Debit Cash, $2,600; credit Unearned Legal Fees Revenue, $2,600.

Debit Legal Fees Revenue, $2,600; credit Accounts Receivable, $2,600.

Debit Accounts Receivable, $2,600; credit Legal Fees Revenue, $2,600.

Debit Cash, $2,600; credit Accounts Receivable, $2,600.

18: A law firm collected $3,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash?

Debit Accounts Receivable, $3,800; credit Unearned Legal Fees Revenue, $3,800.

Debit Cash, $3,800; credit Unearned Legal Fees Revenue, $3,800.

Debit Legal Fees Revenue, $3,800; credit Accounts Receivable, $3,800.

Debit Accounts Receivable, $3,800; credit Legal Fees Revenue, $3,800.

Debit Cash, $3,800; credit Accounts Receivable, $3,800.

19: Specter Consulting purchased $8,900 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

Multiple Choice

Accounts Payable 8,900  

Supplies 8,900

Cash 8,900  

Supplies 8,900

Supplies 8,900  

Cash 8,900

Supplies 8,900  

Accounts Payable 8,900

Supplies Expense 8,900  

Accounts Payable 8,900

20: Adriana Graphic Design receives $2,100 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?

Question 3

Cash 2,100  

Accounts Receivable 2,100

Cash 2,100  

Unearned Design Revenue 2,100

Accounts Receivable 2,100  

Unearned Design Revenue 2,100

Accounts Payable 2,100  

Design Revenue 2,100

Accounts Receivable 2,100  

Cash 2,100

21: On May 31, the Cash account of Tesla had a normal balance of $5,100. During May, the account was debited for a total of $12,300 and credited for a total of $11,600. What was the balance in the Cash account at the beginning of May?

A $0 balance.

A $5,800 debit balance.

A $5,800 credit balance.

A $4,400 debit balance.

A $4,400 credit balance.

22: On April 30, Gomez Services had an Accounts Receivable balance of $24,600. During the month of May, total credits to Accounts Receivable were $59,200 from customer payments. The May 31 Accounts Receivable balance was $19,000. What was the amount of credit sales during May?

$5,600.

$53,600.

$59,200.

$64,800.

$36,800.

23: he following transactions occurred during July:

1.Received $1,050 cash for services provided to a customer during July.

2.Issued common stock for $5,000 cash.

3.Received $900 from a customer in partial payment of his account receivable which arose from sales in June.

4.Provided services to a customer on credit, $525.

5.Borrowed $7,500 from the bank by signing a promissory note.

6.Received $1,400 cash from a customer for services to be performed next year.

What was the amount of revenue for July?

$1,050.

$1,575.

$2,975.

$3,875.

$15,850.

24: Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:

1.Andrea invested $15,100 cash in the business in exchange for common stock.

2.Andrea contributed $36,000 of photography equipment to the business.

3.The company paid $3,700 cash for an insurance policy covering the next 24 months.

4.The company received $7,300 cash for services provided during January.

5.The company purchased $7,800 of office equipment on credit.

6.The company provided $4,350 of services to customers on account.

7.The company paid cash of $3,100 for monthly rent.

8.The company paid $4,700 on the office equipment purchased in transaction #5 above.

9.Paid $435 cash for January utilities

Based on this information, the balance in the cash account at the end of January would be:

$62,250.

$10,465.

$23,500.

$18,450.

$14,815.

25: Centurion Co. had the following accounts and balances at December 31:

Account Debit Credit

Cash $ 10,900  

Accounts Receivable 2,180  

Prepaid Insurance 2,760  

Question 4

Supplies 1,180  

Accounts Payable $ 5,450  

Common Stock 5,440  

Service Revenue 7,900  

Salaries Expense 590  

Utilities Expense 1,180  

Totals $ 18,790 $ 18,790  

Using the information in the table, calculate the company's reported net income for the period.

$1,280.

$4,270.

$4,860

$11,480.

$6,130.

26: A bookkeeper has debited an asset account for $4,900 and credited a liability account for $2,700. Which of the following would be an incorrect way to complete the recording of this transaction:

Credit another asset account for $2,200.

Credit another liability account for $2,200.

Credit a revenue account for $2,200.

Credit the common stock account for $2,200.

Debit another asset account for $2,200.

27: A $26 credit to Sales was posted as a $260 credit. By what amount is the Sales account in error?

$260 understated.

$234 overstated.

$260 overstated.

$26 understated.

$234 understated

28: At year-end, a trial balance showed total credits exceeding total debits by $6,000. This difference could have been caused by:

An error in the general journal where a $6,000 increase in Accounts Receivable was recorded as an increase in Cash.

A net income of $6,000.

The balance of $60,000 in Accounts Payable being entered in the trial balance as $6,000.

The balance of $6,760 in the Office Equipment account being entered on the trial balance as a debit of $760.

An error in the general journal where a $6,000 increase in Accounts Payable was recorded as a decrease in Accounts Payable

29: A $190 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Supplies, understated $190; Fees Earned, overstated $190.

Supplies, understated $380; Fees Earned, overstated $190.

Supplies, overstated $190; Fees Earned, overstated $190.

Supplies, overstated $190; Fees Earned, understated $190.

Supplies, overstated $380; Fees Earned, understated $190.

30: Jeff Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred:

1.Jackson invested $43,000 cash in the business in exchange for common stock.

2.Jackson contributed $118,000 of equipment to the business.

3.The company paid $3,800 cash to rent office space for the month of March.

4.The company received $34,000 cash for repair services provided during March.

5.The company paid $8,000 for salaries for the month of March.

6.The company provided $4,800 of services to customers on account.

7.The company paid cash of $2,300 for utilities for the month of March.

8.The company received $4,900 cash in advance from a customer for repair services to be provided in April.

9.The company paid $6,800 in cash dividends.

Based on this information, net income for March would be:

$24,700.

$31,400.

$7,100.

$6,600.

$31,500