Exam 1 Review

Prepaid Expenses will appear on the income statement and will decrease Net Income.

• True

• False

When we purchase supplies on account, we will be crediting Accounts Receivable.

• True

• False

Adjusting journal entries adjust for timing differences across periods.

• True

• False

Merchandising companies recognize and incur costs at separate points within their operating cycle.

• True

• False

If our Revenues are $1,450, Expenses are $1,600, Dividends are $200, and our beginning balance for Retained Earnings is $1,300, then our ending Retained Earnings will be:

• $1,650

• $1,250

• $1,350

• $950

The definition of accounting is:

• Accounting is a process used to record economic activities of an organization in order to generate reports for use by administration.

• Accounting is a process used to record economic activities of an organization in order to generate reports for use by decision makers.

• Accounting is a process used to record financial activities of an organization in order to generate reports for use by decision makers.

• Accounting is a process used to record economic activities of an organization in order to generate statements for use by decision makers.

Which of these could be a long-term investment asset?

• Land held to be sold

• Stocks held by a day trader

• Patents

• Bonds payable

Company X had the following items on its balance sheet:

Cash: $1,200. Accounts Receivable: $400.

Supplies: $200. Buildings: $10,000.

Goodwill: $1,000. Accounts Payable $300.

Unearned Revenues: $500. Bonds Payable: $1,300.

Mortgage Payable $9,000.

• 1.15:1

• 0.85:1

• 1.75:1

• 2.25:1

Which of the following events is not recorded in the accounting records?

• Equipment is purchased on account

• An employee is terminated

• A cash investment is made into the business

• Company pays dividends to stockholders

During 2023, a company's assets decreased by $50,000 and its liabilities decreased by $90,000. Its stockholders' equity therefore:

• Increased by $40,000

• Decreased by $140,000

• Decreased by $40,000

• Increased by $140,000