AC 211

During June, the Grass is Greener company mows 100 lawns a week; the company bills customers and full payment is due by July 15. The company uses the accrual basis of accounting. How will these events affect the company's financial statements?

• In July, a liability will decrease and a revenue account will increase

• In June, an asset and a liability account both increase

• In July, an asset account will increase and a liability will decrease

• In June, an asset and a revenue account will both increase

During its first year of operations, a company enters into the following transactions:

• - Borrowed $20,000 from the bank by signing a promissory note

• - Issued stock to owners for $40,000

• - Purchased $4,000 of supplies on account

• - Paid $1,600 to supplies as payment on account for the supplies purchased

• What is the total amount of LIABILITIES at the end of the year?

• $22,400

• $62,400

• $64,000

• $24,000

Board building company redeemed $3,850 of gift cards previously purchased that customers now used to pay for services that were performed by the company. The related adjusting entry would include a debit to:

• Accounts receivable and a credit to Service revenue

• Cash and a credit to deferred revenue

• Deferred revenue and a credit to service revenue

• Cash and a credit to service revenue

When Blendtek company performs $980 of services on account for a customer, Blendtek will record a journal entry with a debit to:

• Service revenue and a credit to deferred revenue

• Cash and a credit to accounts receivable

• Accounts receivable and a credit to service revenue

• Cash and a credit to accounts payable

Puffin company began the year with assets of $120,000 and liabilities of $90,000. During the year assets increased by $14,400 and liabilities decreased by $10,800. What is the amount of the change in Puffin's stockholders' equity during the year?

• $25,200 decrease

• $3,600 increase

• $25,200 increase

• $3,600 decrease

What is the effect of the adjusting entry for depreciation on the accounting records?

• Decrease assets, decrease liabilities, no effect on net income

• No effect on assets, decrease liabilities, increase net income

• Increase assets, no effect on liabilities, increase net income

• Decrease assets, no effect on liabilities, decrease net income

Baldwin Company purchased equipment for $420,000 and planned to use it when the company expanded one of its product lines. However, six months later, the company changed its plans and sold the equipment to Stick, Inc. for $420,000. Stick signed a note for $420,000 that is due in 60 days. The journal entry prepared by Baldwin Company to record the sale of the equipment would include which of the following?

• Credit to equipment

• Credit to notes payable

• Debit to cash

• Debit to accounts payable

When employees work for a company in June but are not paid until July, the June financial statements will include ________ on the ________.

• Salaries and Wages payable; balance sheet

• Prepaid Salaries and Wages; balance sheet

• Prepaid salaries and wages; income statements

• Salaries and Wages Payable; income statement

In January, the Huntington Beach Resort (HBR) accepts your reservation and receives your $2,000 payment for a week of sun and fun in California during spring break. In January, HBR will record a journal entry that includes a debit to:

• Cash and a credit to service revenue

• Accounts payable and a credit to service revenue

• Cash and a credit to deferred revenue

• Service revenue and a credit to cash

During the month, a company uses up $4,000 of supplies. At the end of the month, the related adjusting journal entry would result in a(n)?

• Decrease in an asset and an equal increase in expenses

• Increase in an asset and a decrease in expenses

• Increase in an asset and an equal increases in expenses

• Decrease in an asset and an equal decrease in expenses