ACCT 2301 Final Exam Review Part 2

If equity is $309,000 and liabilities are $190,000, then assets equal:

• $808,000.

• $309,000.

• $119,000.

• $499,000.

Answer explanation

Assets = Liabilities + Equity

Assets = $190,000 + $309,000 = $499,000.

Which of the following decreases equity:

• Accounts receivable.

• Expenses.

• Revenues.

• Assets.

Grandmark Printing pays the current month’s rent of $2,000 to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?

• Assets would decrease $2,000 and liabilities would decrease $2,000.

• Assets would increase $2,000 and equity would increase $2,000.

• Assets would decrease $2,000 and equity would decrease $2,000.

• Assets would increase $2,000 and liabilities would increase $2,000.

• Liabilities would decrease $2,000 and equity would increase $2,000.

The difference between a company's assets and its liabilities, or net assets is:

• Net loss.

• Equity

• Net income.

• Revenue.

• Expense.

A company purchased $21,500 of supplies on credit. The journal entry to record this transaction consists of a:

• Debit Supplies for $21,500; credit Accounts Payable for $21,500.

• Debit Accounts Payable for $21,500; credit Supplies for $21,500.

• Debit Cash for $21,500; credit Supplies for $21,500.

• Debit Supplies for $21,500; credit Prepaid Expense for $21,500.

• Debit Supplies for $21,500; credit Cash for $21,500.

Select the account below that normally has a credit balance.

• Cash.

• Office Equipment.

• Sales Salaries Expense.

• Notes Receivable.

• Wages Payable.

A company had the following accounts and amounts on December 31. Using this information, compute total assets for the company.

• $39,800.

• $35,300.

• $60,800.

• $58,200.

Answer explanation

Total Assets = Cash + Accounts receivable + Equipment

Total Assets = $18,400 + $16,900 + $22,900 = $58,200

Sharp Services provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries did Sharp Services make to record the billing of the customer?

• 
• 
• 
• 
• 

Identify which error will cause the trial balance to be out of balance.

• A $420 cash salary payment posted as a $420 debit to Cash and a $420 credit to Salaries Expense.

• An $1,900 prepayment from a customer for services to be rendered in the future was posted as an $1,900 debit to Unearned Revenue and an $1,900 credit to Cash.

• A $185 cash receipt from a customer in payment of her account posted as a $185 debit to Cash and a $185 credit to Cash.

• A $116 cash purchase of office supplies posted as a $116 debit to Office Equipment and a $116 credit to Cash.

• A $320 cash receipt from a customer in payment of her account posted as a $320 debit to Cash and a $32 credit to Accounts Receivable.

Fragment Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. Fragment collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made on December 31 would be:

• A debit to Unearned Revenue and a credit to Rent Revenue for $2,400.

• A debit to Unearned Revenue and a credit to Rent Revenue for $4,000.

• A debit to Rent Revenue and a credit to Cash for $2,400.

• A debit to Cash and a credit to Rent Revenue for $6,400.

• A debit to Rent Revenue and a credit to Unearned Revenue for $2,400.

Answer explanation

lease amt × current pd/total pd

$6,400 × 3/8 = $2,400 earned by December 31