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    Company management is responsible for preparing a company's financial statements. Assets listed are cash, prepaid rent, and retained earnings. Ending retained earnings is 50. Transactions that violate the balance sheet equation are increasing revenues and reducing a liability or increasing an expense. Liabilities listed are salaries payable and employment contracts. Accounts that would be increased with a credit are additional paid-in capital, inventory, and notes payable. The journal entry that represents paying cash to reduce a liability is decreasing cash and reducing notes payable.

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    Company management is responsible for preparing a company's financial statements. Assets listed are cash, prepaid rent, and retained earnings. Ending retained earnings is 50. Transactions that violate the balance sheet equation are increasing revenues and reducing a liability or increasing an expense. Liabilities listed are salaries payable and employment contracts. Accounts that would be increased with a credit are additional paid-in capital, inventory, and notes payable. The journal entry that represents paying cash to reduce a liability is decreasing cash and reducing notes payable.

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    77 views4 pages

    Hyi

    Uploaded by

    Sirius Black
    Company management is responsible for preparing a company's financial statements. Assets listed are cash, prepaid rent, and retained earnings. Ending retained earnings is 50. Transactions that violate the balance sheet equation are increasing revenues and reducing a liability or increasing an expense. Liabilities listed are salaries payable and employment contracts. Accounts that would be increased with a credit are additional paid-in capital, inventory, and notes payable. The journal entry that represents paying cash to reduce a liability is decreasing cash and reducing notes payable.

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    of 4

    Question 1

    Who is responsible for preparing a company’s financial statements?


    Company management
    The company's tax department
    The Financial Accounting Standards Board
    The company's external auditor
    The audit committee of the Board of D irectors

    Question 2
    Which of the following is an asset? (check all that apply)
    Common Stock
    Retained Earnings

    Cash
    Prepaid Rent
    Notes Payable

    Question 3
    What are Ending Retained Earnings in the table below?

    Total Assets 300


    Total Liabilities 120

    Total Stockholders’ Equity


    Beginning Retained Earnings 30
    Ending Retained Earnings ?

    Dividends 10
    Revenues 190
    Expenses 140
    Net Income

    Cash 50

    Not enough information


    20
    70
    50
    -20

    Question 4
    Which of the following transactions violates the balance sheet equation? (check all that apply)
    Reduce cash and reduce a liability
    Increase cash and increase an expense
    Increase cash and reduce inventory (a n on-cash asset)
    Increase revenues and reduce a liability
    Increase cash and reduce a liability

    Question 5
    Which of the following are liabilities? (check all that apply)
    Salaries Payable
    Retained Earnings
    Prepaid Rent
    Common Stock
    Employment Contracts

    Question 6
    Which of the following accounts would be increased with a Credit? (check all that apply)
    Additional Paid-in Capital
    Revenue
    Inventory
    Prepaid Rent
    Notes Payable

    Question 7
    Which of these journal entries represent paying cash to reduce a liability? (check all that apply)

    Dr. Cash 1000

    Cr. Notes Payable 1000

    Dr. Land 100

    Cr. Cash 100

    Dr. Income Taxes Payable 500

    Cr. Cash 500

    Dr. Cash 300

    Cr. Accounts Payable 300

    Dr. Retained Earnings 500

    Cr. Cash 500

    Question 8
    Which journal entry reflects the following transaction?:

    BOC sold 10,000 shares of $1 par value stock to investors for $5 per share.

    Dr. Common Stock 10,000


    Dr. Additional Paid-in Capital 40,000

    Cr. Cash 50,000

    Dr. Cash 10,000

    Cr. Common Stock 10,000

    Dr. Cash 50,000


    Dr. Cash 3,000
    Cr. Prepaid Rent 3,000

    Dr. Cash 3,000


    Cr. Rent Expense 3,000

    Dr. Prepaid Rent 3,000


    Cr. Cash 3,000

    Dr. Rent Revenue 3,000


    Cr. Cash 3,000

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