Intermediate Accounting Exam 1- Chapter 1 Problem Set Exam

The financial statement that reports assets, liabilities, and owners' equity is the - ANS balance sheet If liabilities total $150,000 and owners' equity totals $50,000, the assets must total - ANS 200,000 Compute net income: Sales revenue $10,000, Wage expense $4,000, Accounts payable $1,000 and Utilities expense $2,000 - ANS 4,000 Compute total assets: Cash $10,000, Accounts receivable $3,000, Accounts payable $4,000, and Equipment $20,000 - ANS 33,000 Which is the logical order in which to construct the financial statements? - ANS income statement, retained earnings, balance sheet The income statement shows information for a point in time such as the end of the business day on December 31, 2015 T or F - ANS false The balance sheet shows information for an entire year such as the year ending December 31, 2015 T or F - ANS false Sales less what equals Gross Margin or Gross Profit - ANS Cost of goods sold Given the following account balances, prepare an income statement. Show Gross Margin, Income Before Taxes and Net Income General and Administrative Expenses $20,000 Sales $120,000 Taxes $15,000 Marketing Expense $5,000 Cost of Goods Sold $50,000 - ANS Gross Margin - (sales - cogs) * 70,000 Income Before Taxes - (Gross Margin - expenses) * (70,000 - 20,000 - 5,000) = 45,000 Net Income (Income before taxes - taxes) * 45,000 - 15,000 = 30,000 Assets will always equal liabilities plus owners' equity T or F - ANS True A company sells furniture to a customer for $10,000 in September. The customer is going to pay for the furniture in October. In which month should the company record sales? - ANS September If beginning stockholders' equity = $50,000 and the following transactions occur during the fiscal year, what is ending stockholders' equity • Net income was $10,000 • Dividends declared were $1,000 • Accounts receivable collected were $4,000 • Common stock was issued for a total of $12,000 • A delivery truck was purchased for $25,000 cash Ending Stockholders' Equity = __________________ - ANS SE + CS + Revenues + Retained Earnings - Expenses - Dividends - (50,000 + 10,000 -1,000 + 12,000) = 71,000 Suppose: Assets = $20,000, Liabilities = $5,000, and Stockholders' Equity = $15,000 *What will those accounts balances equal after the following transaction: *A customer pays $5,000 to the company to satisfy an accounts receivable invoice* - ANS A = 20,000 L = 5,000 SE = 15,000 * (D) Cash 5,000 (C) A/R 5,000 - entries cancel each other out The amount of net income for a company can be calculated by taking the difference between the beginning and ending cash account for the fiscal year. T or F - ANS False Suppose: Assets = $20,000, Liabilities = $5,000, and Stockholders' Equity = $15,000 *What will those accounts balances equal after the following transaction: *A customer pays $2,000 in advance for some design work that the company will perform in 3 months* - ANS A = 22,000 L = 7,000 SE = 15,000 * (D) Cash 2,000 (C) Unearned revenue 2,000 - increases asset account and increases liability account