Exam 1 - Financial Accounting 2023 graded A+ with answers 100% verified

1. If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have: - Increased $22,000 Identify the statement below that is true: - The trial balance is a list of all accounts from the ledger with their balances at a point in time. On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable $7,250; Supplies $650; Equipment $12,000; Accounts Payable $9,300. What is the amount of equity as of May 31 of the current year? - $31,100 If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be: - Equity decreases $4,500 and liabilities increase $4,500 The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is: - Accrual basis accounting The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect? - Equipment was purchased on credit Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? - Assets increase by $75,000 and liabilities increase by $75,000 On December 31, Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage beginning on that date. The adjusting entry needed on December 31 is: - Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000 If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is: - Debit Unearned Legal Fees and credit Legal Fees Earned The adjusting entry to record an accrued expense is: - Increase an expense; increase a liability The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the: - Revenue recognition principle The right side of a T-account is a(n): - Credit During the month of February, Victor Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance? - $2,900 At the end of its first month of operations, Michael's Consulting Services reported net income of $25,000. They also had account balances of: Cash $18,000; Office Supplies $2,000; Accounts Receivables $10,000. The sole stockholder's total investment in exchange for common stock for this first month was $5,000. There were no dividends in the first month. Calculate the amount of total equity to be reported on the balance sheet at the end of the month. - $30,000 What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250? - Debit Insurance Expense $4,500; credit Prepaid Insurance $4,500 Identify the accounts that would normally have balances in the credit column of a business's trial balance. - Revenues and liabilities Which of the following does not affect the equity of a business? - Unearned Revenues Revenues are: - The increase in equity from a company's sales of products and services. The chronological record of each complete transaction that has occurred in a business is called the: - Journal