ACC 201 Module 2 – Exam 1 – Chapters 1, 2 & 3 (2014)

ACC 201 JUNE – AUG 2014 (1))Assignment – Module 2 – Exam 1 – Chapters 1, 2 & 31.Generally Accepted Accounting Principles:Focus on the review of a situation.Do not require financial statements.Never change. Intend to make information on the financial statements relevant, reliable, and comparable.Oversees Security and Exchange Commission.2. A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000, and purchased for $137,000. The land should be recorded in the purchaser’s books at:$95,000$137,000$138,500$140,000 $150,0003. Operating activities:Are the means organizations must use to pay for resources like land, buildings, and equipment. Involve using resources to research, develop, purchase, produce, distribute, and market products and services.Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.Are also called asset management.Are also called strategic management.4.Unearned revenues are:Revenues that have been earned and received in cash.Revenues that have been earned but not yet collected in cash. Liabilities created when a customer pays in advance for products or services before the revenue is earned.Recorded as an asset in the accounting records.Increases to retained earnings.5. Prepaid expenses are:Payments made for products and services that do not ever expire.Classified as liabilities on the balance sheet.Decreases in retained earnings. Assets that represent prepayments of future expenses.Promises of payments by customers.6. A debit is used to record:A decrease in an asset account.A decrease in an expense account.An increase in a revenue account.An increase in the balance of common stock. A decrease in the balance of retained earnings.7.Adjusting entries:Affect only income statement accounts.Affect only balance sheet accounts. Affect both income statement and balance sheet accounts.Affect only cash flow statement accounts.Affect only equity accounts.8.Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:Items that require contra accounts. Items that require adjusting entries.Asset and equity.Asset accounts.Income statement accounts9. A classified balance sheet:Measures a company’s ability to pay its bills on time. Organizes assets and liabilities into important subgroups.Presents revenues, expenses, and net income.Reports operating, investing, and financing activities.Reports the effect of profit and dividends on retained earnings10. The asset section of a classified balance sheet usually includes: Current assets, investments, plant assets, and intangible assets.Current assets, long-term assets, revenues, and intangible assets.Current assets, investments, plant assets, and equity.Current liabilities, investments, plant assets, and intangible assets.Current assets, liabilities, plant assets, and intangible assets.11.On October 1, Keisha King organized Real Answers, a new consulting firm; On October 3, the owner contributed $68,370 cash. On October 31, the company’s records show the following items and amounts. Cash $ 10,000 Cash dividends $ 2,000 Accounts receivable 14,000 Consulting fees earned 16,000 Office supplies 21,250 Rent expense 2,880 Land 46,000 Salaries expense 6,400 Office equipment 18,000 Telephone expense 760 Accounts payable 37,500 Miscellaneous expenses 580 Common stock 68,370 ________________________________________ Using the above information prepare an October income statement for the business.12. Following are the transactions of a new company called Pose for Pics. Aug. 1 Madison Harris, the owner, invested $11,500 cash and $49,450 of photography equipment in the company in exchange for common stock.2 The company paid $3,800 cash for an insurance policy covering the next 24 months.5 The company purchased office supplies for $2,185 cash.20 The company received $3,900 cash in photography fees earned.31 The company paid $879 cash for August utilities. Prepare general journal entries for the above transactions.13.a. One-third of the work related to $15,000 cash received in advance is performed this period.b. Wages of $6,000 are earned by workers but not paid as of December 31, 2013.c. Depreciation on the company’s equipment for 2013 is $11,800.d. The Office Supplies account had a $370 debit balance on December 31, 2012. During 2013, $4,886 of office supplies are purchased. A physical count of supplies at December 31, 2013, shows $539 of supplies available.e. The Prepaid Insurance account had a $5,000 balance on December 31, 2012. An analysis of insurance policies shows that $2,600 of unexpired insurance benefits remain at December 31, 2013.f. The company has earned (but not recorded) $700 of interest from investments in CDs for the year ended December 31, 2013. The interest revenue will be received on January 10, 2014.g. The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31, 2013. The company must pay the interest on January 2, 2014. For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2013. (Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.)14. Following are Nintendo’s revenue and expense accounts for a recent calendar year. Net sales Â¥ 1,998,622 Cost of sales 1,554,981 Advertising expense 118,008 Other expense, net 398,244 ________________________________________Prepare the company’s closing entries for its revenues and its expenses.