Current Assets Chapter 2
The Kelly Company purchased a building for $75,000 in cash. What is the effect on current assets?
- Increase in current assets
- Decrease in current assets
- No effect on current assets
- Unable to determine
Current Assets Chapter 2
Effect on the Current Ratio Chapter 2
A company had $250,000 of current assets and $90,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of the company’s current ratio?
- No effect
- Increase
- Decrease
- Cannot be determined
Retained Earnings Chapter 2
Which of the following would increase retained earnings?
- an increase to an expense account.
- an increase to a revenue account.
- a cash dividend being declared and paid to stockholders.
- issuance of additional shares of common stock.
T/F: T-Account Logic Chapter 2
A T-account shows total debits of $26,000 and total credits of $20,000; therefore, it has a $6,000 debit balance.
True / False?
Solving for Missing Amounts Chapter 2
A company had the following account balances at the end of its first year of operations. Find the missing amounts.
| Cash | 1,300 | Accounts receivable | ? |
| Inventory | 400 | Property and equipment | 1200 |
| Accounts payable | 500 | Salaries payable | 800 |
| Common Stock | 1475 | Retained earnings | 525 |
| Revenue | 2500 | Expenses | ? |
| Net Income | 570 | Dividends | ? |
- Determine Accounts Receivable
- Determine Expenses
- Determine Dividends
The Effect of Journal Entries Chapter 2
For each transaction, select the two effects it will have.
| Transaction | Effect 1 | Effect 2 | |
|---|---|---|---|
| 1 | Provided services and received cash | ||
| 2 | Provided services on account | ||
| 3 | Received payment from customers on account | ||
| 4 | Received payment in advance from customers | ||
| 5 | Paid wages earned this week | ||
| 6 | Paid 6 month’s rent in advance | ||
| 7 | Borrowed cash from the bank and signed a note | ||
| 8 | Loaned cash to employee who signed a note | ||
| 9 | Purchased equipment with cash | ||
| 10 | Purchases supplies on account | ||
| 11 | Received cash and issued stock | ||
| 12 | Paid for supplies bought earlier on account | ||
| 13 | Paid dividends to stockholders |
Account Classifications Chapter 2
| Accounts payable | $12,000 | Accounts Receivable | 20,900 |
| Furniture | 5,000 | Accumulated Depreciation | 6,500 |
| Building | 82,000 | Cash | 21,500 |
| Common Stock | ? | Sales Revenue | 90,700 |
| Cost of Goods Sold | 51,500 | Depreciation Expense | 1,450 |
| Dividends | 6,600 | Note Payable (due 3/1 Year 4) | 20,000 |
| Marketable Securities | 1,400 | Prepaid Expenses | 18,000 |
| Salaries Payable | 2,800 | Land | 38,000 |
| Note Payable (due 5/30 Year 2) | 12,400 | Service Revenue | 22,550 |
| Retained Earnings (1/1 Year 1 ) | 39,700 | Salary Expense | 18,000 |
| Accrued Expenses Payable | 1,500 | Unearned Revenue | 30,500 |
| Utilities Expense | 5,400 |
- Determine Total assets on December 31, Year 1
- Determine Current Liabilities on December 31, Year 1
- Determine Net Income for the year ended December 31, Year 1
- Determine the total amount of Common Stock on December 31, Year 1