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Exam 2: Analyzing Business Transactions

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Question 41

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At the end of the first month of operations for SloMo Delivery Service, the business had the following accounts: Accounts Receivable, $11,350; Prepaid Insurance, $400; Equipment, $26,200 and Cash, $21,650. On the same date, SloMo owed the following creditors: Simpson Supply Company, $17,000; Allen Office Equipment, $14,500. The total amount of Liabilities is:

A) $17,000.
B) $14,500.
C) $28,100.
D) $31,500.

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Question 42

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A withdrawal of funds by the owner for personal use is considered a business expense.

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Question 43

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The Statement of Owner's Equity is calculated as follows:

Assets always equal debts of the business plus the financial interest of the owner.

When cash is paid to a creditor, the firm's liabilities decrease.

Which of the following equations is the Fundamental Accounting Equation?

An Income Statement is all of the following except:

The ________ reports the changes that have occurred in the owner's financial interest during the accounting period.

Assets and liabilities are reported on:

The three-line heading of a financial statement shows who, what, and ________.

If the income statement covered a six-month period ending on November 30, 2019, the third line of the income statement heading would read:

The following information should be used for questions. The transactions listed below took place at the Mitchell Advertising Agency. These transactions affected the following accounts. Indicate the accounts affected and use plus and minus to show the changes caused by each transaction. $\begin{array}{|l|l|}\hline \text { Cash } & \text { K. Mitchell, Capital } \\\hline \text { Accounts Receivable } & \text { Revenue } \\\hline \text { Equipment } & \text { Expenses } \\\hline \text { Accounts Payable } & \\\hline\end{array}$ -Purchased a computer for cash

A company has assets of $56,320 and liabilities of $29,500. The owner's equity is $85,820.

Which financial statement is reported as of a specific date?

On the income statement, revenues minus expenses equals ________ for a period of time.

The owner's investment or equity in a business is called:

During October, a firm had the following transactions involving revenue and expenses. Did the firm earn a net income or incur a net loss for the period? What was the amount? Paid $1,600 for rent for October Provided services for $4,750 in cash Paid $350 for the October telephone service Provided services for $1,700 on credit Paid salaries of $2,675 to employees Paid $350 for the monthly office cleaning service

A net loss results:

On June 1, Donna Banhil established Solo Services, a voice consulting service. Enter the following transactions for June in the table below using + and - to indicate increases or decreases: Transactions 1. Donna Banhil invested $21,000 in cash to open the business 2. Paid $1,650 for June's rent 3. Paid $4,950 for rent in advance, for the next three months (July-September) 4. Purchased office supplies for $550 on credit 5. Performed voice consulting services and immediately received $3,300 from clients. 6. Gave voice lessons to charge account clients and earned $8,800 7. Paid $220 cash for the supplies purchased earlier in the month 8. Received $1,000 in cash from credit clients billed earlier in the month

When using the fundamental accounting equation, an accountant must make sure that total assets are always equal to total liabilities minus owner's equity.