Determine when cash is collected from customers

Question

1.The realization principle indicates that revenue usually should be recorded in the accounting records:

Question 1 options:

	A) when cash is collected from customers
	B) when goods are sold or services are rendered to customers
	C) at the end of the accounting period
	D) only when the revenue can be matched by an equal dollar amount of expenses
	E) both (b) and (d) are correct

2.Which of the following account(s) would be part of working capital?

Question 2 options:

	A) accounts payable
	B) land
	C) supplies
	D) retained earnings
	E) cost of goods sold
	F) two of the above accounts are part of working capital
	G) three of the above accounts are part of working capital
	H) four of the above accounts are part of working capital
	I) all of the above accounts are part of working capital

3.On May 17, Buckeye Corporation performed $800 of services for ABC Company, a customer. ABC paid for one-half of the
bill on May 17 and agreed to pay the remainder within 30 days. On June 9, ABC paid the remaining amount owed. Which
of the following journal entries would ABC Company make on June 9?

Question 3 options:

	A) debit accounts receivable $400 and credit cash $400
	B) debit cash $400 and credit service revenue $400
	C) debit accounts payable $400 and credit service revenue $400
	D) debit cash $400 and credit accounts payable $400
	E) debit cash $400 and credit accounts receivable $400
	F) debit accounts payable $400 and credit cash $400

4.The following information is available for XYZ Company:

January 1, 2003 December 31, 2003

Assets $500,000 $700,000 Liabilities $300,000 $400,000 Equity $200,000 $300,000

XYZ Company reported a net income of $50,000 during 2003.
XYZ Company's return on equity (ROE) for 2003 was equal to:

Question 4 options:

	A) 8.3%
	B) 50.0%
	C) 25.0%
	D) 20.0%
	E) 16.7%

5.Fletcher, Inc. reported an ending notes payable balance of $57,000. An examination of the notes payable t-account revealed debits of $25,000 and credits of $39,000 during the year. The beginning notes payable balance for Fletcher,
Inc. was equal to:

Question 5 options:

	A) $71,000 credit
	B) $71,000 debit
	C) $43,000 debit
	D) $43,000 credit
	E) none of the above are correct

6.Indicate the effect each of the following transactions has on the accounting equation (i.e., assets, liabilities, and equity). Enter the number corresponding to your answer in the box provided. Answer choices may be used once, more than once, or not at all.

Question 6 options:

ABC Company performed $2,000 of delivery services for a customer who agreed to pay next month ABC Company paid $2,000 cash to the bank; $1,800 of this amount was the repayment of a bank loan and the other $200 paid was interest ABC Company made the adjusting entry to accrue income taxes owed but not yet paid ABC Company purchased equipment for $3,000 cash

1. assets increase; liabilities increase; equity decrease 2. assets decrease; liabilities decrease; equity no effect 3. assets increase; liabilities no effect; equity increase 4. assets no effect; liabilities no effect; equity no effect 5. assets no effect; liabilities increase; equity decrease 6. assets increase; liabilities increase; equity increase 7. assets increase; liabilities increase; equity no effect 8. assets no effect; liabilities decrease; equity increase 9. assets decrease; liabilities no effect; equity decrease 10. assets decrease; liabilities decrease; equity decrease