Question

12) Retained earnings at the end of the year is calculated using: A) Common stock and dividends. B) Beginning retained earings, net income, and dividends. C) Stockholders' equity, net income, and dividends. D) Net income and dividends. 13) Which of the following accounts has a credit balance! A) Land. B) Accounts Payable C) Salaries Expense. D) Prepaid Rent 14) Emmitt had the following final balances after the first year of operations assets, S55.000; stockholders' equity, 525,000; dividends, 53.000, and met income, 510,000. What is the amount of Emmitt's liabilities? A) S55,000. B) $30,000. C) 57.000 D) $13,000 15) 15) A company receives a $50,000 cash deposit from a customer on October 15, but will not provide services until November 20. Which of the following statements is true? A) The company records cash collection on November 20. B) The company records nothing on October 15. C) The company records deferred revenue on October 15. D) The company records service revenue on October 15. 16) How many of the following transactions are operating activities? Borrow $50,000 from the bank. Purchase $12.000 in supplies. Provide services to customers for $27.000 Pay the utility bill of S750. Purchase a delivery truck for $12,000. Receive $25,000 from issuing common stock. A) One. B) Two. C) Three D) Four

Answer 1

12.

Retained earnings at the end of the year is calculated using Beginning Retained earnings, Net income and Dividends

Retained earnings, ending = Retained earnings, beginning + Net income - Dividends

Correct option is (B)

13.

Accounts payable has a credit balance since it is a liability.

Land and prepaid rent have debit balance since these are assets.

Salaries expense also has a debit balance since all expenses have normal debit balances.

Correct option is (B)

14.

Liabilities = Total assets - Stockholders' equity

= 55,000 - 25,000

= $30,000

Correct option is (B)

15.

When cash is received in advance from customers for services to be rendered in future, it increases assets in the form of cash and liabilities in the form of deferred revenue.

Hence, deferred revenue will be recorded on October 15

Correct option is (C)

16.

Transactions second, third and fourth are operating activities.

Thus, there are three operating activities transactions.

Correct option is (C)

Transactions first and sixth are financing activities transactions.

Fifth transaction relates to investing activities

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