Question

D) only the balance sheet 9) Why does an accountant prepare the income statement first? A) Net income must be counted first to properly complete the other financial statements Bit is easier to adjust insome statement accounts first than it is to adjust balance sheet accounts. Management, being profit oriented, is more interested in the company's net income than in the assets the company owns and the debts it owes. D) There is no particular order in which financial statements must be prepared. 10) When preparing a bank reconciliation, which of the following items would be subtructed from the bank balance on the bank statement? A) deposits in transit B) bank service charges C) EFT cash payments D) outstanding cheques 11) In a bank reconciliation, bank service charges are: A) added to the bank balance on the bank statement B) deducted from the bank balance on the bank statement C) added to the bank balance in the general ledger D) deducted from the bank balance in the general ledger 12) If the bank records a deposit of S50 as $150, the error would be shown on a bank reconciliation as A) a deduction from the book balance of $100 B) an addition to the book balance of $100 C) a deduction from the bank balance of $100 D) an addition to the bank balance of $100 13) Barley & Hops Company was formed in 2014. During the year the company had the following events occur: 1. The company issued $100.000 in common shares for cash. 2 The company purchased equipment for $15,000. paying $5.000 down and signing a lvear, 8% note for the balance. 3. The company hired 4 employees. 4. The company had sales of $250,000. All sales were on account. 5. The company incurred the following expenses: rent: $2,000, salaries: $20,000, advertising $2.000 and utilities $4.000. All expenses were paid in cash. Required: Prepare the journal entries to record the above transactions.

Answer 1

As per HOMEWORKLIB POLICY and guideline, the 1^st four MCQs are answered below:

9.

Answer: A

An income statement is the record of final revenue balance and various expenses balances in order to get net income. It is prepared first because such net income is required for retained earnings statement, which is ultimately recorded in balance sheet for finishing. Cash flow statement also requires net income for calculating.

10.

Answer: B

Service charge is debited by bank; therefore, it requires a subtraction from bank balance.

All the other options are not relevant here.

11.

Answer: B

A bank statement reflects the bank charge, which is deducted from bank balance.

12.

Answer: B

This is a mistake done by the bank. The amount of mistake is (150 – 50 =) $100, which increases the bank balance but can’t be rectified immediately. Therefore, in case of reconciliation the book balance should be added with $100.