Question

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Calculate the missing cash at bank account balance from these statement of financial position items. Equity $5 800; accounts receivable $890: accounts payable $450; inventory $360; loan to another business $1 400. Answers: A. $6 300 B. $4 900 C. $3 600 D. $5 400 The amount of rent expense reported on the income statement is 1 Answers: A. an increase in net income B. the amount of cash paid for rent in the current period less any unpaid rent at the end of the period c. the amount of rent used up during the current period to earn revenue D. the amount of cash paid for rent during the current period The premium on a three-year insurance policy purchase on April 30th, 2019 was $18 000 for the coverage to begin immediately. Calculate the amount of insurance expense that should be presented in the company's income statement for the year ended December 31, 2019. Answers: $2 000 A. $12 000 B. $6 000 c. $4 000 D. Assume a company's January 1st, 2019 financial position was: Assets, $40 000 and Liabilities, $15 000. During January 2019, the company completed the following transactions: (a) paid accounts payable for $6 000; collected accounts receivable for $4 000 and (c) purchased a truck using $1 000 in cash and borrowing $8 000 from the bank. The company's January 31, 2019 financial position is: Answers Assets A. $42 000 Liabilities $9 000 Equity $33 000 Assets B. S47 000 Liabilities $22 000 Equity $25 000 Assets C. $42 000 Assets D. $44 000 Liabilities $17 000 Liabilities $17 000 Equity $25 000 Equity $27 000 Which of these is not always a characteristic of an asset? 1 Answers: A. Probable expected future economic benefits B. Legal ownership by the entity C. Ability of the benefit to be measured in money terms D. Exclusive control of the economic benefits

Answer 1

Answers:

1) Calculation of missing cash =

Assets = Liablities + Equity

Assets :- Accounts receivable = $890

Inventory = $ 360

Loan to other business = $1,400

Total assets = $2,650

Liabilities:- Equity = $5,800

Accounts payable = $450

Total liabilities = $6,250

Cash = Total liabilities - Total assets

= $6,250 - $2.650

= 3,600

So, option C is correct.

2) Option D is correct which is 'the amount of cash paid for rent during the current period'.

Because rent expense is an account that lists the cost of occupying rental property during a specified period. Under the cash basis of accounting, the amount of rent expense reported in a period is the amount of cash paid during that period.

Option A, B and C are incorrect because it does not increase in net income, neither the amount of cash paid for rent in the current period less any unpaid rent nor to earn revenue.

3) Option B is correct which is $12,000. Because it is a case of prepaid expense and the amount due is deducted and rest the amount which is still prepaid for the coming years is reported as prepaid expense.

Option A, C and D are incorrect because they are not giving correct calculations.

4) Option C is correct which is Assets = 42,000 Liabilities = 17,000 Equity = 25,000

Calculation is as:-

Assets = $40,000 -6,000( cash paid to accounts payable) -4,000 (collected accounts receivable) +4,000 ( cash increased due to accounts rec. collection) +9,000 ( Fixed assets increased i.e., truck) - 1,000 ( cash paid to purchase truck)

= $42,000

Liabilities = $ 15,000 - 6,000 ( reduction in accounts payable) +8,000 (Borrowing drom the bank)

= $17,000

Equity = Assets - Liabilities

= 42,000 - 17,000

= 25,000

5) Option A is correct which is 'probable expected future economic benefis. Because it is not a characteristics of an asset due to future benefits as future is uncertain.

Option B, C and D are incorrect because these all are characteristics of an asset. An asset have legal ownership characteristics, ability of the benefit in money terms and economic benefits control.

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