Question

Use the following to answer question 7: Fat Possum's $80,000. During the year, the business recorded $210,000 in revenues, $140,000 in expenses, Service Shop started the year with total assets of $110,000 and total liabilities of and owner drawings of $20,000. 7. Owner's equity at the end of the year was A) $30,000. B) $80,000. C) $100,000. D) $120,000. 8. Misra Company compiled the following financial information as of December 31, 2011 Revenues Owner's Capital (1/1/11) Equipment $170,000 70,000 40,000 125,000 45,000 10,000 5,000 20,000 Owner's Drawings Supplies Accounts payable Misra's assets on December 31, 2011 are A) $90,000. B) $125,000. C) $180,000. D) $245,000. 9. A credit is not the normal balance for which account listed below? A) Capital account B) Revenue account C) Liability account D) Drawings account 10. If a business has received cash inr advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be A) debit Unearned Revenue and credit Cash. B) debit Unearned Revenue and credit Service Revenue. C) debit Unearned Revenue and credit Prepaid Expense. D) debit Unearned Revenue and credit. Accounts Receivable.

Answer 1

Answer 7) B- $80,000 Total Assets = $110,000 Total Liabilities $80,000 Revenues $210,000 Expenses = $140,000 Drawings $20,000 Beginning Equity Balance = Total Assets-Total Liabilities $110,000-$80,000 $30,000 Net Income = Revenues-Expenses $210,000 $140,000 -$70,000 Ending Owners Equity Beginning Equity +Net Income -Drawings = $30,000 + $70,000-$20,000 -$80,000 8) B-$125,000 Assets Equipments + Cash Supplies +Accounts Recievables $40,000 $45,000 $5,000$35,000 = $125,000

9) D- Drawings Account Debit balance Assets Owners Equity & LiabilitiesCredit balance Income Expenses Credit balance Debit balance Capital account will come under Owners Equity and have credit balance Revenue account will have credit balance as it is an Income Liability account will have credit balance as it is an obligation Drawings will have Debit balance as it reduce Capital balance 10) B- Debit Unearned Revenue and Credit service Revenue When advance is received Cash is Debited and Unearned Revenue account is Credited. The Entry for same is Cash - Unearned Revenue When we perform Service we have to adjust the Unearned revenue account against Service revenue account The Entry for same is Unearned Revenue - Service Revenue