In the statement of stockholders' equity, the balance of Retained Earnings increased by $32,000. The company declared a dividend of $10,000 during the year. What was the net income for the year?

A) $10,000.

B) $32,000.

C) $42,000.

D) $22,000.

Answer: C

A classified balance sheet ________.

A) Shows only current assets and current liabilities

B) Shows changes in assets, liabilities, revenues and expenses

C) Contains confidential information

D) Shows subtotals for current assets and current liabilities

Answer: D

Which financial statement provides information for a point in time only?

A) Statement of cash flows.

B) Income statement.

C) Statement of stockholders' equity.

D) Balance sheet.

Answer: D

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $60,000. During the period, the company reports a net loss of $10,000 and net cash outflows of $15,000. The ending balance in the Retained Earnings account is:

A) $60,000.

B) $35,000.

C) $50,000.

D) $45,000.

Answer: C

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $25,000. During the period, the company reports a net income of $10,000 and a dividend of $4,000. The ending balance in the Retained Earnings account is:

A) $10,000.

B) $35,000.

C) $39,000.

D) $31,000.

Answer: D

The statement of stockholders' equity includes:

A) Net income from the income statement.

B) The amount of stock issued in the current period.

C) Dividends declared to stockholders in the current period.

D) All of the other answers are correct.

Answer: D

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect net income for the current period?

A) Net income will be too low.

B) Net income will be correct.

C) Net income will be too high.

D) Not possible to determine.

Answer: C

If a company incorrectly records a payment as an expense instead of an asset, how will this error affect net income in the current period?

A) Net income will be too low.

B) Net income will be correct.

C) Net income will be too high.

D) Not possible to determine.

Answer: A

The statement of stockholders' equity includes which of the following for the period?

A) Details of a company's profitability that represents stockholders' claims.

B) Changes in stockholders' equity accounts.

C) Inflows and outflows of cash that benefit stockholders.

D) Current assets available to pay current liabilities to reduce risk to stockholders.

Answer: B

The following table contains financial information for Trumpeter Inc. before closing entries: Cash $ 12,000

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is Trumpeter's net income?

A) $3,500.

B) $2,500.

C) $5,000.

D) $5,500.

Answer: D

Which of the following best describes the information reported in the income statement?

A) The portion of profits paid in cash to stockholders.

B) The current resources available to pay current obligations.

C) The amount recognized from providing goods and services to customers compared to the cost of doing so.

D) The extent to which cash inflows exceed cash outflows.

Answer: C

Which of the following is true about an income statement?

A) It reports activity for a period of time.

B) It does not include dividends paid.

C) It reports revenues and expenses.

D) All of the other answers are true.

Answer: D

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below. Cash $ 12,000

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below.

Cash $ 12,000

Retained Earnings 31,000

Prepaid Rent 2,000

Salaries Expense 15,000

Equipment 68,000

Service Revenue 40,000

Miscellaneous Expense 10,000

Supplies 4,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 38,000

What is the total amount of credits?

A) $111,000.

B) $81,000.

C) $114,000.

D) $86,000.

Answer: C

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below.

Cash $ 12,000

Retained Earnings 31,000

Prepaid Rent 2,000

Salaries Expense 15,000

Equipment 68,000

Service Revenue 40,000

Miscellaneous Expense 10,000

Supplies 4,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 38,000

What is the total amount of debits?

A) $114,000.

B) $86,000.

C) $81,000.

D) $11,000.

Answer: A

Which of the following trial balances shows account balances that incorporate current year deferrals and accruals?

A) Adjusted trial balance.

B) Final trial balance.

C) Unadjusted trial balance.

D) Cash-basis trial balance.

Answer: A

Consider the adjustment process at the end of the accounting period.

1. Record the adjusting entries in the journal.

2. Prepare an adjusted trial balance to check the equality of the debits and credits.

3. Determine the accounts requiring adjustment, using the unadjusted trial balance.

4. Post the adjusting entries to the general ledger.

Place the actions above in the proper order.

A) 1, 4, 3, 2.

B) 1, 2, 4, 3.

C) 3, 4, 2, 1.

D) 3, 1, 4, 2.

Answer: D

An adjusted trial balance:

A) Is a list of all accounts and their balances after adjusting entries.

B) Is a list of all accounts and their balances before adjusting entries.

C) Is a list of all accounts and their balances after closing entries.

D) Is a trial balance adjusted for cash-basis accounting.

Answer: A

The adjusted trial balance should be prepared ________ the financial statements are prepared in order to prove the ________ of the debits and credits.

A) after; equality

B) before; accuracy

C) before; equality

D) after; accuracy

Answer: C

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period. On April 1, 2021, total sales of one-year subscriptions are $12,000. What is the adjusted balance of Deferred Revenue on December 31, 2021?

A) $9,000.

B) $3,000.

C) $0.

D) $12,000.

Answer: B

Eve's Apples opened for business on January 1, 2021, and paid for two insurance policies effective that date. The liability policy was $36,000 for 18 months, and the crop damage policy was $12,000 for a two-year term. What was the balance in Eve's Prepaid Insurance account as of December 31, 2021?

A) $9,000.

B) $18,000.

C) $30,000.

D) $48,000.

Answer: B

A list of all accounts and their balances after updating account balances for adjusting entries is referred to as:

A) A trial balance.

B) An adjusted trial balance.

C) A post-closing trial balance.

D) An accounting trial balance.

Answer: B