Question 1

Melvin's Cleaning Service completed the following transactions:
a. Billed clients for service, $1,050.
b. Completed work for clients $400 on account.
c. Received a bill for utilities to be paid later, $120.
d. Collected $700 cash for services performed.
e. Paid the amount due for utilities.
f. Withdrew $500 cash for personal use.
Required: Record the above transactions in the expanded accounting equation. Note that the items have beginning balances.
Melvin's Cleaning Service

Accepted Answer

The answer of Melvin's Cleaning Service completed the following transactions:
a....

Question 2

Which financial statement is prepared last?
A) Statement of Owner's Equity
B) Balance Sheet
C) Income Statement
D) None of the above

Accepted Answer

The Balance Sheet is prepared last because it uses information from the Income Statement and the Statement of Owner's Equity to show the financial position of the business at a specific point in time.

Question 3

Which account is NOT included in the asset section of the balance sheet?
A) Supplies
B) Utility Expense
C) Land
D) Computer

Accepted Answer

Utility Expense is considered an expense account, not an asset. Assets are resources owned by a company that have future economic value, while expenses are costs incurred by the business in the process of earning revenues.

Question 4

Revenue and cash will always equal.

Accepted Answer

Revenue and cash are not always equal because revenue is recognized when earned, according to the accrual basis of accounting, while cash can be received at a different time.

Question 5

The income statement is a financial statement showing the change in owners' equity.

Accepted Answer

The income statement shows a company's revenue and expenses over a period of time, not the change in owners' equity.

Question 6

The financial statement that shows business results in terms of Revenue and Expenses is:
A) Customer Statement.
B) a balance sheet.
C) a statement of Owner's Equity.
D) None of the above.

Accepted Answer

The financial statement specifically designed to show business results in terms of Revenue and Expenses is the Income Statement, which is not listed among the options provided.

Question 7

Determine the ending capital balance of a business which had a beginning capital balance of $2,950, additional investments of $500, withdrawals of $750, Revenue of $3,800, and Expenses of $2,600.
$ ________

Accepted Answer

The answer of Determine the ending capital balance of a...

Question 8

An accounting report that shows the changes in capital during the accounting period is:
A) a balance sheet.
B) an income statement.
C) a statement of Owner's Equity.
D) All of these answers are correct.

Accepted Answer

A statement of Owner's Equity shows the changes in the owner's equity (capital) during the accounting period, including contributions, withdrawals, and the impact of the net income or loss.

Question 9

Withdrawals are business Expenses that are included on the income statement.

Accepted Answer

Withdrawals are distributions to owners and are not considered business expenses; therefore, they do not appear on the income statement.

Question 10

Indicate whether each of the following represents (1) Asset, (2) Liability, or (3) Owner's Equity:
1. ________ Office Supplies
2. ________ Accounts Payable
3. ________ Capital
4. ________ Cash
5. ________ Withdrawal
6. ________ Land
7. ________ Accounts Receivable
8. ________ Expense
9. ________ Equipment
10. ________ Revenue

Accepted Answer

The answer of Indicate whether each of the following represents...

Question 11

If Expenses are greater than Revenues, a net income is incurred.

Accepted Answer

If expenses are greater than revenues, a net loss is incurred, not net income. Net income occurs when revenues exceed expenses.

Question 12

The increase or decrease in Cash is reported on the:
A) income statement.
B) statement of Owner's Equity.
C) balance sheet.
D) All of these are correct.

Accepted Answer

The increase or decrease in Cash is reported on the balance sheet, which reflects a company's financial position at a specific point in time, including its assets, liabilities, and equity. Cash, being an asset, is included in the balance sheet.

Question 13

The income statement is completed before the statement of Owners' Equity.

Accepted Answer

The income statement is completed first because it provides the net income or loss, which is then used to prepare the statement of owners' equity.

Question 14

Which of the following items are on both the balance sheet and the statement of Owner's Equity?
A) Net loss
B) Capital
C) Additional owner's investments
D) Owner's withdrawals

Accepted Answer

Capital is the only item that appears on both the balance sheet and the statement of Owner's Equity. The balance sheet reflects the owner's capital as part of the equity section, while the statement of Owner's Equity shows the changes in the owner's capital, including the beginning balance, additions, and subtractions to arrive at the ending capital balance.

Question 15

Total Liabilities are included in the statement of Owner's Equity.

Accepted Answer

Total Liabilities are not included in the statement of Owner's Equity; they are reported on the balance sheet. The statement of Owner's Equity focuses on changes in the owner's equity during a specific period, including contributions, withdrawals, and the net income or loss.

Question 16

The statement of Owner's Equity shows the change in Revenue.

Accepted Answer

The statement of Owner's Equity shows changes in the owner's equity in the business over a period of time, not changes in revenue. Revenue changes are shown in the income statement.

Question 17

Determine the beginning capital balance of a business having an ending capital balance of $10,800, no additional investments, withdrawals of $2,600, and a net income of $4,700.
$ ________

Accepted Answer

The answer of Determine the beginning capital balance of a...

Question 18

The statement of Owner's Equity is the link between the income statement and balance sheet.

Accepted Answer

The Statement of Owner's Equity shows changes in the owner's equity account during a period, including contributions, withdrawals, and net income or loss (from the income statement), thus linking the income statement's results to the balance sheet's equity section.

Question 19

The statement of Owner's Equity shows the beginning and the ending capital balance.

Accepted Answer

The statement of Owner's Equity displays the beginning capital balance, adds net income (or subtracts net loss), includes any additional investments made by the owner, subtracts any withdrawals made by the owner, and then shows the ending capital balance.

Question 20

Record the following transactions into the expanded accounting equation for the Dora's Law Firm. Note that all titles have beginning balances. (You will need to determine the beginning capital balance.)
a. Provided legal services for cash, $700
b. Billed customers for services rendered, $2,500
c. Received and paid the monthly utility bill, $300
d. Collected $100 on account from customers
e. Paid supplies Expense, $250
f. Withdrew $200 cash for personal use
Dora's Law Firm

Accepted Answer

The answer of Record the following transactions into the expanded...

Quiz 1: Accounting Concepts and Procedures

Which financial statement is prepared last?

Which account is NOT included in the asset section of the balance sheet?

Revenue and cash will always equal.

The income statement is a financial statement showing the change in owners' equity.

The financial statement that shows business results in terms of Revenue and Expenses is:

Determine the ending capital balance of a business which had a beginning capital balance of $2,950, additional investments of $500, withdrawals of $750, Revenue of $3,800, and Expenses of $2,600. $ ________

An accounting report that shows the changes in capital during the accounting period is:

Withdrawals are business Expenses that are included on the income statement.

Indicate whether each of the following represents (1) Asset, (2) Liability, or (3) Owner's Equity: 1. Office Supplies 2. Accounts Payable 3. Capital 4. Cash 5. Withdrawal 6. Land 7. Accounts Receivable 8. Expense 9. Equipment 10. Revenue

If Expenses are greater than Revenues, a net income is incurred.

The increase or decrease in Cash is reported on the:

The income statement is completed before the statement of Owners' Equity.

Which of the following items are on both the balance sheet and the statement of Owner's Equity?

Total Liabilities are included in the statement of Owner's Equity.

The statement of Owner's Equity shows the change in Revenue.

Determine the beginning capital balance of a business having an ending capital balance of $10,800, no additional investments, withdrawals of $2,600, and a net income of $4,700. $ ________

The statement of Owner's Equity is the link between the income statement and balance sheet.

The statement of Owner's Equity shows the beginning and the ending capital balance.