Exam (elaborations)

FINAL SOLUTION OF INTERMEDIATE ACCOUNTING EXAM ||ALREADY GRADED A+

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Course
ACCOUNTING

Institution
ACCOUNTING

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Uploaded on September 24, 2024
Number of pages 10
Written in 2024/2025
Type Exam (elaborations)
Contains Questions & answers

liabilities
stockholder
monitor
business
accounting
statements
investment
revenue
employee
retained
assets

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FINAL SOLUTION OF INTERMEDIATE
ACCOUNTING EXAM ||ALREADY
GRADED A+
What will happen if expenses are paid in cash? - ANSWER Stockholders' equity
will increase.

X Assets will decrease.

Assets will increase.

Liabilities will decrease.

________ has no effect on retained earnings. - ANSWER X Hiring a new
employee
revenue
paying a dividend
an expense

An investment by the stockholders in a business causes an increase in which of the
following? - ANSWER assets and stock holder equity

Which of the following represents the characteristics of every accounting
information system? Select all that apply. - ANSWER It processes transaction data.
It communicates financial information to decision-makers.
It collects transaction data.

________ that require recording in the financial statements are called accounting
transactions. - ANSWER economic events

________ that require recording in the financial statements are called accounting
transactions. - ANSWER assets increase

What could happen when an individual asset is increased? - ANSWER there could
be an equal decrease in another asset

Assets and liabilities increase when a business - ANSWER receives cash in
advance from a customer.

, What happens when dividends are paid? - ANSWER stockholder equity decreases

A book designer purchased a new computer monitor for $1,200 cash. As a result
of this purchase, - ANSWER total assets remain unchanged

Receipts of cash in advance from customers are not treated as revenue at the time
of receipt because - ANSWER revenue is not recognized until the work is
performed.

________ will increase when services are performed on account. - ANSWER
stockholder equity

There must be a corresponding increase in liabilities or an increase in
stockholders' equity if total assets are - ANSWER increased

Which of the following occurs when a business makes a purchase of inventory on
account? - ANSWER both inventory and accounts payable increase

Of the following transactions, which would lead to the largest decrease in a firm's
retained earnings? - ANSWER issuance of $18,000 of common stock
receipt of $20,000 for services performed
X payment of $20,000 in employee salaries
payment of an $18,000 dividend on common stock

Which of the following accounting entries would you MOST expect to accompany
a $9,000 decrease in cash, and why? - ANSWER $9,000 increase in Equipment,
because cash is an asset, so an equal but opposite change to another asset account
such as Equipment will offset the decrease to the Cash account.

On February 2, Miles Inc. pays $800 to purchase a one-year insurance policy that
will expire next year on January 31. Miles indicates this transaction in its books by
recording an $800 reduction in cash and an $800 increase in expenses. Did Miles
make the proper accounting entries? Why or why not? - ANSWER No, Miles did
not make the proper accounting entries. Prepaid insurance is an asset, not an
expense. Thus, the firm should have offset the $800 decrease in cash (an asset
account) with an $800 increase in prepaid insurance (also an asset account).

On September 30, Jordan Consulting received $12,000 from Hank's Hardware in
exchange for services performed. Upon receipt of this payment, Jordan recorded a

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