Accounting Test 1(1)

.docx

School

Western Governors University *

*We aren’t endorsed by this school

Course

D196

Subject

Accounting

Date

Jan 9, 2024

Type

docx

Pages

Uploaded by SuperSardinePerson1020

• Address You, a fancy-dress manufacturer, sold a dress for $8,000 on credit. The cost of producing this dress was $1,000. First, how would the revenue and receivable from this transaction impact the accounting equation of Address You? Please enter the amounts in the boxes below Answer: Part 1: Assets Increase $8,000 and Owner’s Equity Increase $8,000 Part 2: Assets Decrease $1,000 and Owner’s Equity Decrease $1,000 • We Like to Rock (WLR), a granite countertop manufacturer, delivered 5 countertops at $2,000 each to their client. The cost of producing the countertops was $500 each. The client paid cash for the countertops. First, how would the revenue from this transaction impact the accounting equation for WLR? Answer Assets Increase $10,000 and Owner’s Equity Increase $10,000 Note: 5 x $2,000 Assets Decrease $2,500 and Owner’s Equity Decrease $2,500 • Jarvard University Bookstore paid $67,000 for books purchased on credit in the previous month. How would this payment impact the accounting equation? Answer: Assets Decrease $67,000 and Liabilities Decrease $67,000 • Which of the following demonstrates the historical cost principle?

Answer Bullet #2 is the Historical Cost Principle Real Estate prices in Orderville have increased dramatically over the last five years. Although the land under Chad’s office building is currently believed to be worth $500,000, it is recorded at $250,000 because that is the price he paid for it. • Below are some of the accounts that Company F has on their books: Cash and Cash Equivalents $2,000 Insurance Expense $250 Accounts Payable $800 Prepaid Rent $400 Accounts Receivable $750 Deferred Revenue $1,650 Inventory $925 Which of the amounts below is the correct total of liabilities? Answer Bullet #1 Accounts Payable + Deferred Revenue = $2,450 • Breeze Inc. receives payment of $800,000 for 4 wind turbines that were delivered and invoiced on credit in the previous month. How would this receipt impact the accounting equation of Breeze Inc.? Select all that apply. Answer Assets Increase and Decrease by $800,000 • Below are some of the accounts that Company F has on their books: Cash and Cash Equivalents $2,000 Insurance Expense $250 Accounts Payable $800 Prepaid Rent $400 Accounts Receivable $750

Deferred Revenue $1,650 Inventory $925 Which of the amounts below is the correct total of assets? Answer Bullet #3 Cash + Prepaid Rent +Accounts Receivable + Inventory = $4,075 • Which of the following demonstrates the going concern concept? Answer Bullet #3 AQG Industries purchases $20,000 of product on credit from RSI Manufacturing. AQG records the purchase as an increase in inventory and an increase in accounts payable. AQG feels that they will be able to realize the value from the inventory and settle the obligation to RSI in the weeks to come . • Perfect Printers is able to obtain 30 days credit terms to purchase a heavy duty printing machine for $200,000. How will this purchase impact the accounting equation of Perfect Printers at the time of the purchase? Select all that apply. Answer Assets Increase $200,000 and Liabilities Increase $200,000 • Which of the following would cause a decrease to liabilities? Select all that apply. Answer Bullets #1, #4, #5

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version