Fall 70-122 2007 Introduction to Accounting Professor Nan Quiz 1
Name_______________ Section_____________
Instructions: This is a close-book, close-notes quiz. You are allowed to use a non-programming calculator. There are two required parts with totally 100 points (Part I and II). Partial credits will be awarded for Part II. Make sure your name and section are legible and your answer is neatly presented.
Part I: Circle the right answer (30 points, 6 points each) 1. In the 2006 balance sheet of Sarah Co., total assets is $50,000, stockholders' equity is $25,000, and current assets is $30,000. Jessica Co. does not have long-term liabilities. What is its working capital for 2006? A. 50,000 C. 20,000 B. 25,000 D. 5,000
2. Black Diamond Co. reported the following in 2005 financial statements: total assets $85,000, total liabilities $35,000, contributed capital $20,000, net income $40,000. What was the retained earnings? A. $30,000 C. $20,000 B. $45,000 D. $35,000
3. Mike paid $500 to GEICO for car insurance for the next 6 month. The $500 should be recognized as Mike's ____ and GEICO's_____. A. Prepaid Expense; Unearned Revenue B. Account Payable; Account Receivable C. Account Receivable; Account Payable D. Insurance Expense; Insurance Revenue 4. Which one is NOT a current asset? A. Prepaid expense C. Account receivable B. Inventory D. Copyright
5. dividend The paid to the shareholders is cash flow from____ activities. A. Operating B. Investing C. Financing D. None of the above
Part II: (70 points) 1. Make the journal entries for each transaction. (50 pts. 10 pts each) SoHo Co. engaged in the following transactions: A) On January 1, 2007, SoHo pays $1500 for the rent for January, 2007 B) On March 2nd, SoHo purchase $2,000 inventory from a supplier on credit C) On April 10th, pay $2,000 of amounts owed to supplier in transaction B. D) On May 5th, SoHo receives $4,000 from a customer for services that SoHo will provide in the future. E) On July 2nd, SoHo issues 10,000 shares of common stock and receives $50,000 from investors. The par value for each share is $1. A) January 1 Prepaid rent Cash 1,500 1,500
B) March 2nd
Inventory
2,000 Account Payable
2,000
C) April 10th
Account Payable Cash
2,000 2,000
D) May 5th
Cash
4,000 Unearned Revenue
4,000
E) July 2nd
Cash
50,000 Common Stock APIC
10,000 40,000
2. Determine the financial statement component in which the accounting item would be found. Indicate your selection by writing a "X" in the appropriate box. (20 pts, 4 pts each)
Account name Common Stock Repayment of long-term debt Unearned Revenue Cost of Goods Sold Changes in accounting policies Income Statement Balance Sheet x x x x Cash Flow x Notes