Chapter 2 sample test

Chapter 2 sample test - Chapter 2 sample test 1. The First...

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Chapter 2 sample test 1. The First Corporation began business on January 1 when its owners invested $20,000 in the company. During January, the company borrowed $9,000, management generated resources of $6,000, and owners were paid dividends of $2,000. Determine the company’s total assets on January 31. The keys to this problem are to recognize that companies obtain resources from three sources (borrowing, owners, and management) and resources generated by management are either paid out to owners or kept in the company. The company borrowed $9,000 of resources, received $20,000 from owners, and kept $4,000 of the $6,000 resources generated by management. The company's total resources are $33,000 ($9,000 + $20,000 + $4,000). Resources = Sources of Resources Resources = Borrowed Resources + Owner Invested Resources + Management Generated Resources + $20,000 = $0 + + $20,000 + $0 + $9,000 = + $9,000 + $0 + $0 + $6,000 = $0 + $0 + + $6,000 - $2,000 = $0 + $0 + - $2,000 $33,000 = $9,000 + $20,000 + $4,000 See text exercise 2.1 for similar material. 2. On February 2, the Second Corporation had cash of $12,000. During the rest of February, the company paid $800 cash for additional supplies, provided $1,700 services to customers who promised to pay the Second Corporation in March, paid $4,000 cash for February rent, purchased $500 of supplies on account, and received $1,100 cash from customers for services provided to them in January. Determine the company’s cash on February 28. The key to this problem is to recognize that only the effects on cash are important. Any
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This note was uploaded on 10/09/2011 for the course ACCT 60.201 taught by Professor Monty during the Spring '11 term at UMass Lowell.

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Chapter 2 sample test - Chapter 2 sample test 1. The First...

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