Quiz 1a - C Debit Cash credit Service Revenue D Debit Rent...

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Quiz 1 Key 1. Sooner Company has had a net income of $8,000, $5,000, $12,000, and $10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $3,000, what is the retained earnings balance at the end of the 4 th year? A. $47,000. B. $35,000. C. $23,000. D. $7,000. Beginning Retained Earnings ($0) + Net Income ($8,000 + $5,000 + $12,000 + $10,000) - Dividends ($3,000 * 4) = Ending Retained Earnings. 2. The financial statement that presents the financial position of the company on a particular date is the: A. Income statement. B. Statement of financial accounting. C. Balance sheet. D. Statement of cash flows. 3. Summer Leasing received $12,000 for 24 months rent in advance. How should Summer record this transaction? A. Debit Prepaid Rent; credit Rent Expense. B. Debit Cash; credit Unearned Revenue.
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Unformatted text preview: C. Debit Cash; credit Service Revenue. D. Debit Rent Expense; credit Cash. 4. A company pays $12,000 to purchase an insurance policy for the current period. Record the transaction. Insurance Expense 12,000 Cash 12,000 5. Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries? A. B. C. D. $4,200/12 months = $350 per month. $350 × 5 months = $1,750. 6. Prepayments occur when: A. Cash payment (or an obligation to pay cash) occurs before the expense recognition. B. Sales are delayed pending credit approval. C. Customers are unable to pay the full amount due when goods are delivered. D. Cash payment occurs after the expense is incurred and liability is recorded....
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Quiz 1a - C Debit Cash credit Service Revenue D Debit Rent...

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