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Exam 2: Accounting for Accruals

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Question 81

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Cascade Corporation began business operations and experienced the following transactions during Year 1: 1)Issued common stock for $20,000 cash2)Provided services to customers for $80,000 on account3)Incurred $36,000 of operating expenses on account4)Collected $46,000 cash from customers5)Paid $30,000 on accounts payable Required:Record the above transactions on a horizontal statements model to reflect their effect on Cascade's financial statements. In the last column, enter OA, IA, or FA for the type of cash flow activity, if applicable.

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Question 82

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Explain the meaning of the "matching concept."

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The "matching concept" refers to the pro...

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Question 83

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ABC Company ended Year 1 with the following account balances:Cash 600, Common Stock 400, and Retained Earnings 200.The following transactions occurred during Year 2:Issued common stock for $19,000 cash.ABC borrowed an additional $11,000 from Chris Bank.ABC earned $9,000 of revenue on account.ABC incurred $4,000 of operating expenses on account.Cash collections of accounts receivables were $6,000.ABC provided additional services to customers for $1,000 cash.ABC purchased land for $14,000.ABC used $3,000 in cash to make a partial payment on its accounts payable.ABC declared and paid a $200 dividend to the stockholdersOn December 31 ABC had accrued salaries of $4,000.What is the amount of net income (loss) reported on the December 31, Year 2 income statement?

Frank Company earned $15,000 of cash revenue. Which of the following accurately reflects how this event affects the company's horizontal financial statements model?

Tucker Company shows the following transactions for the accounting period ending December 31, Year 1:1)Issued common stock for $16,000 cash2)Borrowed $40,000 cash from the bank3)Performed $60,000 of services on account4)Paid operating expenses of $8,000 in cash5)Accrued salary expense of $20,0006)Accrued interest expense of $500 Show how the above transactions and year-end adjustments affect the accounting equation. Put the amount in parentheses if the transaction reduces that section of the equation. Leave cells blank for items not affected.

The following account balances were drawn from the Year 1 financial statements of Grayson Company: What is the balance of the Common Stock account?

Chester Company began Year 2 with a note payable of $20,000 and interest payable of $800. During the year, the company accrued an additional $400 of interest expense, and paid off the note with interest. On the company's Year 2 statement of cash flows, cash flows for financing activities related to the note would be:

Warren Enterprises began operations during Year 1. The company had the following events during Year 1:The business issued $40,000 of common stock to its stockholders.The business purchased land for $24,000 cash.Services were provided to customers for $32,000 cash.Services were provided to customers for $10,000 on account.The company borrowed $32,000 from the bank.Operating expenses of $24,000 were incurred and paid in cash.Salary expense of $1,600 was accrued.A dividend of $8,000 was paid to the stockholders of Warren Enterprises. What is the balance of the Retained Earnings account as of December 31, Year 1?

Determine whether each of the following events are asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE)transactions. 1)________ Borrowed $6,000 from creditors2)________ Issued common stock to investors for $8,000 cash3)________ Accrued interest expense4)________ Provided services to customers and collected $35,000 cash5)________ Paid creditors $10,0006)________ Provided services to customers on account, $12,0007)________ Collected $2,000 from customers in partial settlement of accounts receivable8)________ Recognized accrued salary expense of $2,000

Which of the following describes the effects of a claims exchange transaction on a company's financial statements?