Principles of Financial Accounting: Question and Answers
Q & T Explain what debit and credit mean.
T For each of the following transactions of Dennen, Inc., for the month of January 2015, indicate the accounts, amounts, and direction of the effects on the accounting equation. A sample is provided.
a. (Sample) Borrowed $30,000 from a local bank
b. Lent $10,000 to an affiliate; accepted a note due in one year.
c. Sold 100 additional shares of stock with a par value of $.10 per share to investors for $500 cash.
d. Purchased $15,000 of equipment, paying $5000 cash and signing a note for the rest due in one year.
e. Declared and paid $2,000 in dividends to stockholders.
T Total liabilities on a balance sheet at the end of the year are $150,000, retained earnings , at the end of the year is $80,000, net income for the year is $60,000, common stock is $40,000, and additional paid –in-capital is $20,000. What amount of total assets whould be reported on the balance sheet at the end of the year?
a. $290,000
b. $270,000
c. $205,000
d. $15,000
T The cash T-account has a beginning balance of $21,000. During the year, $100,000 was debited and $110,000 was credited to the account. What is the ending balance of Cash?
a. $11,000 debit balance
b. $11,000 credit balance
c. $31,000 credit balance
d. $31,000 debit balance
T Which of the following statements are true regarding the balance sheet?
1. One cannot determine the true fair market value of a company by reviewing its balance sheet.
2. Certain internally generated assets, such as a trademark, are not reported on a company’s balance sheet.
3. A balance sheet shows only the ending balances, in a summarized format, of all balance sheet accounts in the accounting system as of a particular date.
a. None are true.
b. Statements 1 and 2 only are true.
c. Statements 2 and 3 are true.
d. All statements are true.
T At the end of a recent year, The Gap, Inc., reported total assets of $7,422 million, current assets of $4,309 million, total liabilities of $4,667, current liabilities of
T For each of the following transactions of Dennen, Inc., for the month of January 2015, indicate the accounts, amounts, and direction of the effects on the accounting equation. A sample is provided.
a. (Sample) Borrowed $30,000 from a local bank
b. Lent $10,000 to an affiliate; accepted a note due in one year.
c. Sold 100 additional shares of stock with a par value of $.10 per share to investors for $500 cash.
d. Purchased $15,000 of equipment, paying $5000 cash and signing a note for the rest due in one year.
e. Declared and paid $2,000 in dividends to stockholders.
T Total liabilities on a balance sheet at the end of the year are $150,000, retained earnings , at the end of the year is $80,000, net income for the year is $60,000, common stock is $40,000, and additional paid –in-capital is $20,000. What amount of total assets whould be reported on the balance sheet at the end of the year?
a. $290,000
b. $270,000
c. $205,000
d. $15,000
T The cash T-account has a beginning balance of $21,000. During the year, $100,000 was debited and $110,000 was credited to the account. What is the ending balance of Cash?
a. $11,000 debit balance
b. $11,000 credit balance
c. $31,000 credit balance
d. $31,000 debit balance
T Which of the following statements are true regarding the balance sheet?
1. One cannot determine the true fair market value of a company by reviewing its balance sheet.
2. Certain internally generated assets, such as a trademark, are not reported on a company’s balance sheet.
3. A balance sheet shows only the ending balances, in a summarized format, of all balance sheet accounts in the accounting system as of a particular date.
a. None are true.
b. Statements 1 and 2 only are true.
c. Statements 2 and 3 are true.
d. All statements are true.
T At the end of a recent year, The Gap, Inc., reported total assets of $7,422 million, current assets of $4,309 million, total liabilities of $4,667, current liabilities of