1. The document contains 20 multiple choice questions assessing knowledge of double-entry accounting concepts including the accounting equation, calculating changes in assets, liabilities, and owner's equity based on financial transactions, and analyzing year-end financial statements.
2. It also includes two exercises asking to calculate net income, ending owner's equity, and total assets for a business based on provided financial information for a year, and calculate changes to assets, liabilities, and owner's equity given changes in two or three of those elements.
3. The questions and exercises test understanding of how increases or decreases in revenues, expenses, assets, liabilities, and owner's equity/capital affect the accounting equation and year-end financial statement
1. The document contains 20 multiple choice questions assessing knowledge of double-entry accounting concepts including the accounting equation, calculating changes in assets, liabilities, and owner's equity based on financial transactions, and analyzing year-end financial statements.
2. It also includes two exercises asking to calculate net income, ending owner's equity, and total assets for a business based on provided financial information for a year, and calculate changes to assets, liabilities, and owner's equity given changes in two or three of those elements.
3. The questions and exercises test understanding of how increases or decreases in revenues, expenses, assets, liabilities, and owner's equity/capital affect the accounting equation and year-end financial statement
1. The document contains 20 multiple choice questions assessing knowledge of double-entry accounting concepts including the accounting equation, calculating changes in assets, liabilities, and owner's equity based on financial transactions, and analyzing year-end financial statements.
2. It also includes two exercises asking to calculate net income, ending owner's equity, and total assets for a business based on provided financial information for a year, and calculate changes to assets, liabilities, and owner's equity given changes in two or three of those elements.
3. The questions and exercises test understanding of how increases or decreases in revenues, expenses, assets, liabilities, and owner's equity/capital affect the accounting equation and year-end financial statement
1. The document contains 20 multiple choice questions assessing knowledge of double-entry accounting concepts including the accounting equation, calculating changes in assets, liabilities, and owner's equity based on financial transactions, and analyzing year-end financial statements.
2. It also includes two exercises asking to calculate net income, ending owner's equity, and total assets for a business based on provided financial information for a year, and calculate changes to assets, liabilities, and owner's equity given changes in two or three of those elements.
3. The questions and exercises test understanding of how increases or decreases in revenues, expenses, assets, liabilities, and owner's equity/capital affect the accounting equation and year-end financial statement
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ASSESSMENT IN DOUBLE ENTRY ACCOUNTING
1. If total liabilities decreased by $15,000 and owner’s equity decreased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
a. $20,000 increase b. $10,000 increase c. $20,000 decrease d. $10,000 decrease
2. The accounting equation for Goodboys Enterprises is as follows:
Assets Liabilities Owner’s Equity $120,000 = $60,000 + $60,000 If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to
Assets Liabilities Owner’s Equity
a. $120,000 = $60,000 + $60,000 b. $132,000 = $60,000 + $72,000 c. $132,000 = $66,000 + $66,000 d. $132,000 = $72,000 + $60,000
3. As of June 30, 2008, Houston Company has assets of $100,000 and owner’s equity of $5,000. What are the liabilities for Houston Company as of June 30, 2008?
a. $85,000 b. $90,000 c. $95,000 d. $100,000
4. If total liabilities increased by $4,000, then
a. assets must have decreased by $4,000.
b. owner's equity must have increased by $4,000. c. assets must have increased by $4,000, or owner's equity must have decreased by $4,000. d. assets and owner's equity each increased by $2,000.
5. Collection of a $500 Accounts Receivable
a. increases an asset $500; decreases an asset $500.
b. increases an asset $500; decreases a liability $500. c. decreases a liability $500; increases owner's equity $500. d. decreases an asset $500; decreases a liability $500.
6. As of December 31, 2008, Anders Company has assets of $35,000 and owner's equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008?
a. $15,000 b. $10,000 c. $25,000 d. $20,000
Jimmy's Car Repair Shop started the year with total assets of $270,000 and total liabilities of $180,000. During the year, the business recorded $450,000 in car repair revenues, $255,000 in expenses, and Jimmy withdrew $45,000.
7. Jimmy's Capital balance at the end of the year was
a. $240,000. b. $225,000. c. $285,000. d. $195,000.
8. The net income reported by Jimmy's Car Repair Shop for the year was
a. $150,000. b. $195,000. c. $90,000. d. $405,000.
9. Jimmy's Capital balance changed by what amount from the beginning of the year to the end of the year?
a. $45,000 b. $195,000 c. $90,000 d. $150,000
10. Benson Company began the year with owner’s equity of $175,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and had owner drawings of $20,000. What was Benson’s owner’s equity at the end of the year?
a. $255,000 b. $215,000 c. $405,000 d. $235,000
11. Ed Dexter began the Dexter Company by investing $20,000 of cash in the business. The company recorded revenues of $185,000, expenses of $160,000, and had owner drawings of $10,000. What was Dexter’s net income for the year?
a. $15,000 b. $35,000 c. $25,000 d. $45,000
12. Jenner Company began the year with owner’s equity of $15,000. During the year, Jenner received additional owner investments of $21,000, recorded expenses of $60,000, and had owner drawings of $4,000. If Jenner’s ending owner’s equity was $46,000, what was the company’s revenue for the year? a. $70,000 b. $74,000 c. $91,000 d. $95,000
13. Janzen Company began the year with owner’s equity of $217,000. During the year, Janzen received additional owner investments of $294,000, recorded expenses of $840,000, and had owner drawings of $56,000. If Janzen’s ending owner’s equity was $531,000, what was the company’s revenue for the year?
a. $860,000 b. $916,000 c. $1,154,000 d. $1,210,000
Benny’s Repair Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and owner drawings of $20,000.
14. Owner’s equity at the end of the year was
a. $120,000. b. $100,000. c. $80,000. d. $90,000.
15. The net income reported by Benny’s Repair Shop for the year was
a. $80,000. b. $100,000. c. $60,000. d. $190,000.
Berwick Company compiled the following financial information as of December 31, 2008: Revenues $ 140,000 Berwick, Capital (1/1/08) 105,000 Equipment 40,000 Expenses 125,000 Cash 35,000 Berwick, Drawings 10,000 Supplies 5,000 Accounts payable 20,000 Accounts receivable 15,000
16. Berwick’s assets on December 31, 2008 are
a. $235,000. b. $170,000. c. $80,000. d. $95,000. 17. Berwick’s owner’s equity on December 31, 2008 is
a. $105,000. b. $110,000. c. $80,000. d. $120,000.
18. Owner’s equity changed by what amount from the beginning of the year to the end of the year?
a. $15,000 b. $14,000 c. $6,000 d. $3,000
19. During the year 2008, Toronto Enterprises earned revenues of $45,000, had expenses of $25,000, purchased assets with a cost of $5,000 and had owner drawings of $3,000. Net income for the year is
a. $45,000. b. $20,000. c. $17,000. d. $15,000.
20. At October 1, Bennington Enterprises reported owner’s equity of $35,000. During October, no additional investments were made and the company earned net income of $4,000. If owner’s equity at October 31 totals $32,000, what amount of owner drawings were made during the month?
a. $0 b. $1,000 c. $3,000 d. $7,000
EXERCISE 1. Use the following information to calculate for the year ended December 31, 2008 (a) net income (net loss), (b) ending owner’s equity, and (c) total assets.
Answers: a) Net income: Revenues $ 23,000 Operating expenses (12,000) Net income $ 11,000 b) Ending owner's equity: Beginning Capital $ 5,000
Net income 11,000
Drawings (1,000) Increase in Capital 10,000 Ending owner's equity $ 15,000
c) Total assets: Cash $ 15,000 Accounts receivable 3,000 Supplies 1,000 Equipment 6,000 Total assets $ 25,000
EXERCISE 2. At the beginning of 2008, Clemens Company had total assets of $550,000 and total liabilities of $330,000. Answer each of the following questions.
1) If total assets increased $60,000 and owner's equity decreased $90,000 during the year, determine the amount of total liabilities at the end of the year.
Therefore, the total liabilities is $480,000 ($610,000 of total assets minus $130,000 of total owner’s equity, since owner's equity + liabilities is equal to the total assets).
2) During the year, total liabilities decreased $75,000 and owner's equity increased $50,000. Compute the amount of total assets at the end of the year.
Therefore, the total assets is $525,000 ($255, 000 of total liabilities plus $270,000 of total owner's equity, since liabilities + owner’s equity is equal to the total assets).
3) If total assets decreased $100,000 and total liabilities increased $55,000 during the year, determine the amount of owner's equity at the end of the year.
Therefore, the amount of owner’s equity is $65,000 ($450,000 of total assets minus $385,000 of total liabilities, since liabilities + owner’s equity is equal to the total assets).
EXERCISE 3. Presented below is a balance sheet for Jim Dixon Lawn Service at December 31, 2008. JIM DIXON LAWN SERVICE Balance Sheet December 31, 2008
Assets Liabilities and Owner's Equity
Cash $ 13,000 Liabilities Accounts receivable 6,000 Accounts payable $ 8,000 Supplies 9,000 Notes payable 15,000 Equipment 11,000 Owner's Equity Jim Dixon, Capital 16,000 ________ Total assets $ 39,000 Total liabilities and owner's equity $ 39,000
The following additional data are available for the year which began on January 1: All expenses (excluding supplies expense) total $6,000. Supplies on January 1, were $11,000 and $5,000 of supplies were purchased during the year. Net income for the year was $8,000 and drawings were $6,000.
Instructions Determine the following: (Show all computations.) 1) Supplies used during the year.
January 1 $ 11,000 Purchased supplies 5,000 Supplies $ 16,000
