Generally Accepted Accounting Principles and Owners Equity

Fundamental Concepts Professor Deanna McKenzie Accounting Module – Practice Questions Name: Date: 1 . Identify the Assets, Liabilities and Owners’ Equity below: Assets Liabilities Owners’ equity Truck Accounts Payable Retained Earnings Wages Payable Cash Salaries Payable Equipment Pre paid Rent Land Note Payable Office Supplies Building Furniture Prepaid Insurance Accounts receivable Common Stock 2. ABC Company issued common stock and received $4000. Please complete the accounting equation below: Assets 4,000 = Liabilities + Owners’ Equity + 4,000 3.
ABC Company then purchased Office supplies on Account for $200. Please complete the accounting equation below (after the purchase): cash 4,000 = Liabilities + Owners’ Equity Office Supplies 200 ”Accounts Payable 200 + 4,000 4. a) The owners of XYZ Corporation received $5000 from Mr. Brown and issued him common stock. The company then borrowed $20,000 from the bank and purchased a delivery truck (cash) for $7000. What type of accounts on the balance sheet (Categories) are affected? Owners’ Equity Liabilty b) List the specific accounts affected and the amounts.
Common Stock 5,000 Cash 18,000…20-7+3) Notes Delivery Truck 7,000 c) Write the Accounting Equation below: 5. A company generates $200,000 in revenue in 2011, the gross profit was recorded as $175,000. What their cost of Goods sold? ANSWER: 25,000 200,000 -COGS 175,000 6. XYZ Company’s total expenses for 2001 was $450,000. The net Income recorded was $100,000. How much did they generate in revenues? ANSWER: 550,000 Revenue -450,000 1 oo,ooo 7. Stewart’s Company purchased an asset with useful life of 5 years for $40000. The salvage value of the asset is $5000.

Using the straight line depreciation method: a) How much is the asset depreciated by each year? ANSWER:7K 40,000-5,000 35,000 b) What is the depreciation expense at year 4? 7K c) What is the accumulated depreciation at the end of year 3? 21 K d) What is the value of the asset at the end of year 4? 12K 8. Company A purchased an equipment to print T-shirts. This equipment cost $30,000 and is expected to remain useful for 7 years. The residual value of the equipment is $2000. Find the depreciation expense and the accumulated depreciation after 5 years.

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