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Balance Sheet

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ACC 300
Practice Questions

1). For each of the following accounts, complete the following table. Indicate whether the account is classified as a current asset (CA), noncurrent asset (NCA), current liability (CL), noncurrent liability (NCL), or stockholders' equity (SE), and whether the account usually has a debit (dr) or credit (cr) balance.
Account Balance Sheet
Classification Debit or Credit
1. Land ____________________ ____________________
2. Retained Earnings ____________________ ____________________
3. Notes Payable (due in three years) ____________________ ____________________
4. Accounts Receivable ____________________ ____________________
5. Leasehold Improvements ____________________ ____________________
6. Contributed Capital ____________________ ____________________
7. Machinery and Equipment ____________________ ____________________
8. Accounts Payable ____________________ ____________________
9. Cash ____________________ ____________________
10. Taxes Payable ____________________ ____________________

2). Match each definition with its related term by entering the appropriate letter in the space provided.
Term Definition
______ 1. Expenses
______ 2. Matching principle
______ 3. Revenue principle
______ 4. Cash basis accounting
______ 5. Unearned revenue
______ 6. Accrual basis accounting
______ 7. Prepaid expenses A. Record expenses when incurred in earning revenue.
B. A liability account used to record the obligation to provide future services or return cash that has been received before revenues have been earned.
C. Costs that result when a company sacrifices resources to generate revenues.
D. Record revenues when certain criteria are met (delivery of goods or services has occurred, there is persuasive evidence of an arrangement, the price is fixed or determinable, and collection is reasonably assured).
E. Record revenues when received and expenses when paid.
F. An asset account used to record the benefits obtained when cash is paid before expenses are incurred.
G. Record revenues when earned and expenses when incurred.


3). what is ratio/calculation for each of the following and what does the item tell you about the company?
Ratios or Percentages Formula
1. Leverage Ratio
2. Inventory turnover ratio
3. Gross profit percentage
4. Current ratio
5. Earnings per share

4). Determine if each of the following statements is true or false. (10 Points)
___ 1. Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate.
___ 2. All major U.S. corporations are required to maintain an adequate system of internal control.
___ 3. Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.
___ 4. The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.
___ 5. Only large companies need to be concerned with a system of internal control.

5). During its first month of business ended April 30, 2008, the ABC Corporation completed eight transactions with the dollar effects indicated in the following schedule:

1. Write a brief explanation of transactions a through h. Include any assumptions that you made.
2. Compute the ending balance in each account and prepare and balance sheet for the Corporation on April 30, 2008.


Solution Preview

It was much easier working with the original word document that was provided, so most of the answers are on the word document attached. #3 is answered on the attachment.doc. #5 can be found on both the word and excel documents that have been attached. Some explanations for how the answers were found are below:


1. Land: It's a non current or long term asset because it lasts for longer than 12 months
2. Retained Earnings: It is equity and represents amount of net income retained by company
3. Notes Payable (due in three years): It's a non current liability because it is longer than 12 months
4. Accounts Receivable: It is a current asset ...