Accounting Study Guide: Exam 1 Prep 2022

School: University of Nebraska, Lincoln - Course: ACCT 312 - Subject: Accounting

EXAM 1 PREP 2022 1. Indicate whether each of the accounts is increased by a debit (D) or a credit (C). 1.Prepaid rent 2.Additional paid in capital 3.Inventories 4.Goodwill 5.Gain on sale of building 6.Provision for income taxes 7.Allowance for bad debts 8.Accounts payable 9.Provision for uncollectibles 10. Unearned revenue 11. Short-term investments 12. Wages payable 2. Indicate the financial statement (Balance Sheet, Income Statement, Statement of Comprehensive Income, or Statement of Cash Flows) on which you would find each of the following line items: 1.Proceeds from sale of PP&E 2.Other Comprehensive Income 3.Other income 4.Accumulated Depreciation 5.Accounts Receivable 6.Gross Profit

For questions 3 and 4, assume that the fiscal year end for Blue Devil Corp. is December 31st, and that Blue Devil recognizes revenue when the products have been delivered to the customer. 3.On February 1, 2021, a customer paid cash for 1,000 blue and white striped wristbands to be delivered on March 1 and April 1 (500 wristbands on each date). Blue Devil Corp. purchases each wristband for $1.00 and sells them for $5.00. a.Provide the journal entry(ies) Blue Devil made on February 1 (4 points). b.Provide the journal entry(ies) made on March 1 (4 points). c.Provide the journal entry(ies) made on April 1 (4 points). d.What is the cumulative effect of the transactions above on Blue Devil's net income?

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4.On July 1, 2021, Blue Devil Corp. paid $20,000 for insurance coverage from July 2021 through June 2022. The initial journal entry was recorded as a debit to prepaid insurance and a credit to cash. Provide the adjusting entry Blue Devil would make at the end of 2021. 5. On July 1, 2021, Blue Devil Corp. purchased a packing machine for $78,000. The machine has a residual value of $3,000 and a useful life of 15 years. Provide the adjusting journal entry on December 31, 2021 that would be required if Blue Devil uses the straight line method of depreciation. 6.The SEC grants the authority to set U.S. accounting standards to which of the following organizations (3 points)? a)GAAP b)IASB c)IFRS d)FASB e)None of these 7.According to accounting standard setters, which two of the following (circle two) are desirable characteristics of accounting information? a)Timeliness b)Conservatism c)Verifiability d)Creativity