investments increase owner\'s equity. Withdrawals owner\'s equity Increase. o. D
ID: 2599186 • Letter: I
Question
investments increase owner's equity. Withdrawals owner's equity Increase. o. Decrease c. Either increase or decrease d. Have no effect on 40. Income summary is used for what type of entries? a. Regular b. Closing c. Adjusting d. All of the above 41. The capital account is a. A permanent account b. A temporary account c. An asset account d. An income statement account 42. A company purchased 130 units for 530 each on January 31. It purchased 150 units for $35 eath sold 150 units for $80 each from March 1 through December 31. if the compar first-im, first-out inventory costing method, what is the amount of Cost of Goods Sold or on February 28, It nt for the year ending December 31? (Assume thet the company uses a the income stateme perpetual inventory system.) a. $3,900 b. $5,250 c $4,600 d. $9,150 43. The following information is available for luno Company for the month ending June 30, 2019: Balance as per the bank statement is S 11,500. Balance as per books is $10,300, · . Check #506 for $1,400 and check #510 for $900 were not shown on the June 30, bank . A deposit in transit of $3,218 had not been received by the bank when the bank statement wa generated A bank debit memo indiceted an NSF check for $100 written by Jane Smith to Juno Company a June 13 A bank credit memo indicated a note colected by the bank of $2,200 and interest revenue of : $53 on June 20 The bank statement indicated service charges of $35. What is the adjusted book balance? a. $12,453 b. $12,418 $8,053 d $8,000 61PageExplanation / Answer
39.
When a transaction alters the value of the company's assets, company's equity also consequently changes. Increase in the balance of an asset account without changing the corresponding expense, results in increase in the business equity. Likewise withdrawing the funds directly from the equity account will reduce the business equity. This transaction reduces the cash asset account and equity balance, keeping the accounting equation balanced in the process.
Hence option “b. Decrease” is correct answer.
40.
The income summary account is an intermediate account specifically used for transfer of all income statement revenue and expense accounts at the end of an accounting period.
In the closing process each revenue account will be equally debited with the amount of its credit balance and the total of all those debits will be entered as single credit in the account Income Summary. In the same way each expense account will be credited with the amount of its debit balance, and the total of all of those credits will be entered as a single debit in Income Summary. As soon as these amounts are recorded in the Income Summary, the Income Summary account balance is transferred to Retained Earnings or owner's capital account. So in the other word the income summary account is a temporary account used with closing entries in a manual accounting system.
Hence option “b. Closing” is correct answer.
41.
Capital accounts are not closed at the end of the accounting period. The Cash balances are carried over from one accounting period to another. And also capital accounts are reported in the balance sheet of the company.
Capital accounts of all type of businesses are permanent accounts.
Hence option “a. A permanent account” is correct answer.
42.
FIFO (Perpetual)
Receipts
Cost of Goods Sold
Balance
Date
Description
Qty
Rate
Amount
Qty
Rate
Amount
Qty
Rate
Amount
31-Jan
Purchases
130
$30
$3,900
130
$ 30
$ 3,900
28-Feb
Purchases
150
$35
$ 5,250
12
$11
$ 132
1-Mar
Sold
130
$30
$ 3,900
20
$35
$ 700
130
$ 35
$ 4,550
Ending
280
$9,150
150
$ 4,600
130
$ 4,550
Cost of goods sold is $ 4,600.
Hence option “c. $ 4,600” is correct answer.
[Answered first four questions]
FIFO (Perpetual)
Receipts
Cost of Goods Sold
Balance
Date
Description
Qty
Rate
Amount
Qty
Rate
Amount
Qty
Rate
Amount
31-Jan
Purchases
130
$30
$3,900
130
$ 30
$ 3,900
28-Feb
Purchases
150
$35
$ 5,250
12
$11
$ 132
1-Mar
Sold
130
$30
$ 3,900
20
$35
$ 700
130
$ 35
$ 4,550
Ending
280
$9,150
150
$ 4,600
130
$ 4,550
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