Jing Company Was Started on January 1, Year 1 When

question 37

Multiple Choice

Jing Company was started on January 1, Year 1 when it issued common stock for $39,000 cash. Also, on January 1, Year 1 the company purchased office equipment that cost $16,300 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $2,400. The equipment had a five-year useful life and a $6,100 expected salvage value.Assume that Jing Company earned $26,200 cash revenue and incurred $16,500 in cash expenses in Year 3. Using straight-line depreciation and assuming that the office equipment was sold on December 31, Year 3 for $10,000, the amount of net income or (loss) appearing on the December 31, Year 3 income statement would be:

• A) ($2,460).
• B) $3,060.
• C) $6,040.
• D) $5,940.

Understand the components and objectives of internal control systems.

Identify and apply bank statement adjustments and company book adjustments.

Recognize elements of the control environment, risk assessment, and control procedures.

Match internal control elements to their descriptions or purposes.

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Definitions:

Cash Dividend

A payout to shareholders from a company's earnings in the form of cash.

Comparative Balance Sheet

A financial statement presenting the assets, liabilities, and equity of an entity at two or more points in time to facilitate comparative analysis.

Direct Method

An approach to preparing the cash flow statement where actual cash flow information from the company's operations is used directly.

Prepaid Expense

Expenditures paid for in advance for goods or services to be received in the future, often including insurance premiums or rent.