During January 2015, the First Month of Operations, a Consulting

question 169

Multiple Choice

During January 2015, the first month of operations, a consulting firm had following transactions:
1.Issued common stock to owners in exchange for $20,000 cash.
2.Purchased $5,000 of equipment, paying $1,000 cash and signing a promissory note for $4,000.
3.Received $9,000 in cash for consulting services performed in January.
4.Purchased $1,500 of supplies on account; all of the supplies were used in January.
5.Provided consulting services on account in the amount of $16,000.
6.Paid $750 on account.
7.Paid $3,000 to employees for work performed during January.
8.Received a bill for utilities for January of $3,400; the bill remains unpaid.
-Use the information above to answer the following question.What is the amount to be reported as total liabilities on the balance sheet at the end of January?

• A) $4,750.
• B) $4,150.
• C) $8,150.
• D) $8,500.

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Definitions:

Debt Service Fund

A fund established to account for the accumulation of resources for, and the payment of, long-term debt principal and interest.

General Fund

The primary operating fund of a government, financing a variety of its general activities and services.

Governmental Fund Financial Statements

These are financial reports that detail the financial position and results of operations of governmental funds, focusing on the sources, uses, and balances of expendable financial resources.

Governmental Fund

Fiscal and accounting entities used by governments to manage resources derived from tax and other revenues for specific purposes.