At the End of the First Month of Operations for SloMo

question 22

Multiple Choice

At the end of the first month of operations for SloMo Delivery Service, the business had the following accounts: Accounts Receivable, $11,350; Prepaid Insurance, $400; Equipment, $26,200 and Cash, $21,650. On the same date, SloMo owed the following creditors: Simpson Supply Company, $17,000; Allen Office Equipment, $14,500.
The total assets for the SloMo Delivery Service are:

• A)$59,600.
• B)$21,650.
• C)$33,400.
• D)$33,000.

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Definitions:

Accounting Equation

The fundamental principle of double-entry bookkeeping: Assets = Liabilities + Equity, depicting the relationship between a company's resources and claims on those resources.

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase cost.

Cash-Equivalent Value

The value of an asset that is easily convertible into a known amount of cash with minimal risk of change in value.

Business Activities

Operations, actions, and tasks that a company engages in as part of its economic operations, including production, sales, marketing, and finance.