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Net Income - Financial Accounting Fundamentals - Practice
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Net Income, Employee Salaries Expense, Journal Entries, Financial Accounting Fundamentals

The key terms in this Financial Accounting course include Net Income, Employee Salaries Expense, Interest Expense, Journal Entries, Financial Statement Accounts, Asset (A), Liability (L), Equity (EQ) Account, Ending Inventory, Perpetual LIFO inventory, Cost of the Ending Inventory, Accounts Receivable, Dividends

Determine the net income of a company for which the following information is available for the month of July.

Employee salaries expense$193,000
Interest expense23,000
Rent expense33,000
Consulting revenue452,000







Net Income = Revenues – Expenses
Or Net Income = Consulting Revenue – Employee Salaries Expense – Interest Expense – Rent Expense
Net Income = $452,000 – $193,000 – $23,000 – $33,000; Net Income = $203,000

A law firm billed a client $2,600 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?

Debit Accounts Receivable, $2,600; credit Unearned Legal Fees Revenue, $2,600.

Debit Cash, $2,600; credit Unearned Legal Fees Revenue, $2,600.

Debit Legal Fees Revenue, $2,600; credit Accounts Receivable, $2,600.

Debit Accounts Receivable, $2,600; credit Legal Fees Revenue, $2,600.

Debit Cash, $2,600; credit Accounts Receivable, $2,600.

Identifying financial statement accounts

Classify each of the following accounts as an asset (A), liability (L), or equity (EQ) account.

a.Office EquipmentA
c.Common StockEQ
d.Prepaid InsuranceA
e.Office SuppliesA
f.Prepaid RentA
h.Unearned RentL
i.Accounts PayableL

A company had the following purchases and sales during its first year of operations:

January:28 units at $21019 units
February:38 units at $21518 units
May:33 units at $22022 units
September:30 units at $22521 units
November:28 units at $23035 units

On December 31, there were 42 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)







Ending Inventory

20@$215= 4,300
11@$220= 2,420
2@$225= 450
0@$230= 0
42 units $9,060