Accounting 2 Test

The beginning capitol balance is $5,500, there are no additional investments but the owner did withdraw $500 during the accounting period. The period's revenue is $4,000 and expenses total $6,000. What is the ending capital balance (after closing entries)?

$3,000

The adjusted trial balance on the worksheet shows Accumulated Depreciation, $1,200, and Depreciation Expense, $900. What was the balance in the Accumulated Depreciation account before the adjustment?

$300

Robert purchased a truck for $50,000 with a residual value of $20,000 and a life expectancy of 5 years; using straight-line depreciation, the amount of the depreciation adjustment for the first year would be

$6,000

After closing entries are posted, what is the balance in the Capitol account?

$7,000

Journal entries that are needed in order to update account balances for internal business transactions (such as supplies and prepaid rent) at the end of the period are:

Adjusting entries

Internal control over a company's assets should include the following procedures:

All of these answers are correct

Adjusting entries affect:

Both A and B are correct

Income Summary:

Both A and B are correct

Checks that have been processed by the bank and are no longer negotiable are:

Canceled checks

The bank would issue a credit memorandum to Mary's life Life Management when the bank:

Collects a note receivable from a customer

The journal entry to record the entry of a customer's non-sufficient funds check would include a:

Credit to Cash

Sam's Tutoring Service's $500 petty cash fund has a shortage of $4. The facts are $180 in valid receipts for expenses; $316 in coins and currency. The journal entry to replenish the petty cash fund would include a:

Credit to Cash Short and Over for $4

Tina's Event Planning bought a computer worth $4,000 with an expected life of 4 years and a residual value of $800. What is the adjusting journal entry after the first year?

Depreciation Expense 800 Accumulated Depreciation, Computer 800

Closing entires will:

Either increase or decrease Owner's Capitol

From the bank reconciliation, no entry was recorded for a debit memo for a new check fee expense. This would cause:

Expenses to be understated

Outstanding checks:

Have not been presented to the bank for payment but have been subtracted in the checkbook

The journal entry to close the expense accounts is:

Income Summary 1,300 Supplies Expense 600 Depreciation Expense 400 Salaries Expense 300

It's the end of the accounting period and no electric bill has been received (but the expense has been incurred); you should record an entry that:

Increases the total liabilities and increases the total expenses

The Income Summary account shows debits of $29,000 and credits of $20,000. This results in a:

Net loss of $9,000

All permanent accounts can be found:

On the Balance Sheet

When historical cost is used in the accounting records, the book value of the asset is

Original cost less accumulated depreciation

The person or company to whom a check is payable is called the:

Payee

The correct order for closing accounts is:

Revenue, Expenses, income summary, withdrawals

The inside columns on the financial statements are used to:

Show subtotals

On a worksheet, the income statement debit column totals $10,500 and the credit column totals $10,300. Which of the following statements is correct?

The company had a net loss of $200

A petty cash fund is set up:

To pay for small expenses

All of the following are reasons to adjust the account balances at the end of the period, except:

To report all revenues earned during the period.

Endorsing a check:

Transfers the right to deposit or transfer cash

When making the adjustment for prepaid insurance, instead of writing off only the time that has passed, the entire policy was written off. This would:

Understate net income

A form used to organize and check data before preparing financial reports is known as a(n)

Worksheet