Accounting Midterm
If the balance of supplies at the start of the month was $1,700 and at the end of the month you had $850 on hand, the adjustment for Supplies would be:
850
Which of the following transactions affect Owner's Equity?
A withdrawal
Accounts Payable had a normal starting balance of $900. There were debit postings of $100 and credit postings of $450 during the month. The ending balance is:
A) $1,250 credit. Explanation: ($900 - $100) + $450 = $1,250
Which accounts are affected when the company buys a truck for cash?
A) Assets and Revenue B) Liabilities and Capital C) Capital and Liabilities D) None of the above is correct. (D)
If Cash has been debited, it is likely that:
A) the owner made an investment. B) a customer made a payment. C) a customer paid cash for services. (ALL OF THE ABOVE)
Expenses
A.)are costs the company incurs in carrying on operations. B.)are a subdivision of Owner's Equity.
Which of the following accounts would be credited in a proper journal entry
Accounts Payable when it is increased
When services are rendered but payment is not made, which account would be increased?
Accounts Receivable
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
Which accounts are affected when the company pays salaries?
Assets and Expenses
The beginning balance in the Equipment account was $4,000. The company purchased an additional $1,000 worth of Equipment. The ending balance in the account is:
C) debit of $5,000. Explanation: $4,000 + $1,000 = $5,000
Checks that have been processed by the bank and are no longer negotiable are:
Canceled checks
Accounting services were provided to a customer for cash. How would this affect the accounting equation?
Cash and Revenue increase.
Go Big Red Retail Store collected $16,000 of its accounts receivable. The expanded accounting equation changes include:
Cash increases and Accounts Receivable decreases $16,000.
An overpayment was discovered in computing and paying the wages of a Plum Hollow Country Club employee. When the employee returns the amount of the overpayment, Plum Hollow should make which of the following entries?
Cash, debit; Wages Expense, credit
Revenue, Expenses, and withdrawals are subdivisions of:
Customer payment
The payment of accounts payable would:
Decrease both assets and liabilities
On a bank reconciliation, deposits added to the bank side are called:
Deposits in transit
The credit side is always the left side of the account.
False
A nonsufficient funds check was returned to your company. How does the bank treat this on your bank statement?
It is shown as a debit memo.
Adjusting journal entries:
Must be journalized and posted
An adjustment for Prepaid Rent Expense would indicate
The amount expired
How would outstanding checks be handled when reconciling the ending cash balance per the bank statement to the correct adjusted cash balance?
They would be subtracted from the balance of the bank statement.
Transactions are listed in chronological order in the journal.
True
The bank statement included bank charges. On the bank reconciliation, this item is:
a deduction from the balance per company books.
If Accounts Payable has been debited, it is most likely that:
a payment was made on account
If Accounts Payable has been credited, it is most likely that:
a purchase was made on account.
An accounting tool used to record increases and decreases in individual Assets, Liabilities, Capital, Revenue, Expenses, and Owner's Drawing is a(n)
account
Bringing account balances up to date before preparing financial reports is called:
adjusting
A contra-asset is:
an account with an opposite balance of a normal asset
If a company's Revenues are higher than its Expenses, it will cause:
an increase in Owner's Equity.
Prepaid Rent Expense is considered to be a(n
asset
If Prepaid Rent Expense for the period is NOT adjusted
assets will be overstated and expenses will be understated.
If the Supplies account is NOT adjusted
assets will be overstated and expenses will be understated.
Each adjusting entry affects:
both balance sheet and income statement accounts
Kim billed her legal clients $12,000 for legal work completed during the month. This transaction will:
cause a $12,000 increase in Assets and Revenues.
The bank would issue a credit memorandum to Marion's Life Management when the bank
collects a note receivable from a customer.
The right side of any account is the:
credit side
The adjusting entry to record depreciation for the company automobile would be:
debit Depreciation Expense, Automobile; credit Accumulated Depreciation, Automobile.
The adjusting entry to record the expired rent would be to:
debit Rent Expense; credit Prepaid Rent.
The adjusting entry for accrued salaries is to:
debit Salaries Expense; credit Salaries Payable.
The adjustment to record supplies used during the period would be:
debit Supplies Expense; credit Supplies.
The left side of any account is the:
debit side
Cup's Inc. paid $15,000 in salaries and wages for February. This transaction will
decrease Assets and increase Expenses.
Crystal Clear Imagery received and paid a utility bill for $600 for the month of November. This transaction will
decrease Cash and increase Utility Expense.
Ryan withdrew cash from the business to pay his personal cell phone bill. The expanded accounting equation changes include
decrease in Cash and increase in Withdrawals
Owner's Withdrawals
decrease in assets
As Prepaid Rent Expense is used, the asset becomes a(n)
expense
NOT recording the Prepaid Rent Expense used causes
expenses to be too low.
If the adjustment for Supplies used during the period was NOT made:
expenses would be too low.
Outstanding checks:
have not been presented to the bank for payment but have been subtracted in the checkbook.
A ledger
includes all company accounts and their related balances
The net income or net loss is calculated on the:
income statement
Scotch Services received a credit memorandum from the bank. During the bank reconciliation they should:
increase their cash account on the company's books.
To find an explanation for a transaction, look in the
journal
If beginning capital was $170,000, ending capital is $93,000, and the owner's withdrawals were $19,000, the amount of net income or net loss was
net loss of $58,000.
The bank statement does NOT show:
outstanding checks
If Fees Earned has been credited, it is most likely that:
services were provided.
A formal account that has columns for date, explanation, posting reference, debit, and credit is called the:
standard account form
If Ol' Fashioned Toys' Revenues are greater than its Expenses during the accounting period:
the business will earn a net income.
If Ol' Fashioned Toys' Revenues are less than its Expenses during the accounting period
the business will incur a net loss.
The proper format for a journal entry includes all of the following, except
the credit portion of the transaction is always indented.
An account is said to have a debit balance if
the footing of the debits exceeds the footing of the credits
If Capital has been credited, it is likely that
the owner made an investment.
If Prepaid Rent has been debited, it is likely that:
the rent was paid for three months in advance.
If Rent Expense has been debited, it is likely that:
this month's rent was paid.
A form used to organize and check data before preparing financial reports is known as a(n)
worksheet.