Accounting Exam 1 Ch. 1-4 Part 1

An imprest petty cash fund of​ $600 was established for minor disbursements. At the end of the​ month, the fund included petty cash tickets for the purchase of​ $200 in​ supplies, $73 for​ meals, $82 for​ fuel, and​ $67 for taxi fare. How much cash should be left in the​ fund? A. ​$1022 B. ​$600 C. ​$178 D. ​$245

$178 (600-200-73-82-67=178)

On December 1 of the current​ year, Prepaid Rent was debited​ $10,800 for three months of​ rent, to cover the period December 1 to February 28. The amount of the adjusting entry on December 31​ is: A. ​$0. B. ​$10,800. C. ​$7200. D. ​$3600.

$3600 (10,800/3=3,600)

A record of all the changes in a particular asset during a period of time is found in​ a(n): A. trial balance. B. transaction. C. prior​ period's balance sheet. D. account.

Account

Jaye Company purchased a new building by signing a note for​ $21,000. The entry to record the transaction​ is: A. Building ​21,000 Notes Payable ​21,000 B. Cash ​21,000 Note Payable ​21,000 C. Note Payable ​21,000 Cash ​21,000 D. Building ​21,000 Cash ​21,000

A.

Examples of liabilities​ include: A. investments and note payable. B. accounts payable and note payable. C. accounts payable and common stock. D. accounts payable and dividends.

Accounts payable and note payable

If a company buys inventory on​ account: A. total assets remain the same. B. accounts payable increases. C. cash decreases. D. net income increases.

Accounts payable increases

Interest​ payable, income tax payable and salary payable are all examples​ of: A. expenses of future periods. B. retained earnings. C. accrued liabilities. D. prepaid expenses.

Accrued liabilities

A company purchased supplies of​ $5000 on account. How does this transaction affect the accounting​ equation? A. Add​ $5000 to Supplies and subtract​ $5000 from Cash. B. Add​ $5000 to Supplies Expense and add​ $5000 to Notes Payable. C. Add​ $5000 to Supplies and add​ $5000 to Accounts Payable. D. Add​ $5000 to Supplies and add​ $5000 to Notes Payable.

Add $5000 to supplies and add $5000 to accounts payable

Decision makers who use accounting information​ include: A. the Securities and Exchange Commission. B. creditors. C. the Internal Revenue Service. D. all of the above.

All of the above

Three key duties that must always be separated under a good system of internal controls​ are: A. record​ keeping, transaction analysis and transaction approval. B. asset​ handling, recordkeeping and safeguarding of assets. C. asset​ handling, hiring and safeguarding of assets. D. asset​ handling, record keeping and transaction approval.

Asset handling, record keeping and transaction approval

The accounting equation can be stated​ as: A. Assets − ​Stockholders' Equity​ + Liabilities​ = Zero. B. Assets​ = Liabilities − ​Stockholders' Equity. C. Assets −Liabilities ​= Stockholders' Equity. D. Assets​ + Stockholders' Equity​ = Liabilities.

Assets - liabilities = stockholders' equity (or assets= liabilities+stockholders' equity)

The balance sheet reports information​ about: A. ​liabilities, equity, and expenses. B. ​assets, liabilities, and equity. C. ​assets, revenues, and liabilities. D. ​revenues, expenses, and equity.

Assets, liabilities, and equity

On July​ 25, Henry​ Company's accountant prepared a check for the August rent payment. Henry Company mailed the check on July 27 to the landlord. The landlord received the check on July 31 and cashed it on August 2. When should Henry Company record the rent expense associated with this​ transaction? Henry Company uses accrual accounting. A. August 31 B. July 25 C. July 27 D. August 2

August 31

The adjusted trial balance is used to​ prepare: A. balance​ sheet, income​ statement, and statement of retained earnings. B. the income statement only. C. the balance sheet only. D. the balance sheet and the income statement only.

Balance sheet, income statement, and statement of retained earnings

When preparing a bank​ reconciliation, which of the following items should be added to the book​ balance? A. collection of note receivable by bank B. deposits in transit C. EFT receipts D. both EFT receipts and collection of a note receivable by the bank

Both EFT receipts and collection of a note receivable by the bank

All of the following accounts are closed EXCEPT​ for: A. Dividends. B. Service Revenue. C. Cash. D. Utilities Expense.

Cash

The​ ledger: A. contains all the accounts used by a business. B. is a grouping of all the income statement accounts only. C. contains only the permanent accounts used by a business. D. is a grouping of all of the balance sheet accounts only.

Contains all the accounts used by a business

The entry to close expense​ account(s) includes​ a: A. debit to the revenue accounts. B. credit to the expense accounts. C. credit to Retained Earnings. D. debit to the expense accounts.

Credit to the expense accounts

The Houston Mavericks basketball team receives​ $5000 for season tickets on August 1. By December​ 31, $3000 of the revenue has been earned. The adjusting entry to be made on December 31 includes​ a: A. debit to Ticket Revenue of​ $3000. B. credit to Unearned Revenue of​ $3000. C. credit to Prepaid Revenue of​ $2000. D. debit to Unearned Revenue of​ $3000.

Debit to Unearned Revenue of $3,000

Deposits that have been recorded on the​ company's books, but have not yet been recorded by the bank​ are: A. deposits in transit. B. outstanding deposits. C. nonsufficient funds deposits. D. electronic funds deposits.

Deposits in transit

Assets include​ cash, land, and accounts payable. True False

False

The International Accounting Standards Board is responsible for​ establishing: A. International Financial Reporting Standards. B. U. S. Generally Accepted Accounting Principles. C. the code of professional conduct for accountants. D. an international Securities and Exchange Commission.

International Financial Reporting Standards

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual​ accounting, the doctor recognizes​ revenue: A. in March. B. in July. C. in either March or July. D. at a time that cannot be determined from the facts.

In March

In a bank​ reconciliation, a NSF check​ is: A. added to the bank balance. B. added to the book balance. C. subtracted from the book balance. D. subtracted from the bank balance.

Subtracted from the book balance

Which​ statement(s) reports the​ revenues, gains,​ expenses, and losses of an​ entity? A. Statement of cash flows and income statement B. Balance sheet C. Statement of retained earnings and statement of operations D. Income statement

Income statement

Historical​ cost: A. is the amount that the business could sell an asset for. B. is used in the U.S. to value all business assets. C. is a verifiable measure that is relatively free from bias. D. is equal to the amount of cash paid minus the dollar value of all noncash considerations also given in the exchange.

Is a verifiable measure that is relatively free from bias

A​ company's petty cash​ fund: A. is opened with a particular amount of cash. B. cannot be replaced by the use of debit cards. C. is kept by two or more employees to ensure that disbursements can readily be made. D. balance equals the cash left in the petty cash fund minus the total of the paid vouchers in the cash box.

Is opened with a particular amount of cash

Which of the following is a CORRECT statement regarding the bank​ reconciliation? A. The bank reconciliation is part of the general ledger. B. Journal entries need to be made for all transactions on the book side to get the accounts up−to−date. C. Journal entries need to be made for all transactions on the bank side to get the accounts up−to−date. D. The bank reconciliation is part of the journal.

Journal entries need to be made for all transactions on the book side to get the accounts up-to-date

Which of the following transactions will increase​ stockholders' equity? A. The company purchases equipment. B. The company issues common stock to new shareholders. C. The company pays a dividend to its shareholders. D. The company makes a payment on account.

The company issues common stock to new shareholders

Verifiability means that the accounting​ information: A. is timely and understandable. B. must be capable of being checked for​ accuracy, completeness and reliability. C. is material and relevant. D. is understandable.

Must be capable of being checked for accuracy, completeness and reliability

The entry to close Service Revenue includes a debit​ to: A. Retained Earnings and a credit to Service Revenue. B. Service Revenue and a credit to​ Stockholders' Equity. C. Service Revenue and a credit to Net Income. D. Service Revenue and a credit to Retained Earnings.

Service revenue and a credit to retained earnings

In transaction​ analysis, the declaration and payment of dividends is recorded in the​ ________ and​ ________ columns of the accounting equation. A. Retained​ Earnings; Cash B. ​Expenses; Accounts Payable C. ​Expenses; Accounts Receivable D. ​Dividends; Cash

Retained earnings; cash

Which of the following​ statements, regarding the rules of debits and​ credits, is​ CORRECT? A. A liability is increased by a debit. B. An asset is increased by a credit. C. Revenue is increased by a credit. D. Dividends are decreased by debits.

Revenue is increased by a credit

Net income is computed​ as: A. revenues − expenses. B. revenues − expenses​ + dividends. C. revenues​ + expenses. D. revenues − expenses − dividends.

Revenues - expenses

In what order are the financial statements generally​ prepared? A. income​ statement, balance​ sheet, and statement of retained earnings B. balance​ sheet, income​ statement, and statement of retained earnings C. income​ statement, statement of retained​ earnings, and balance sheet D. statement of retained​ earnings, balance​ sheet, and income statement

Statement of retained earning, balance sheet, and income statement

Dividends declared are reported on​ the: A. Balance Sheet. B. Income Statement. C. Statement of Assets. D. Statement of Retained Earnings.

Statement of retained earnings

The book value of a plant asset is​ the: A. accumulated depreciation less the cost of the asset. B. balance in the accumulated depreciation account. C. cost of the asset. D. cost of the asset less the accumulated depreciation.

The cost of the asset less the accumulated depreciation

The trial balance is used to determine​ if: A. total debits of the balance sheet accounts equal the total credits of the balance sheet accounts. B. total debits of all the accounts equal total credits of all the accounts. C. total debits of the income statement accounts equal the total credits of the income statement accounts. D. total assets equal total liabilities.

Total debits of all the accounts equal total credits of all the accounts

Information must be sufficiently transparent so that it makes sense to reasonably informed users of the financial​ statements, such as creditors. This qualitative characteristic of information is​ called: A. understandability. B. verifiability. C. faithful representative. D. relevant.

Understandability

The two types of accounting​ are: A. profit and nonprofit. B. internal and external. C. financial and management. D. bookkeeping and decision−oriented.

financial and management