Accounting Test

Which of the following accounts decreases with a​ credit?

Cash

Which of the following is the most liquid​ asset?

Cash

John Tilden contributes cash to his business in exchange for capital. John is the sole proprietor. The two accounts involved in this transaction are​ ________.

Cash and​ Tilden, Capital

Montgomery Equipment Rental Company received​ $1,000 cash from a​ customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting​ equation?

Cash increases and Accounts Receivable decreases

A business purchases equipment by paying​ $7,517 in cash and issuing a note payable of​ $19,410. Which of the following​ occurs?

Cash is credited for​ $7,517, Equipment is debited for​ $26,927, and Notes Payable is credited for​ $19,410.

Which of the following accounts will be included in a postminus−closing trial​ balance?

Interest Payable

What type of account is Prepaid​ Rent, and what is its normal​ balance?

It is an asset account and has a debit balance.

Which of the following is a measure of how quickly an item can be converted to​ cash?

Liquidity

Which of the following journal entries would be recorded if a business purchased​ $800 of office supplies on​ account?

Office Supplies 800 Accounts Payable 800

Posting a transaction means​ ________.

Transferring data from the journal to the ledger

Which of the following is a liability​ account?

Unearned Rent

Your Business​ Advisor, a consulting​ company, uses reversing entries. On March​ 31, 2018, the bookkeeper journalized and posted the following adjusting entry to accrue Utilities​ Expense: Utilities Expense 1 comma 0001,000 Utilities Payable 1 comma 0001,000 Which of the following entries is the correct reversing entry to be prepared on April​ 1, 2018?

Utilities Payable 1,000 Utilities Expense 1,000

Metropolitan Casting Services started the year with total assets of $ 110 comma 000$110,000 and total liabilities of $ 40 comma 000$40,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $ 110 comma 000$110,000 and $ 50 comma 000$50,000​, respectively. During the​ year, there were no new capital contributions and the owner withdrew $ 55 comma 000$55,000. Calculate the amount of increase or decrease in​ owner's equity for the year.

a $5,000 increase

Which of the following accounting elements does the matching principle help to​ match?

expenses and revenues

The field of accounting that focuses on providing information for external decision makers is​ ________.

financial accounting

​Patents, copyrights, and trademarks are examples of​ ________.

intangible assets

Managerial accounting provides information to​ ________.

internal decision makers

Transactions are first recorded in a​ ________.

journal

Which one of the following account groups normally has a credit​ balance?

liabilities and revenues

Which one of the following account groups will decrease with a​ debit?

liabilities and revenues

Jason Ford has been the sole owner of a bicycle sales and repair shop for several years. Which of the following business types would limit​ Jason's personal liability exposure to the​ entity's debts?

limited−liability company

At the time the transaction​ occurred, which of the following would result in an increase in net income under the accrual basis of​ accounting, but would not result in an increase in net income under cash basis​ accounting?

performance of services on account

The Sarbanesminus−Oxley Act​ (SOX) ________.

requires companies to take responsibility for the accuracy and completeness of their financial reports

Maxwell Plumbing Services earned​ $500 by completing a job for Smith Company. The​ $500 earned by Maxwell Plumbing Services is its​ ________.

revenue

A reversing entry​ ________.

switches the debit and the credit of a previous entry

Which of the following is considered a fiscal​ year?

twelve months

When does a company account for revenue if it uses cash basis​ accounting?

when cash is​ received, either prior​ to, at the time​ of, or after the services are performed

If a company is using accrual basis​ accounting, when should it record​ revenue?

when services are​ performed, even though cash may be received at a later date

Which of the following accounts increases with a​ credit?

​Owner, Capital

Which of the following are temporary accounts that are closed at the end of the​ year?

​revenues, expenses, and​ Owner, Withdrawals

Which of the following is true of​ assets?

Assets are something of value the business owns or controls.

The return on assets is calculated by​ ________.

dividing net income by average total assets

The following transactions for the month of March have been journalized and posted to the proper accounts of a sole proprietorship. Mar. 1 The business received $ 7 comma 000$7,000 cash from the owner of the​ business, Morris Tharps. The business gave capital to Morris Tharps. Mar. 2 Paid the first​ month's rent of $ 800$800. Mar. 3 Purchased equipment by paying $ 2 comma 500$2,500 cash and executing a note payable for $ 8 comma 000$8,000. Mar. 4 Purchased office supplies for $ 730$730 cash. Mar. 5 Billed a client for $ 8 comma 000$8,000 of design services completed. Mar. 6 Received $ 7 comma 900$7,900 on account for the services previously recorded. What is the balance in Cash on March​ 6?

$10,870

Following is a list of account balances of Nabers Delivery Services as of December​ 31, after the first year of operations. Accounts Receivable $ 5 comma 000$5,000 Accounts Payable 5 comma 0005,000 Salaries Expense 6 comma 0006,000 Repairs Expense 500500 Truck 11 comma 00011,000 Equipment 8 comma 0008,000 Notes Payable 8 comma 4008,400 Cash 7 comma 4007,400 Supplies Expense 1 comma 0001,000 Service Revenue 33 comma 00033,000 Gasoline Expense 2 comma 9002,900 Salaries Payable 400400 What is the amount of total liabilities at the end of the​ year?

$13,800

The following transactions have been journalized and posted to the proper accounts. March is the first month of business operations for the sole proprietorship. Mar. 1 The business received $ 9 comma 000$9,000 cash from the owner in exchange for capital. Mar. 2 Paid the first​ month's rent of $ 800$800. Mar. 3 Purchased equipment by paying $ 4 comma 000$4,000 cash and executing a note payable for $ 6 comma 000$6,000. Mar. 4 Purchased office supplies for $ 500$500 cash. Mar. 5 Billed a client for $ 14 comma 000$14,000 of design services completed. Mar. 6 Received $ 6 comma 000$6,000 on account for the services previously recorded. What is the ending balance in the Service Revenue​ account?

$14,000

The following is the adjusted trial balance for Baker Services. Accounts Debit Credit Cash $ 45 comma 200$45,200 Accounts Receivable 29 comma 00029,000 Prepaid Insurance 6 comma 5006,500 Office Supplies 2 comma 8002,800 Land 50 comma 00050,000 Building 145 comma 000145,000 Accumulated Depreciationlong dash—Building $ 14 comma 500$14,500 Equipment 71 comma 00071,000 Accumulated Depreciationlong dash—Equipment 8 comma 0008,000 Accounts Payable 20 comma 00020,000 Salaries Payable 5 comma 0005,000 Unearned Revenue 24 comma 00024,000 Mortgage Payable 106 comma 000106,000 ​Baker, Capital 30 comma 50030,500 ​Baker, Withdrawals 23 comma 00023,000 Service Revenue 277 comma 000277,000 Salaries Expense 62 comma 00062,000 Depreciation Expenselong dash—Building and Equipment 5 comma 9005,900 Supplies Expense 12 comma 00012,000 Insurance Expense 14 comma 60014,600 Utilities Expense 18 comma 00018,000 Total $ 485 comma 000$485,000 $ 485 comma 000$485,000 There were no new capital contributions during the year. After the closing entries are​ posted, what is the balance in​ Baker, Capital?

$172,000

A sole proprietorship reported the following transactions for the month of March. The transactions have been journalized and posted to the proper accounts. Mar. 1 The business received $ 10 comma 000$10,000 cash from the owner in exchange for capital. Mar. 2 Paid the first​ month's rent of $ 700$700. Mar. 3 Purchased equipment by paying $ 2 comma 000$2,000 cash and executing a note payable for $ 5 comma 000$5,000. Mar. 4 Purchased office supplies for $ 750$750 cash. Mar. 5 Billed a client for $ 11 comma 000$11,000 of design services completed. Mar. 6 Received $ 9 comma 000$9,000 on account for the services previously recorded. What is the balance in Accounts​ Receivable?

$2,000

Murphy Company prepaid $ 3 comma 600$3,600 on October​ 1, 2018 for a oneminus−year insurance premium. Coverage begins October 1. On January​ 1, 2019​ (after December 31​ adjustments), the Prepaid Insurance account will have a debit balance of​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ number.)

$2,700

Following is an extract of account balances of Aztec Moving Services as of December​ 31, after the first year of operation. Accounts Receivable ​$4,000 Accounts Payable ​4,000 Salaries Expense ​7,000 Repairs Expense 700 Truck ​10,000 Equipment ​9,000 Notes Payable ​8,200 Cash ​7,100 Supplies Expense ​1,200 Service Revenue ​35,000 Gasoline Expense ​3,600 Salaries Payable 300 What is the amount of total assets at the end of the​ year?

$30,100

Oakland Tax Planning Service bought computer equipment for $ 23 comma 000$23,000 on January​ 1, 2018. It has an estimated useful life of four years and zero residual value. Oakland uses the straightminus−line method to calculate depreciation and records depreciation expense in the books at the end of each month. Calculate the amount of Depreciation Expense for the​ period, January​ 1, 2018 through September​ 30, 2018, for this equipment.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

$4,313

Watson Tax Planning Service has the following plant​ assets: Communications​ Equipment: Cost, $ 6 comma 960$6,960 with useful life of eight​ years; Furniture:​ Cost, $ 19 comma 200$19,200 with useful life of 12​ years; and​ Computer: Cost, $ 13 comma 200$13,200 with useful life of four years.​ (Assume residual value of all the assets is​ zero.) Watson's monthly depreciation expense calculated using the straightminus−line method is​ ________. (Round any intermediate calculations and your final answer to the nearest​ cent.)

$481

Following is a list of account balances of Lincoln Lawn Services as of December​ 31, after the first year of operations. Accounts Receivable $ 6 comma 000$6,000 Accounts Payable 5 comma 0005,000 Salaries Expense 5 comma 0005,000 Repairs Expense 700700 Truck 12 comma 00012,000 Equipment 8 comma 0008,000 Notes Payable 26 comma 30026,300 Cash 12 comma 00012,000 Supplies Expense 8 comma 0008,000 Service Revenue 26 comma 30026,300 Gasoline Expense 7 comma 3007,300 Salaries Payable 1 comma 5001,500 Calculate the net income.

$5,300

Diamond Company had the following transactions during​ June: Performed services for $ 5 comma 000$5,000 on​ account; received cash on​ account, $ 8 comma 000$8,000​; paid $ 800$800 for repair​ expense; paid $ 1 comma 800$1,800 to a supplier that it owed from the previous month. What is the combined effect on Cash of these June​ transactions?

$5,400 increase

Watson Foods​ Company, a sole​ proprietorship, reported the following transactions for September 2019. ​a) The business received $ 21 comma 000$21,000 cash from the owner in exchange for capital. ​b) The business purchased office equipment for $ 10 comma 000$10,000 for which $ 3 comma 000$3,000 cash was paid and the balance was put on a note payable. ​c) Paid insurance expense of $ 1 comma 700$1,700 cash. ​d) Paid the September utility bill for $ 900$900 cash. ​e) Paid $ 2 comma 000$2,000 cash for September rent. ​f) The business had sales of $ 11 comma 000$11,000 in September. Of these​ sales, 4040​% were cash​ sales, and the balance was credit sales. ​g) The business paid $ 6 comma 000$6,000 cash for office furniture. What are the total liabilities at the end of September​ 2019?

$7,000

The asset​ account, Office Supplies had a beginning balance of $ 5 comma 300$5,300. During the accounting​ period, office supplies were​ purchased, on​ account, for $ 5 comma 500$5,500. A physical​ count, on the last day of the accounting​ period, shows $ 2 comma 700$2,700 of office supplies on hand. What is the amount of Supplies Expense for the accounting​ period?

$8,100

On the first day of​ January, Builders Company borrowed $ 3 comma 000$3,000 on a oneminus−year note payable bearing interest at 66​% per year. The note specifies that principal and interest must be paid in full at the end of the oneminus−year period. On June​ 30, the adjusted trial balance will show Interest Payable of​ ________.

$90 credit

Precision Camera Services started the year with total assets of $ 120 comma 000$120,000 and total liabilities of $ 50 comma 000$50,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $ 140 comma 000$140,000 and $ 60 comma 000$60,000​, respectively. During the​ year, there were no new capital contributions and the owner withdrew $ 55 comma 000$55,000. What is the amount of​ owner's equity at the end of the​ year?

$95,000

A company has $ 140 comma 000$140,000 in current​ assets; $ 600 comma 000$600,000 in total​ assets; $ 90 comma 000$90,000 in current​ liabilities, and $ 130 comma 000$130,000 in total liabilities. Calculate the current ratio of the company.​ (Round your answer to two decimal​ places.)

1.56

The following are selected current​ month's balances for Morgan Company. Accounts Payable $ 8 comma 000$8,000 Revenue 9 comma 0009,000 Cash 1 comma 1501,150 Expenses 1 comma 6001,600 Furniture 12 comma 00012,000 Accounts Receivable 16 comma 00016,000 ​Morgan, Capital 9 comma 2509,250 Notes Payable 4 comma 5004,500 Based on this​ information, calculate the total amount of credits for the trial balance.

30,750

Converse Florists​ & Co. reported assets of​ $1,100 and equity of​ $500. What is its debt​ ratio? (Round your percentage answer to two decimal​ places.)

54.55%

Assume Metro Company had a net income of $ 2 comma 500$2,500 for the year ending December 2018. Its beginning and ending total assets were $ 35 comma 500$35,500 and $ 19 comma 500$19,500​, respectively. Calculate​ Metro's return on assets​ (ROA). (Round your percentage answer to two decimal​ places.)

9.09​%

Green Lawns Company earned​ $500 for landscaping services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this​ transaction?

Accounts Receivable

The formula for computing the current ratio is​ ________.

Current ratio​ = Total Current assets​ / Total Current liabilities

Salaries​ Payable, Accounts​ Payable, and Unearned Revenue are examples of​ ________.

current liabilities

Which of the following organizations is responsible for the creation and governance of accounting standards in the United​ States?

Financial Accounting Standards Board

GAAP refers to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to​ ________.

Generally Accepted Accounting Principles

Revenues and expenses may be transferred to the​ ________ account before their final transfer into the​ Owner, Capital account.

Income Summary

Which of the following is the correct order of preparation of financial​ statements?

Income statement→ statement of​ owner's equity→ balance sheet→ statement of cash flows

The account title used for recording the payment of rent in advance for an office building is​ ________.

Prepaid Rent

Which of the following entries would be recorded by a company that uses the cash basis method of​ accounting?

Rent Expense ​1,000 Cash ​1,000

​________ represents a debt owed for renting a building.

Rent Payable

Which of the following is a permanent​ account?

Salaries Payable

Which of the following organizations requires publicly owned companies to be audited by independent accountants​ (CPAs)?

Securities and Exchange Commission​ (SEC)

Which of the following accounts will be closed by crediting the Income Summary​ account?

Service Revenue

The income statement section of the worksheet includes​ ________.

Service Revenue and Utilities Expense

Which of the following is the correct formula for calculating depreciation under the straightdash-line ​method?

Straightdash-line depreciation​= (Cost − Residual​value) / Useful life

The adjusted trial balance shows​ ________.

account balances after adjustments

Which of the following is an asset​ account?

accounts receivable

Financial statements are prepared from the balances in​ a(n) ________.

adjusted trial balance

Adjusting journal entries are prepared​ ________.

after preparing the unadjusted trial balance

For accounting​ purposes, depreciation refers to the process of​ ________.

allocating the cost of a plant asset to expense over its useful life

Which financial statement is prepared​ last?

balance sheet

The entries that transfer the​ revenue, expense, and​ Owner, Withdrawals balances to the​ Owner, Capital account to prepare the​ company's books for the next period are called​ ________ entries.

closing

Accumulated Depreciation is​ a(n) ________ account and carries a normal​ ________ balance.

contra​ asset; credit

Salaries are $ 5 comma 500$5,500 per week for five working days and are paid weekly at the end of the day on Fridays. The end of the month falls on a Thursday. The accountant for Sunset Company made the appropriate accrual adjustment and posted it to the ledger. The balance of Salaries​ Payable, as shown on the adjusted trial​ balance, will be a​ ________. (Assume that there was no beginning balance in the Salaries Payable​ account.)

credit balance of $4,400

Martinville Company earned revenues of​ $20,000 and incurred expenses of​ $4,000. Martinville withdrew​ $3,500 for personal use. What is the balance in the Income Summary account prior to closing net income or loss to the​ Martinville, Capital​ account?

credit balance of​ $16,000

Brownstone Company has a current ratio of 66. This indicates that the company has $ 6.00$6.00 in​ ________.

current assets for every​ $1 of current liabilities