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.