ACCT 2401 Final MC Questions

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9. On January 1, Lizzie Company authorized 250,000 shares of $10 par value common stock. On February 1, 50,000 shares are issued at $18 per share. On October 31, 5,000 shares of the stock are purchased from shareholders at a price of $25 per share. What is the balance in Common Stock on December 31?A. $500,000 C. $375,000B. $900,000 D. $450,000

Accounts payable appear on which of the following statements?A) Balance sheet.B) Income statement.C) Statement of owner's equity.D) Statement of cash flows.E) Transaction statement.

The interest due on $6,500 at 6% for 60 days is:A) $36B) $42C) $65D) $180E) $420

A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current period. The ending balance in retained earnings equals:A) $108,625B) $(12,625)C) $11,375D) $43,375E) $(11,375)

Identify whether each of the following items 1 through 10 would appear on the bank side or the book side of a bank reconciliation._____ 1. Bank service charges_____ 2. Outstanding checks_____ 3. Deposits in transit_____ 4. NSF check_____ 5. Interest on a checking account_____ 6. The bank incorrectly recorded a check for $9.58. The company properly wrote the check for $95.80._____ 7. The bank printed checks for the depositor for a fee_____ 8. The bank collected a $1,000 note for the depositor.

1. Book, 2. Bank, 3. Bank, 4. Book, 5. Book, 6. Bank, 7. Book, 8. Book

Match the following types of accounts with a through d for each of the following transactions 1 through 4. a. Prepaid expenseb. Unearned revenuec. Accrued expensed. Accrued revenue_____ 1. Used to record wages owed, but not paid._____ 2. Used to record revenue earned but not received._____ 3. Used to record expiration of prepaid insurance._____ 4. Used to record revenue received in advance.

1. C, 2. D, 3. A, 4. B

A company issued 8%, 15-year bonds with a par value of $550,000. The current market rate is 8%. The journal entry to record each semiannual interest payment is:A) Bond Interest Expense ........................ 22,000 Cash............................................ ............22,000B) Bond Interest Expense ........................ 44,000Cash............................................ ............44,000C) Bond Interest Expense ........................ 550,000Cash............................................ ............550,000D) Bond Interest Expense........................ 660,000Bond Payable ............................. ............660,000E) No entry is needed, since no interest is paid until the bond is due.

A company sold a machine that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the machine was $40,000. The company should recognize a:A) $0 gain or lossB) $20,000 gainC) $20,000 gainD) $40,000 lossE) $60,000 gain

A discount on bonds payable:A) Occurs when a company issues bonds with a contract rate less than the market rate.B) Occurs when a company issues bonds with a contract rate more than the market rate.C) Increases the Bond Payable account.D) Decreases the total bond interest expense.

A dividend preference for preferred stock means that:A) Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.B) Preferred shareholders are guaranteed dividends.C) Dividends are paid quarterly.D) Preferred stockholders prefer dividends more that common stockholders.E) Dividends must be declared on preferred stock.

A premium on common stock:A) Is the amount paid in excess of par by purchasers of newly issued stock.B) Is the difference between par value and issue price when the amount paid is below par.C) Represents profit from issuing stock.D) Represents capital gain on sale of stock.E) Is prohibited in most states.

Failure to record an adjusting entry for an accrued expense will result in the following:Liabilities Net IncomeA. understated overstatedB. overstated understatedC. understated no effectD. no effect understated

If a bank reconciliation includes an NSF check for $45, the journal entry to record this reconciling item would include:A. a credit to Cash.B. a debit to Cash.C. a credit to Accounts Receivable.D. no entry. No entry is required.

Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July 10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or entries Newton makes to record the recovery of the bad debt is:A) Accounts Receivable - P. Best....................................... 3,000Allowance for Doubtful Accounts..................................... 3,000Cash ................................................................................... 3,000Accounts Receivable - P. Best............................................ 3,000B) Cash..................................................................................... 3,000Bad Debts Expense............................................................... 3,000C) Accounts Receivable - P. Best......................................... 3,000Bad Debts Expense............................................................... 3,000Cash.......................................................................................... 3,000Accounts Receivable - P. Best............................................ 3,000D) Allowance for Doubtful Accounts.................................. 3,000Accounts Receivable - P. Best............................................. 3,000Accounts Receivable - P. Best.............................................. 3,000Cash.......................................................................................... 3,000E) Cash...................................................................................... 3,000Accounts Receivable - P. Best.............................................. 3,000

Table 3-1Lemon Car Rental, Inc. Unadjusted Trial BalanceDecember 31, 2012Cash $ 7,450Prepaid insurance 1,600Equipment 19,000Accumulated Depreciation $ 4,200Accounts Payable 5,000Common Stock 10,000Retained Earnings 5,600Dividends 6,000Rental Revenue 23,400Insurance Expense 7,000Salary Expense 4,000Repair Expense 3,150$ 48,200 $ 48,200Adjusting entries include:(1) Prepaid insurance used $ 1,600Refer to Table 3-1. After posting adjusting entries, what is the closing entry for the expense accounts?A. Debit Income Summary $14,150 Credit Insurance Expense $7,000 Credit Salary Expense $4,000 Credit Repair Expense $3,150B. Debit Income Summary $14,150 Credit All the Expenses $14,150C. Debit Insurance Expense $7,000Debit Salary Expense $4,000Debit Repair Expense $3,150 Credit Rental Revenue $14,150D. No entry is needed, expenses are permanent accounts.

Table 3-1Lemon Car Rental, Inc. Unadjusted Trial BalanceDecember 31, 2012Cash $ 7,450Prepaid insurance 1,600Equipment 19,000Accumulated Depreciation $ 4,200Accounts Payable 5,000Common Stock 10,000Retained Earnings 5,600Dividends 6,000Rental Revenue 23,400Insurance Expense 7,000Salary Expense 4,000Repair Expense 3,150$ 48,200 $ 48,200Adjusting entries include:(1) Prepaid insurance used $ 1,600Refer to Table 3-1. After posting adjusting entries, what is the closing entry for the revenue accounts?A. Debit Rental Revenue $23,400 Credit Income Summary $23,400B. Debit Income Summary $23,400 Credit Rental Revenue $23,400C. Debit Insurance Expense $7,000Debit Salary Expense $4,000Debit Repair Expense $3,150 Credit Rental Revenue $23,400D. No entry is needed, revenue is a permanent account.

The December 31, 2011 balance sheet of Miller Company reported the following information:Accounts Receivable $197,400Allowance for Uncollectible Accounts 8,600During 2012, a $520 account receivable from Alexis Co. is written off. As a result,A. Miller's net accounts receivable will equal $188,800. B. Miller will record a debit to Uncollectible Account Expense for $520. C. Miller's net income will decrease by $520. D. Miller will record a credit to Allowance for Uncollectible Accounts of $520.

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:A) Operating activities.B) Financing activities.C) Investing activities.D) Schedule of noncash investing or financing activity.E) None of these. This is not reported on the statement of cash flows.

The entry required to close dividends at the end of the period should include a:A. debit to Retained earnings.B. credit to Retained earnings.C. credit to Cash.D. debit to Dividends.

The following data were reported by a corporation:Authorized shares ............................................................. 20,000Issued shares..................................................................... 15,000Treasury shares ................................................................. 3,000The number of outstanding shares is:A) 12,000B) 15,000C) 17,000D) 20,000E) 23,000

When a bond sells at a premium:A) The contract rate is above the market rate.B) The contract rate is equal to the market rate.C) The contract rate is below the market rate.D) It means that the bond is a zero coupon bond.E) The bond pays no interest.

Which of the following is NOT a part of stockholders' equity?A. The principal amount of the bonds issuedB. Par value of the shares of Preferred Stock issuedC. The amount paid-in by investors that is in excess of the par valueD. The earnings that have been reinvested in the business

4. The entry to record the issuance of 1,000 shares of $2 par, common stock for $40 per share would be:A. Cash 2,000Common Stock 2,000B. Cash 40,000Common Stock 2,000Paid-in Capital in Excess of Par 38,000C. Cash 40,000Common Stock 40,000D. Cash 40,000Common Stock 10,000Gain on Sale of Stock 30,0006.

A bond traded at 102½ means that:A) The bond pays 2.5% interest.B) The bond traded at $1,025 per $1,000 bond.C) The market rate of interest is 2.5%.D) The bonds were retired at $1,025 each.E) The market rate of interest is 2 ½% above the contract rate.

A company discarded a display case it had originally purchased for $8,000. The case had $7,200 worth of accumulated depreciation. The company should recognize a (an):A) $0 gain or lossB) $800 lossC) $800 gainD) $8,000 lossE) $7,200 gain

A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000. The accumulated depreciation on it was $60,000. The proceeds from the insurance company were $90,000. The company should recognize:A) A loss of $25,000.B) A gain of $25,000.C) A loss of $65,000.D) A gain of $65,000.E) A gain of $90,000.

A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?A) $395B) $410C) $450D) $510E) $520

A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using FIFO perpetual inventory method, what is the cost of the 12 units that were sold? A) $120B) $124C) $128D) $130E) $140

A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is.A) $0B) $33,750C) $67,500D) $750,000E) $1,550,000

A company purchased a delivery van for $23,000 with a residual value of $3,000 on September 1, 2007. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2007?A) $1,000B) $1,333C) $1,533D) $4,000E) $4,600

A company purchased a rope braiding machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 750,000 units of climbing rope over its useful life. In the first year, 105,000 units were produced. In the second year, production increased to 109,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year? A) $25,200B) $26,160C) $26,660D) $27,613E) $53,160

A depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate each period to the asset's beginning book value is called:A) Book value depreciationB) Declining-balance depreciationC) Straight-line depreciationD) Units-of-production depreciationE) Modified accelerated cost recovery system (MARCS) depreciation

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:A) Direct write-off methodB) Aging of accounts receivable methodC) Percentage of sales methodD) Aging of investments methodE) Percent of accounts receivable method

A promissory note:A) Is a short-term investment for the maker.B) Is a written promise to pay a specified amount of money at a certain date.C) Is a liability to the payee.D) Is another name for an installment receivable.E) Cannot be used in payment of an account receivable.

A trial balance prepared after adjustments have been recorded is called a(n):A) Balance sheetB) Adjusted trial balanceC) Unadjusted trial balanceD) Classified balance sheetE) Unclassified balance sheet

A trial balance prepared after the closing entries have been journalized and posted is the:A) Unadjusted trial balance.B) Post-closing trial balanceC) General ledger.D) Adjusted trial balance.E) Work sheet.

An adjusting entry could contain all of the following EXCEPT a:A. debit to Unearned Revenue.B. credit to Cash.C. debit to Interest Receivable.D. credit to Salary Payable.

An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):A) Internal auditB) Bank reconciliationC) Bank auditD) Trial reconciliationE) Analysis of debits and credits

An asset's book value is $18,000 on June 30, 2007. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, 2008 for $15,000, the company should record:A) A loss on sale of $1,500.B) A gain on sale of $1,500.C) Neither a gain nor a loss is recognized on this type of transaction.D) A gain on sale of $3,000.E) A loss on sale of $3,000.

Based on the information provided in question #83, Lomax Enterprises should recognize depreciation expense in 2010 in the amount of:A) $19,166.67B) $5,000.00C) $5,500.00D) $20,000.00E) $4,166.67

Information on a depreciable asset owned by Wilson Engineering is as follows:Purchase date January 1, 2007Purchase price $45,000Residual value $5,000Useful life 8 yearsDepreciation method straight-lineIf the asset is sold on July 1, 2011 for $10,000 cash, the journal entry to record the sale will include:A) A credit to cash for $10,000.B) A debit to accumulated depreciation for $22,500.C) A debit to loss on sale for $1,000.D) A credit to loss on sale for $1,000.E) A debit to gain on sale for $1,000.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:A) Adjusting entriesB) Closing entriesC) Final entriesD) Work sheet entriesE) Updating entries

Treasury stock is classified as:A) An asset account.B) A contra asset account.C) A revenue account.D) A contra equity accountE) A liability account.

On a bank reconciliation, the amount of an unrecorded bank service charge should be:A) Added to the book balance of cash.B) Deducted from the book balance of cash.C) Added to the bank balance of cash.D) Deducted from the bank balance of cash.E) Noted in memorandum form only.

Par value of a stock refers to the:A) Issue price of the stock.B) Value assigned to a share of stock by the corporate charter.C) Market value of the stock on the date of the financial statement.D) Maximum selling price of the stock.E) Dividend value of the stock.

Revenues, expenses, and dividend accounts, which are closed at the end of each accounting period are:A) Real accountsB) Temporary accountsC) Closing accountsD) Permanent accountsE) Balance sheet accounts

Stock that was reacquired and is still held by the issuing corporation is called:A) Capital stock.B) Treasury stock.C) Redeemed stock.D) Preferred stock.E) Callable stock.

Stockholders' equity consists of:A) Long-term assetsB) Contributed capital and retained earningsC) Contributed capital and par valueD) Retained earnings and cashE) Premiums and discounts

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:A) Operating activities.B) Financing activities.C) Investing activities.D) Schedule of noncash investing or financing activity.E) None of these. This is not reported on the statement of cash flows.

The total cost of an asset less its accumulated depreciation is called:A) Historical costB) Book valueC) Present valueD) Current (market) valueE) Replacement cost

When all of the authorized shares have the same rights and characteristics, the stock is called:A) Preferred stockB) Common stockC) Par value stockD) Stated value stockE) No-par value stock

Which of the following is a permanent account?A. DividendsB. Prepaid InsuranceC. Insurance ExpenseD. Service Revenue

Which of the following items is reported on the statement of cash flows under financing activities?A) Declaration of a cash dividendB) Payment of a cash dividendC) Declaration of a stock dividendD) Payment of a stock dividendE) Stock split

Which of the following statements about cash dividends is FALSE?A. Dividends become a liability on the declaration date.B. The payment of dividends reduces stockholders' equity.C. Chronologically, the relevant dates for dividends occur in this order—declaration date, date of record, payment date.D. Dividends in arrears are not liabilities.

Which of the following statements is FALSE?A. When prices are constant, the ending inventory value will be the same regardless of the inventory method chosen.B. Under the last-in, first-out method, the cost of goods sold is based on the oldest purchases.C. FIFO costing is consistent with the physical movement of inventory for most companies.D. The specific-unit-cost method is appropriate for items that differ from unit to unit.

A bond sells at a discount when the:A) Contract rate is above the market rate.B) Contract rate is equal to the market rate.C) Contract rate is below the market rate.D) Bond has a short-term life.E) Bond pays interest only once a year.

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $175. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?A) Bad Debt Expense............................................... 15,750Allowance for Doubtful Accounts......................... 15,750B) Bad Debt Expense............................................... 15,575Allowance for Doubtful Accounts......................... 15,575C) Bad Debt Expense................................................ 15,925Allowance for Doubtful Accounts......................... 15,925D) Accounts Receivable........................................... 15,750 Bad Debt Expense............................................... 175Sales........................................................................... 15,925E) Accounts Receivable........................................... 15,925Allowance for Doubtful Accounts......................... 15,925

A company had Service Revenues of $75,000 and Utilities Expense of $63,000 for the accounting period. Which of the following entries would be an appropriate closing entry?A) Retained Earnings ........................................... 13,000Common Stock ................................... 13,000B) Retained Earnings........................................... 75,000Service Revenues ............................... 75,000C) Service Revenues............................................ 75,000Retained Earnings .............................. 75,000D) Utilities Expense ............................................. 63,000Retained Earnings .............................. 63,000

A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, it purchased 10 units at $13 per unit. On August 12 it purchased 20 units at $14 per unit. On August 15, is sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?A) $140B) $160C) $210D) $380E) $590

A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of contributed capital in excess of par is:A) $100B) $600C) $1,000D) $6,000E) $7,000

A company purchased a cash register on January 1 for $5,400. This register has a useful life of 10 years and a residual value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?A) $500B) $800C) $864D) $1,000E) $1,080

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:A) Operating activitiesB) Investing activitiesC) Financing activitiesD) Direct activitiesE) Indirect activities

A method that charges the same amount of expense over each period of the asset's useful life is called:A) Accelerated depreciationB) Declining-balance depreciationC) Straight-line depreciationD) Units-of-production depreciationE) Modified accelerated cost recovery system (MARCS) depreciation

A trial balance prepared before any adjustments have been recorded is:A) An adjusted trial balance.B) Used to prepare financial statements.C) An unadjusted trial balance.D) Correct with respect to proper balance sheet and income statement amounts.E) Only prepared once a year.

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:A) Financing activitiesB) Investing activitiesC) Operating activitiesD) Direct activitiesE) Indirect activities

An error is indicated if the following account has a balance appearing on the post-closing trial balance:A) Office Equipment.B) Accumulated Depreciation-Office Equipment.C) Depreciation Expense-Office Equipment.D) Common Stock.E) Salaries Payable.

Assets, liabilities, and equity accounts are not closed; these accounts are called:A) Nominal accountsB) Temporary accountsC) Permanent accountsD) Contra accountsE) Accrued accounts

Depreciation:A) Measures the decline in market value of an asset.B) Measures physical deterioration of an asset.C) Is the process of allocating to expense the cost of a plant asset.D) Is an outflow of cash from the use of a plant asset.E) Is applied to land.

During 2012, Bustamante Co. incurred salary expense of $240,000. Beginning and ending Salary Payable was $4,000 and $8,000, respectively. In 2012, Bustamante paid salaries of:A. $248,000 C. $236,000B. $240,000 D. $244,000

Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method.June 1 Beginning inventory, 15 units at $20 eachJune 15 Sale of 6 units for $50 eachJune 29 Purchase of 8 units at $25 eachThe cost of the ending inventory is:A) $200B) $220C) $380D) $275E) $300

If a check correctly written and paid by the bank for $794 is incorrectly recorded on the company's books for $749, how should this error be treated on the bank reconciliation?A) Subtract $45 from the bank's balance.B) Add $45 to the bank's balance.C) Subtract $45 from the book balance.D) Add $45 to the book balance.E) Subtract $45 from the bank's balance and add $45 to the book's balance.

On December 31 of the current year, a company's unadjusted trial balance included the following:Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts, credit balance of $951. What amount should be debited to Bad Debt Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?A) $951B) $3,992C) $4,884D) $5,835E) $6,786

On July 7 a 5%, 90 day, $2,600 note receivable is accepted from a customer for the sale of farm equipment. Which of the following is correct?Due Date Maturity ValueA. 10/4 $2,600.00B. 10/5 $2,730.00C. 10/5 $2,632.50D. 10/6 $2,632.50

On October 1, 2012, the Jernigan Company paid $4,800 for a one-year insurance policy. On December 31, 2012, the adjusting entry would include a:A. debit to Insurance Expense, $3,600.B. credit to Insurance Payable, $1,200.C. credit to Prepaid Insurance, $1,200.D. debit to Insurance Expense, $4,000.

On a bank reconciliation, an unrecorded withdrawal for printing checks is:A) Noted as a memorandum only.B) Added to the book balance of cash.C) Deducted from the book balance of cash.D) Added to the book balance of cash.E) Deducted from the bank balance of cash.

Table 3-1Lemon Car Rental, Inc. Unadjusted Trial BalanceDecember 31, 2012Cash $ 7,450Prepaid insurance 1,600Equipment 19,000Accumulated Depreciation $ 4,200Accounts Payable 5,000Common Stock 10,000Retained Earnings 5,600Dividends 6,000Rental Revenue 23,400Insurance Expense 7,000Salary Expense 4,000Repair Expense 3,150$ 48,200 $ 48,200Adjusting entries include:(1) Prepaid insurance used $ 1,6006. Refer to Table 3-1. The adjusting entry to record the prepaid insurance used would be:A. Debit Prepaid Insurance $1,600 Credit Insurance Expense $1,600B. Debit Prepaid Insurance $3,200 Credit Insurance Expense $3,200C. Debit Insurance Expense $1,600 Credit Prepaid Insurance $1,600D. Debit Insurance Expense $3,200 Credit Prepaid Insurance $3,200

The Retained Earnings account has a credit balance or $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000, what is the ending balance in the retained earnings account after all closing entries are made?A) $8,000B) $15,400C) $23,400D) $17,000E) $32,400

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:A) Operating activities.B) Financing activities.C) Investing activities.D) Schedule of noncash investing or financing activity.E) None of these. This is not reported on the statement of cash flows.

The following information is available for the Travis Travel Agency, Inc. After these closing entries what will be the balance in the Retained Earnings account? Total Revenues.......................................................... $125,000Total Expenses .......................................................... 60,000Retained Earnings ..................................................... 80,000Dividends ........................................................... 15,000A) $65,000B) $80,000C) $130,000D) $145,000E) $280,000

The formula for computing annual straight-line depreciation is:A) Depreciation cost divided by useful life in units.B) Cost plus residual value divided by the useful life in years.C) Cost less residual value divided by the useful life in years.D) Cost divided by the useful life in years.E) Cost divided by the useful life in units.

The maturity date of a note receivable:A) Is the day of the credit sale.B) Is the day the note was signed.C) Is the day the note is due to be paid.D) Is the date of the first payment.E) Is the last day of the month.

The statement of cash flows reports:A) Assets, liabilities, and equity.B) Revenues, gains, expenses, and losses.C) Cash inflows and cash outflows for an accounting period.D) Equity, net income, and dividends.E) Changes in equity.

Thomas Enterprises purchased a depreciable asset on January 1, 2007 at a cost of $100,000. The asset is expected to have a residual value of $15,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, 2008 will be:A) $24,000B) $21,600C) $36,000D) $85,000E) $64,000

Data Co. has asked you to assist in the preparation of a bank reconciliation at the end of July. Answer questions 1-3 using the following code letters to indicate how the item described would be reported on the bank reconciliation.A. Add to the bank statement balanceB. Deduct from the bank statement balanceC. Add to the book balanceD. Deduct from the book balanceE. Does not belong on the bank reconciliation1. Note and interest collected by the bank for the company, $500 (plus $25 interest).2. Deposit in transit, $400.3. Check no. 662 for written for $730 was incorrectly recorded by the bank as $370.

C, A, B

A company had sales of $695,000 and costs of goods sold of $278,000. It gross margin equals:A) $(417,000)B) $ 695,000C) $ 278,000D) $ 417,000E) $ 973,000

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. The entry to record the adjusting entry should have been: A) Debit Salary Expense, $9,000; credit Cash, $9,000.B) Debit Salary Expense, $9,000; credit Fees Earned, $9,000.C) Debit Salary Expense, $9,000; credit Prepaid Salary, $9,000.D) Debit Salary Expense, $9,000; credit Salaries Payable, $9,000.E) Debit Salaries Payable, $9,000; credit Salary Expense, $9,000.

A company receives a 10%, 90-day note for $1,500. The total interest due on the maturity date is:A) $50.00B) $150.00C) $75.00D) $37.50E) $87.50

A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:Accounts Receivable.............................................................. $355,000 debitAllowance for uncollectible accounts.................................. 500 creditNet Sales................................................................................... 800,000 creditAll sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What adjusted entry should the company make at the end of the current year to record its estimated bad debt expense?A) Bad Debt Expense............................................... 1,275Allowance for Doubtful Accounts......................... 1,275B) Bad Debt Expense............................................... 1,775Allowance for Doubtful Accounts......................... 1,775C) Bad Debt Expense................................................ 4,500Allowance for Doubtful Accounts......................... 4,500D) Bad Debt Expense............................................... 4,800Allowance for Doubtful Accounts......................... 4,800E) Bad Debt Expense............................................... 5,500Allowance for Doubtful Accounts......................... 5,500

A corporation issued 6,000 share of its $10 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:A) A debit to Common Stock for $60,000.B) A debit to Land for $60,000.C) A credit to Land for $60,000.D) A credit to Contributed Capital in Excess of Par Value, Common Stock for $24,000.E) A credit to Common Stock for $84,000.

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include: A) A debit to Contributed Capital in Excess of Par Value, Common Stock for $42,000.B) A debit to Cash for $140,000.C) A credit to Common Stock for $182,000.D) A credit to Common Stock for $140,000.E) A credit to Contributed Capital in Excess of Par Value, Common Stock for $182,000.

A method that allocates an equal portion of the total depreciation cost for a plant asset to each unit produced is called:A) Accelerated depreciationB) Declining-balance depreciationC) Straight-line depreciationD) Units-of-production depreciationE) Modified accelerated cost recovery system (MARCS) depreciation

Adams Company purchased a tract of land, an office building, and some manufacturing equipment for $775,000. The appraised value of the land, building, and equipment were $373,100, $427,700, and $109,200, respectively. What was the debit to the Building account to record the purchase?A. $427,700B. $303,333 C. $258,333D. $364,250

Financial statements are typically prepared in the following order:A) Balance sheet, statement of retained earnings, income statement.B) Statement of retained earnings, balance sheet, income statement.C) Income statement, balance sheet, statement of retained earnings.D) Income statement, statement of retained earnings, balance sheet.E) Balance sheet, income statement, statement of retained earnings.

In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information:Cash balance per company books on September 30 $6,275Deposits in transit at month-end $1,300Outstanding checks at month-end $ 620Bank charges for printing new checks $ 45Note receivable and interest collected by bank on Marks' behalf $ 770 A check given to Marks during the month by a customer is returned by the bank as NSF $ 480The adjusted cash balance per the books on September 30 is:A) $6,900B) $8,160C) $4,600D) $6,520E) $5,840

Nelson Company purchase equipment on July 1 for $27,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's residual value is $3,500, the amount of monthly depreciation expense Nelson should recognize is:A) $2,400B) $200C) $4,800D) $400E) $450

Outstanding checks refer to checks that have been:A) Written, recorded, sent to payees, and received and paid by the bank.B) Written and not yet recorded in the company books.C) Held as blank checks.D) Written, then recorded on the company books and sent to the customer, but have not yet been paid by the bank.E) Issued by the bank.

Table 7-1 On December 31, 2012, Zeb Company reported the following amounts and account balances (before adjustments):Accounts Receivable $ 840,000Allowance for Uncollectible Accounts, credit 22,050Net Sales (all on credit) 3,850,0007. Refer to Table 7-1. Zeb Co. estimates that its Uncollectible Account Expense is 2 ½% of net sales. The Uncollectible-Account Expense for 2012 should be:A. $21,000. C. $118,300.B. $74,200. D. $ 96,250.

Table 8-1On January 1, 2012, Lunsford Equipment Company purchased a new computerized security system for $130,000. It expects to use the system for 5 years, after which it can be sold for $6,500.2. Refer to Table 8-1. What is the book value of the equipment on December 31, 2012, if Lunsford uses the straight-line method of depreciation?A. $ 49,400B. $ 74,100C. $ 80,600D. $105,300

The 2012 income statement showed Rent Expense of $6,100. The related balance sheet account, Prepaid Rent, had a beginning balance of $1,400 and an ending balance of $1,200. The amount of cash paid for rent during 2012 is:A. $6,100.B. $1,200.C. $6,300.D. $5,900.

The adjusted trial balance contains information pertaining to:A) Asset accounts only.B) Balance sheet accounts only.C) Income statement accounts only.D) All general ledger accounts.E) Revenue accounts only.

The amount due on the maturity date of a $6,000, 60-day 8%, note receivable is:A) $6,000B) $6,480C) $5,520D) $6,080E) $5,920

Which of the following groups of accounts correctly appear on the post-closing trial balance?A. Rent Expense, Prepaid Rent, Retained EarningsB. Dividends, Equipment, Accumulated DepreciationC. Service Revenue, Interest Receivable, Note PayableD. Retained Earnings, Cash, Unearned Revenue

Which of the following is included in the cash flow from financing activities section of the statement of cash flows?A) Interest revenueB) Sale of equipmentC) Interest expenseD) Purchase of treasury stockE) Purchase of a stock dividend

A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?A) $304B) $296C) $288D) $280E) $276

A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of contributed capital is:A) $100B) $600C) $1,000D) $6,000E) $7,000

A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should:A) Deduct the deposit from the bank statement balance.B) Send the bank a debit memorandum.C) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance.D) Add the deposit to the book balance of cash.E) Add the deposit to the bank statement balance.

A company made no adjusting entry for accrued and unpaid employee salaries of$9,000 on December 31. Which of the following statements is true?A) It will have no effect on income.B) It will overstate assets and liabilities by $9,000.C) It will understate net income by $9,000.D) It will understate assets by $9,000.E) It will understate expenses and overstate net income by $9,000.

An asset's book value is $36,000 on January 1, 2007. The asset is being depreciated at a rate of $500 per month on the straight-line method. Assuming the asset is sold on July 1, 2008 for $25,000, the company should record:A) Neither a gain nor a loss is recognized on this type of transaction.B) A gain on sale of $2,000.C) A loss on sale of $1,000.D) A gain on sale of $1,000.E) A loss on sale of $2,000.

Bonds can be issued:A) At parB) At a premiumC) At a discountD) Between interest payment datesE) All of the above

Corporations often buy back their own stock:A) To avoid a hostile take-over.B) To have shares available for a merger or acquisition.C) To have shares available for employee compensation.D) To maintain market value for the company stock.E) All of the above.

Gross profit:A) Is also called gross margin.B) Less operating expenses equals net income.C) Equals sales less cost of goods sold.D) Must cover all operating expenses to yield a return for the owner of the business.E) All of the above.

Investing activities include the:A) Purchase of plant assets.B) Lending and collecting on note receivable.C) Sale of short-term investments other than cash equivalents.D) Sale of plant assets.E) All of the above.

Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, 2007. The asset will be depreciated on the straight-line method over its four-year useful life. Assuming the asset's residual value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, 2010?A) $5,000.00B) $4,166.67C) $16,666.67D) $20,000.00E) $19,166.67

On March 31, 2007, Phoenix, Inc. paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines. The subscriptions are starting immediately. What is the adjusting entry that should be recorded by Melanie Publishing Company on December 31, 2007?A) Debit Unearned Fees, $15,480; credit Fees Earned $15,480.B) Debit Unearned Fees, $5,160; credit Fees Earned, $5,160.C) Debit Unearned Fees, $11,610; credit Fees Earned, $11,610.D) Debit Unearned Fees, $ 1,290; credit Fees Earned, $1,290.E) Debit Unearned Fees, $3,870; credit Fees Earned, $3,870.

Salvage value is:A) Also called residual value.B) Also called scrap value.C) An estimate of the asset's value at the end of its benefit period.D) A factor relevant to determining depreciation.E) All of the above.

The relevant factor(s) in computing depreciation include:A) CostB) Residual valueC) Useful lifeD) Depreciation methodE) All of the above

The statement of cash flows reports:A) Cash flows from operating activities.B) Cash flows from financing activities.C) Cash flows from investing activities.D) Significant noncash financing and investing activities.E) All of the above.

The total amount of stock that a corporation's charter allows it to issue is referred to as:A) Issued stockB) Outstanding stockC) Common stockD) Preferred stockE) Authorized stock

Which of the following is representative of typical cash flows from operating activities?A) Proceeds from collecting the principal amount of loans.B) Repayment of principal on loans.C) Proceeds from the issuance of bonds and notes payable.D) Payments by a merchandiser to acquire equity securities of other companies.E) Receipts of cash sales.

A corporation: A) Is a legal entity separate and distinct from its owners. B) Is controlled by the FASB. C) Has shareholders who have unlimited liability for the acts of the corporation. D) Is the same as a limited liability partnership .E) All of the above.

Distributions of earnings by a corporation to its stockholders are called:A) Dividends.B) Expenses.C) Assets.D) Retained Earnings.E) Net Income.

The ending Cash account balance is $57,600. During the period, debit postings equal $124,300. If credit postings during the period total $135,100, then the beginning Cash amount must have been:A. $ 68,400.B. $ 46,800.C. $181,900.D. $ 10,800.

On April 30, Holden Company had a Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivables were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?A) $5,000B) $47,000C) $52,000D) $57,000E) $32,000

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:A) items that require contra accountsB) items that require adjusting entriesC) asset and equityD) asset accountsE) Income statement accounts.

A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?A) $75B) $125C) $175D) $250E) $325

If equity is $300,000 and liabilities are $192,000, then assets equal:A) $108,000B) $192,000C) $300,000D) $492,000E) $792,000

Revenues are:A) The same as net income.B) The excess of expenses over assets.C) Resources owned or controlled by a company.D) The gross increase in equity from a company's earning activities.E) The costs of assets or services used.

Wisconsin Rentals purchased office supplies on credit. The general journal entry made by Winconsin Rentals will include a:A) Debit to Accounts Payable.B) Debit to Accounts Receivable.C) Credit to Cash.D) Credit to Accounts Payable.E) Credit to Common Stock.

The general journal provides a place for recording:A) The transaction date.B) The names of the accounts involved.C) The amount of each debit and credit.D) An explanation of the transaction.E) All of the above.

The rules adopted by the accounting profession as guides in preparing financial statements are:A) Comprised of both general and specific principles.B) Known as generally accepted accounting principles.C) Abbreviated as GAAP.D) Intended to make information in financial statements relevant, reliable, and comparable. E) All of the above.

Which of the following statements is true about assets?A) They are economic resources owned or controlled by the business.B) They are expected to provide future benefits to the business.C) They appear on the balance sheet.D) Claims on them are shared between creditors and owners.E) All of the above.

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):A) Balance sheet.B) Income statement.C) Statement of cash flows.D) Statement of owner's equity.E) Financial Status Statement.

Accrued revenues:A) At the end of one accounting period often result in cash receipts from customers in the next period.B) At the end of one accounting period often result in cash payments in the next period.C) are also called unearned revenuesD) Are listed on the balance sheet as liabilities.E) Are recorded at the end of an accounting period because cash has already been received for revenues earned.

Determine the net income of a company for which the following information is available for the month of May.Employee salaries expense...........$180,000Interest expense..............................$10,000Rent expense....................................$20,000Consulting revenue.........................$400,000A) $190,000B) $210,000C) $230,000D) $610,000

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:A) Increased $22,000B) Decreased $22,000C) Increased $89,000D) Decreased $156,000E) Increased $156,000

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?A) Assets would have increased $55,000B) Assets would have decreased $55,000C) Assets would have increase $19,000D) Assets would have decreased $19,000E) None of the above

Net income:A) Occurs when revenues exceed expenses.B) Is the same as revenue.C) Equals resources owned or controlled by a company.D) Occurs when expenses exceed assets.E) Represents assets taken from a company for an owner's personal use.

On January 1, Southwest College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester, which spans four months beginning on January 2. What amount of tuition revenue should the college recognize on January 31?A) $300,000B) $600,000C) $800,000D) $900,000E) $1,200,000

Resources owned or controlled by a company that are expected to yield benefits are:A) AssetsB) RevenuesC) LiabilitiesD) Owner's equityE) Expenses

Rocky Industries received its telephone bill in the amount of $300, and immediately paid it. Rocky's general journal entry to record this transaction will include aA) Debit to Telephone Expense for $300.B) Credit to a Accounts Payable for $300.C) Debit to Cash for $300.D) Credit to Telephone Expense for $300.E) Debit to Accounts Payable for $300.

The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is:A) Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400.B) Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400.C) Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200.D) Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200.E) Debit Cash, $4,800; credit Prepaid Insurance, $4,800.

The journal entry to record the payment to a supplier of $890 on account is:A. Accounts Payable 890Cash 890B. Cash 890Accounts Receivable 890C. Cash 890Accounts Payable 890D. Supplies 890Cash 890

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31st. This oversight would:A) Understate net income by $28,000B) Overstate net income by $28,000C) Have no effect on net incomeD) Overstate assets by $28,000E) Understate assets by $28,000

A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:A) debit unpaid salaries $600 and credit salaries payable $600B) debit salaries expense $400 and credit salaries payable $400C) debit salaries expense $600 and credit salaries payable $600D) debit salaries payable $400 and credit salaries expense $400E) debit salaries expense $400 and credit cash $400

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be:A) an overstatement of equityB) an understatement of equityC) an understatement of assetsD) an understatement of liabilitiesE) an overstatement of assets

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n): A) Account balance.B) Trail balance.C) Ledger.D) Chart of accounts.E) General ledger.

An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):A) accrued expenseB) contra accountC) accrued revenueD) intangible assetE) adjunct account

Assets created by selling goods and services on credit are:A) Accounts payableB) accounts receivableC) LiabilitiesD) ExpensesE) Equity

If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is purchased for $137,000, the land should be recorded in the purchaser's books at: A) $95,000B) $137,000C) $138,500D) $140,000E) $150,000

If assets are $365,000 and equity is $120,000, then liabilities are:A) $120,000B) $245,000C) $365,000D) $485,000E) $610,000

If assets are $99,000 and liabilities are $32,000, then equity equals:A) $32,000B) $67,000C) $99,000D) $131,000E) $198,000

Net income is:A) Assets minus liabilities.B) The excess of revenues over expenses.C) An asset.D) The same as revenue.E) The excess of expenses over equity.

Note Payable has a normal beginning balance of $30,000. During the period, new borrowings total $63,000 and the ending balance in Note Payable is $41,000. Determine the payments on loans during the period.A. $ 8,000B. $ 52,000C. $134,000D. $ 22,000

Oliver Company collected $2,250 on account. The effect of this transaction on the accounting equation is to:A. increase assets and decrease liabilities.B. nothing. It has no effect on total assets.C. increase assets and increase stockholders' equity.D. decrease assets and decrease liabilities.

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?A) Assets: $30,000 increase; liabilities: no effects; equity: $30,000 increaseB) Assets: $30,000 decrease; liabilities: $30,000 decrease; equity: no effectsC) Assets: $30,000 decrease; liabilities: $30,000 increase; equity: no effectsD) Assets: no effects; liabilities: $30,000 decrease; equity: $30,000 increaseE) Assets: $30,000 decrease; liabilities: no effects; equity: $30,000 decrease

The accounting principle that requires revenue to be reported when earned is the:A) Matching principleB) Revenue recognition principleC) Time period principleD) Accrual reporting principleE) Going-concern principle

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity is known as the:A) Income statement equation.B) Accounting equation.C) Business equation.D) Return on equity ratio.E) Net income.

Unearned revenue is reported in the financial statements as:A) a revenue on the balance sheetB) a liability on the balance sheetC) an unearned revenue on the income statementD) an asset on the balance sheetE) An operating activity on the statement of cash flows

Use the following selected information for the Callie Company to calculate the correct credit column total for a trial balance:Accounts receivable $ 7,200Accounts payable 6,900Building 179,400Cash 15,800Common stock 64,000Salary expense 56,100Salary payable 3,600Service revenue 190,500Dividends 6,500A. $201,000B. $265,000C. $321,400D. $271,500

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?A) Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250.B) Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500.C) Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500.D) Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750.E) Debit Cash, $7,750; credit Prepaid Insurance, $7,750.

A balance sheet lists:A) The types and amounts of the revenues and expenses of a business.B) Only the information about what happened to equity during a time period.C) The types and amounts of assets, liabilities, and equity of a business as of a specific date.D) The inflows and outflows of cash during the period.E) The assets and liabilities of a company but not the owner's equity.

A company had the following accounts and balances year-end: Cash..................................................... $30,000 Accounts receivable............................ 32,000 Accounts payable................................. 20,000 Fees earned.......................................... 65,000 Rent expense........................................ 15,000 Insurance expense................................ 4,800 Supplies expense.................................... 5,000 Common stock...................................... 19,800 Dividends............................................... 18,000 If all of the accounts have normal balances, what are the totals for the trial balance?A) $45,200B) $67,000C) $104,800D) $209,600E) $186,600

A company's balance sheet shows: cash $22,000, account receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholder's equity?A) $17,000B) $29,000C) $71,000D) $88,000E) $105,000

A credit entry:A) Increases asset and expense accounts, and decreases liability, common stock, and revenue accounts.B) Is always a decrease in an account.C) Decreases asset and expense accounts, and increases liability, common stock, and revenue accounts.D) Is recorded on the left side of a T-account.E) Is always an increase in an account.

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):A) Account.B) Trail balance.C) Journal.D) T-account.E) Balance column account.

Adjusting entries:A) Affect only income statement accounts.B) Affect only balance sheet accounts.C) Affect both income statement and balance sheet accounts.D) Affect only cash flow statement accounts.E) Affect only equity accounts.

An account balance is:A) The total of the credit side of the account.B) The total of the debit side of the account.C) The difference between the total debits and the total credits for an account including the beginning balance.D) Assets= liabilities + equityE) Always a credit.

Expense:A) Increase equity.B) Are gross increases in equity from a company's earning activity.C) Are the costs of assets or services use to earn revenues.D) Occur when equity exceeds revenue.E) Are creditors' claims on assets.

If a company failed to make the end-of-period adjustments to remove from the Unearned Management Fees account the amount of management fees that were earned, this omission would cause:A) An overstatement of net income.B) An overstatement of assets.C) an overstatement of liabilitiesD) An overstatement of equity.E) An understatement of liabilities.

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:A) debit cash and credit legal fees earnedB) debit cash and credit unearned legal feesC) debit unearned legal fees and credit legal fees earnedD) debit legal fees earned and credit unearned legal feesE) debit unearned legal fees and credit accounts receivable

Of the following accounts, the one that normally has a credit balance is:A) CashB) Office equipmentC) Sales Salaries PayableD) DividendsE) Sales Salaries Expense.

On June 30, 2007, Apricot Co. paid $7,500 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at a time of cash payment. On June 30, 2007 Apricot should record:A) a credit to an expense for $7,500B) a debit to an expense for $7,500C) a debit to a prepaid expense for $7,500D) a credit to a prepaid expense for $7,500E) a debit to cash for $7,500

On June 30, 2007, Apricot Co. paid $7,500 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at a time of cash payment. The adjusting entry on December 31, 2007 for Apricot would include:A) a debit to expense for $5,635B) a debit to a prepaid expense for $5,635C) a debit to an expense for $1,875D) a debit to a prepaid expense for $1,875E) a credit to a liability for $1,875

On May 1, 2007 Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30, 2008. The cash receipt was recorded as unearned fees and at December 31, 2007 $1,000 of the fees had been earned. The adjusting entry on December 31 Year 1 should include:A) a debit to unearned fees for $500B) a credit to unearned fees for $500C) a credit to earned fees for $1,000D) a debit to earned fees for $1,000E) a debit to earned fees for $500

Prior to recording adjusting entries, the office supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is: A) Debit office supplies $105 and credit office supplies expense $105B) debit office supplies expense $105 and credit office supplies $105C) debit office supplies expense $254 and credit office supplies $254D) debit office supplies $254 and credit office supplies expense $254E) debit office supplies $105 and credit supplies expense $254

Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting Inc. Which of the following journal entries will RH Consulting make to record this transaction?A) Assets $200,000Common Stock $200,000B) Cash and Land $200,000Common Stock $200,000C) Cash $70,000 Land $130,000Common Stock $200,000D) Common Stock $200,000Assets $200,000E) Common Stock $200,000Assets $200,000

The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners?A) $900,000B) $700,000C) $500,000D) $200,000E) It is impossible to determine unless the amount of this owners' investment is known.

The excess of expenses over revenues for a period is:A) Net assets.B) Equity.C) Net loss.D) Net income.E) A liability.

The income statement reports all of the following except:A) Revenues earned by a business.B) Expenses incurred by a business.C) Assets owned by a business.D) Net income or loss earned by a business.E) The time period over which the earnings occurred.

The right side of a T-account is a(n):A) Debit.B) Increase.C) Credit.D) Decrease.E) Account balance.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:A) Accrual basis accounting.B) Operating cycle accounting.C) Cash basis accounting.D) Revenue recognition accounting.E) Current basis accounting.

Use the following information as of December 31 to determine equity.Liabilities ...............................................................$141,000Cash .......................................................................$57,000Equipment .............................................................$206,000Buildings ................................................................$175,000A) $57,000B) $141,000C) $297,000D) $438,000E) $579,000

Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the account equation are: A) Total assets decrease and equity increases.B) Both total assets and equity decrease.C) Total assets, total liabilities and equity are unchanged.D) Both total assets and equity are unchanged and liabilities increase.E) Total assets increase and equity decreases.

Which of the following assets is not depreciated?A) store fixturesB) computersC) landD) buildingsE) all of the above are depreciated

Which of the following does not require an adjusting entry at year-end?A) accrued interest on notes payableB) supplies used during the periodC) Cash invested by the ownerD) accrued wagesE) Expired portion of prepaid insurance

Which of the following groups of accounts are not balance sheet accounts? A) Assets.B) Liabilities.C) Revenues.D) Equity accounts.E) All of the above are balance sheet accounts.

Which of the following statements is correct?A) The left side of a T-account is the credit side.B) Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts.C) The left side of the t-account is the debit side.D) Credits increase asset and expense accounts, and decrease liability, equity and revenue accounts.E) In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.

Which of these is (are) an example of a liability account?A. Service RevenueB. Rent ExpenseC. Accounts PayableD. All of the above

Which of these statements is NOT correct?A. The account is a basic summary device used in accounting.B. A business transaction is recorded first in the journal and then posted to the ledger.C. The ledger is a chronological listing of all transactions.D. The debit entry is recorded first in a journal entry; the credit entry then follows.

Zed Bennett opened an art gallery and as a dealer completed these transactions: 1. Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000. 2. Purchased $70 of office supplies on credit. 3. Paid $1,200 cash for the receptionist's salary. 4. Sold a painting for an artist and collected a $4,500 cash commission on the sale. 5. Completed an art appraisal and billed the client $200. What was the balance of the cash account after these transactions were posted?A) $12,230B) $12,430C) $43,300D) $43,430E) $61,430

A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):A)Journal.B) Posting.C) Trail balance.D) Account.E) Chart of accounts.

A written promise to pay a definite sum of money on a specific future date is a(n):A) Unearned revenue.B) Prepaid expense.C) Credit account.D) Note payable.E) Account receivable.

Assets = Liabilities + Equity is known as the:A) Income statement equation.B) Cost principle.C) Objectivity principle.D) Accounting equation.E) Transaction principle.

How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed?A) +$10,000 accounts receivable, -$10,000 accounts payableB) +$10,000 accounts receivable, +$10,000 accounts payableC) +$10,000 accounts receivable, +$10,000 cashD) +$10,000 accounts receivable, +$10,000 revenueE) +$10,000 accounts receivable, -$10,000 revenue

If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decrease $30,000 during the same period, the assets of the business must have:A) Decreased $105,000B) Decreased $45,000C) Increased $30,000D) Increased $45,000E) Increased $105,000

On April 1, 2007 a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2007?A) $1,350B) $450C) $1,012.50D) $337.50E) $37.50

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustment only at year-end, the adjusting entry at the end of the first year is:A) debit prepaid insurance, $1,800; credit cash, $1,800B) debit prepaid insurance, $1,440; credit insurance expense, $1,440C) debit prepaid insurance, $360; credit insurance expense, $360D) debit insurance expense, $360; credit prepaid insurance, $360E) debit insurance expense, $360; credit prepaid insurance, $1,440

On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of July 1 of the current year?A) $8,300B) $13,050C) $20,500D) $31,100E) $40,400

On September 1, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What is the balance in the Cash account at the end of September?A) A $0 balance.B) A $4,300 debit balance.C) A $4,300 credit balance.D) A $5,700 debit balance.E) A $5,700 credit balance.

PPW Co. leased a portion of its store to another company for eight months beginning on October 1, 2007, at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which PPW Co. recorded as unearned revenue. The journal entry made by PPW Co. at year-end on December 31, 2007 would include:A) a debit to rent earned for $2,400B) a credit to unearned rent for $2,400C) a debit to cash for $6,400D) a credit to rent earned for $2,400E) a debit to unearned rent to $4,000

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:A) debit unpaid salaries and credit salaries payableB) debit salaries payable and credit salaries expenseC) debit salaries expense and credit cashD) debit salaries expense and credit salaries payableE) debit cash and credit salaries expense

The balance sheet equation is:A) Revenues minus expenses equal net income.B) Debits equal credits.C) The bookkeeping phase of accounting.D) Another name for the accounting equation.E) Assets minus liabilities and equity.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:A) Recognition principle.B) Cost principle.C) Cash basis of accounting.D) Matching principle.E) Time period principle.

The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called:A) A balance sheet.B) A statement of owner's equity.C) A statement of cash flows.D) An income statementE) A statement of financial position.

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:A) accumulated depreciationB) a contra accountC) the matching principleD) depreciationE) an accrued account

Which of the following statements is incorrect?A) The normal balance of accounts receivable is a debit.B) The normal balance of dividends is a debit.C) The normal balance of accounts payable is a credit.D) The normal balance of an expense account is a credit.E) The normal balance of capital stock is a credit.

Which of these accounts has a normal credit balance?A. Rent ExpenseB. Common StockC. Service RevenueD. Both B and C

Which of these statements is TRUE?A. Decreases in assets and increases in revenues are recorded with a debit.B. Increases in liabilities and decreases in stockholders' equity are recorded with a credit.C. Increases in both assets and dividends are recorded with a credit.D. Decreases in liabilities and increases in expenses are recorded with a debit.

A credit is used to record:A) A decrease in an expense account.B) A decrease in an asset account.C) An increase in a liablitiy account.D) An increase in a revenue account.E) All of the above.

A debit is used to record:A) A decrease in an asset account.B) A decrease in an expense account.C) An increase in a revenue account.D) An increase in the balance of the common stock account.E) An increase in the balance of the dividends account.

Adjusting entries are journal entries made at the end of an accounting period for the purpose of:A) Updating liability and asset accounts to their proper balances.B) Assigning revenues to the periods in which they are earned.C) Assigning expenses to the periods in which they are incurred.D) Assuring that financial statements reflect the revenues earned and the expenses incurred.E) All of the above.

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:A) Assets overstated and equity understated.B) Assets and equity both understated.C) Assets overstated, net income understated, and equity overstated.D) Assets, net income, and equity understated.E) Assets, net income and equity overstated.

If a company paid $38,000 of its accounts payable in cash, what was the effect on the assets, liabilities and equity?A) Assets would decrease $38,000, liabilities would decrease $38,000 and equity would decrease $38,000B) Assets would decrease $38,000, liabilities would decrease $38,000 and equity would increase $38,000C) Assets would decrease $38,000, liabilities would decrease $42,000 and equity would not changeD) There would be no effect on the accounts because the accounts are affected by the same amount.E) None of the above.

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:A) intangible expensesB) prepaid expensesC) unearned expensesD) net expensesE) accrued expenses

On May 1, 2007, Carter Advertising Company received $3,600 from Kaitlyn Breanna for advertising services to be completed April 30, 2008. The Cash receipt was recorded as unearned fees. The adjusting entry on December 31, 2008 should include:A) A debit to Earned Fees for $3,600.B) A debit to Unearned Fees for $1,200.C) A credit to Unearned Fees for $1,200.D) A debit to Earned Fees for $2,400.E) A credit to Earned Fees for $2,400.

The difference between the cost of an asset and the accumulated depreciation for that asset is called:A) Depreciation ExpenseB) Unearned DepreciationC) Prepaid DepreciationD) Depreciation ValueE) Book Value

Which of the following statements is incorrect?A) Prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities.B) Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.C) Adjusting entries can be used to record both accrued expenses and accrued revenues.D) Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.E) Adjusting entries affect the cash account.

Zion Company has assets of $500,000, liabilities of $250,000 and equity of $250,000. It buys office equipment on credit for $75,000. The effects of this transaction include:A) Assets increase by $75,000 and expenses increase by $75,000B) Assets increase by $75,000 and expenses decrease by $75,000C) Liabilities increase by $75,000 and expenses decrease by $75,000D) Assets decrease by $75,000 and expenses decrease by $75,000E) Assets increase by $75,000 and liabilities increase by $75,000

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