Exam Review

11. Willow Rentals purchased office supplies on credit. The general journal entry made by Willow 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 Willow, Capital.

D: Credit to accounts payable

5. Identify the account below that is classified as a liability account: A. Cash B. Accounts Payable C. Salaries Expense D. J. Jackson, Capital E. Equipment

B: Accounts Payable

4. Identify the account below that is classified as an asset account: A. Unearned Revenue B. Accounts Payable C. Supplies D. J. Jackson, Capital E. Service Revenue

C: Supplies

9.. Identify the statement below that 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 a 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.

C: The left side of a T-account is the debit side

7. A business uses a credit to record: A. An increase in an expense account. B. A decrease in an asset account. C. A decrease in an unearned revenue account. D. A decrease in a revenue account. E. A decrease in a capital account.

A: An increase in an expense account

6. Identify the account below that impacts the Equity of a business: A. Utilities Expense B. Accounts Payable C. Accounts Receivable D. Cash E. Unearned Revenue

A: Utilities Expense

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the: A. Accounting equation. B. Cost principle. C. Going-concern assumption. D. Realization principle. E. Business entity assumption.

B. Cost principle

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

B: $137,000

13. Unearned revenue is reported in the financial statements as: A. A revenue on the balance sheet. B. A liability on the balance sheet. C. An unearned revenue on the income statement. D. An asset on the balance sheet. E. A financing activity on the statement of cash flows.

B: A liability on the balance sheet

10. Golddigger Services Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a: A. Debit to Unearned Management Fees for $60,000. B. Credit to Management Fees Earned for $60,000. C. Credit to Cash for $60,000. D. Credit to Unearned Management Fees for $60,000. E. Debit to Management Fees Earned for $60,000.

B: Credit to management Feed Earned for $60,000

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the: A. Objectivity principle B. Monetary unit assumption C. Business entity assumption D. Going-concern assumption E. Revenue recognition principle

C: Business entity assumption

12. On May 31, the Cash account of Bottle's R US had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May? 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.

D Add $12,200 to the normal balance and subtract credit of $11,500 to get $5,700 in cash

8. A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a: A. Withdrawals account. B. Capital account. C. Drawing account. D. T-account. E. Balance column sheet.

D: T-Account