Acc 201 Final - Sample Questions
Equipment purchased on January 3 for $80,000 was depreciated using the straight-line method based upon a five-year life and $7,500 residual value. The equipment was sold three years later on December 31 for $40,000. What is the gain on the sale of the equipment? A. $3,500 B. $14,500 C. $36,500 D. $43,500
A. $3,500.
Based on the following data, what is the amount of current assets? Accounts Payable $62,000 Accounts Receivable $100,000 Cash $30,000 Intangible Assets $100,000 Inventory $138,000 Long-term Investments $160,000 Long-term Liabilities $200,000 Short-term Investments $80,000 Notes Payable $56,000 Plant Assets $1,340,000 Prepaid Expenses $2,000 A. $350,000 B. $210,000 C. 212,000 D. $192,000
A. $350,000
At May 1, 2012, the Friends Forever Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company had activity as follows: May 5 purchased 200 units at $8 May 12 sold 140 units at $12 May 22 purchased 500 units during the month for $12 per unit The Friends Forever Company uses the weighted average cost method. The ending inventory is A. $5,277 B. 1,227 C. $1,073 D. $2,300
A. $5,277
Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. Revenue Earned $14,000 Accounts Receivable $3,000 Expenses Incurred $7,250 Accounts Payable $750 A. $6,750 B. $9,000 C. $4,500 D. $7,200
A. $6,750
In the first month of operations, the total of the debit entries to the Cash Account amounted to $1,400 and the total of the credit entries to the Cash Account amounted to $600. The Cash Account has a A. $800 debit balance B. $600 credit balance C. $1,400 debit balance D. $800 credit balance
A. $800 debit balance
Marcus has decided to open an auto-detailing business. He will pick up an automobile from the client, take it to his parents' garage, detail it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special organization, which type of business organization, in effect, has he chosen? A. A sole proprietorship B. A limited-liability company C. A corporation D. A partnership
A. A sole proprietorship
Which of the following accounts will have an ending balance after the closing process is completed? A. Accumulated Depreciation B. Dividends C. Rent Expense D. Service Revenue
A. Accumulated Depreciation
Mulberry Corporation collected $16,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry Corporation? A. Assets increase by $16,000, assets decrease by $16,000 B. Assets increase by $16,000, liabilities increase by $16,000 C. Assets increase by $16,000, equity increases by $16,000 D. Assets increase by $16,000, liabilities decrease by $16,000
A. Assets increase by $16,000, assets decrease by $16,000 Assets are the resources owned by a business. Assets appear on: Balance Sheet Normal balance of an asset: Debit Asset account examples: - Cash - Accounts Receivable - Land - Buildings - Equipment
A furniture factory's employees work overtime to finish an order that is sold on January 31. The office sends a statement to the customer in early February and payment is received by mid-February. The overtime wages should be expensed in A. January B. February C. The period when the workers receive their checks D. Either January or February, depending on when the pay period ends.
A. January The revenue recognition principle says that revenue should be recognized in the accounting records that it is earned, which would be January 31.
Which statement is INCORRECT? A. Sales Returns and Allowances is a Revenue Account B. computers and electronic scanners allow more companies to use a perpetual inventory system C. freight-in is debited to merchandise inventory when a perpetual inventory system is used D. regardless of what inventory system is used, a company should take a physical inventory count
A. Sales Returns and Allowances is a Revenue Account
For which of the following types of adjusting entities are liabilities overstated and revenues understated before the adjusting entry is made? A. Unearned Revenues B. Accrued Revenues C. Prepaid Expenses D. Accrued Expenses
A. Unearned Revenues
A credit will reduce __ but increase __. A. accounts receivable; accounts payable B. expenses; accounts receivable C. accounts payable; common stock D. common stock; prepaid insurance
A. accounts receivable; accounts payable
The usual sequence of steps in the recording process is A. analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts B. analyze each transaction, enter the transaction in the book of original entry, and transfer the information to the journal C. analyze each transaction, enter the information in the ledger, and transfer the information to the journals D. analyze each transaction, enter the transaction in the book of accounts, and transfer the information in the journal
A. analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts
A financial statement that reports accounting data at a specific date is the A. balance sheet B. retained earnings statement C. income statement D. statement of cash flows
A. balance sheet
The Accumulated Depreciation Account is a(n) A. contra asset B. liability C. asset D. operating expense
A. contra asset
The book value of a depreciable asset is defined as the asset's A. cost less accumulated depreciation B. current fair value C. replacement cost D. cost
A. cost less accumulated depreciation
Goods held on consignment are A. never owned by the consignees B. included in the consignor's ending inventory C. kept for sale on the premises of the consignor D. included as part of no one's ending inventory
A. never owned by the consignees
An error in the physical count of goods on hand at the end of the current period resulted in a $2,500 overstatement of the ending inventory. The effect of this error in the current period is to A. overstate net income B. understate accounts payable C. overstate accounts receivable D. understate gross profit
A. overstate net income
Limited liability (no liability beyond investment) is not enjoyed by the owners of A. partnership and proprietorship B. partnership and corporation C. proprietorship and corporation D. corporation
A. partnership and proprietorship
When using a perpetual inventory system, why are discounts credited to Inventory? A. the discounts reduce the cost of the inventory B. the discounts are debited to discount expense and thus the credit has to be made to merchandise inventory C. the discounts are a reduction of business expenses D. none of the answers are correct
A. the discounts reduce the cost of the inventory
An accounting record that includes a list of accounts and their balances at a given time is called a A. trial balance B. general ledger C. chart of accounts D. general journal
A. trial balance
Mason Painting Services has a weekly payroll of $28,000. December 31 falls on Wednesday and Mason will pay its employees the following Monday (January 5) for the previous full week. Assume that Mason has a five−day workweek and has an unadjusted balance in Salaries Expense of $800,000 at December 31. What amount should be debited to Salaries Expense on December 31? A. $16,800 B. $800,000 C. $11,200 D. $28,000
A. $16,800 Salaries Expense = (Weekly Payroll / Days in Work Week) * Days Worked 16,800 = (28,000 / 5) * 3
Athens Delivery Service is hired on October 31, 2018 to perform services, beginning on November 1, 2018. The delivery services will be performed for six months at a rate of $3,500 per month. Athens' fiscal year ends on December 31. What amount of service revenue should be recorded as an adjusting entry on December 31, 2018? A. $7,000 B. $3,500 C. $10,500 D. 0
A. $7,000 6 month contract at 3,500 a month Nov 1 - Dec 31 = 2 months 3,500 * 2 = 7000
Samson, Inc. had the following balances and transactions during 2019: Beginning Merchandise Inventory 25 units at $93 March 10 Sold 22 units June 10 Purchased 75 units at $98 October 30 Sold 70 units What is the balance of the company's Merchandise Inventory, as disclosed in the December 31, 2019 balance sheet as per the periodic FIFO inventory costing method? A. $784 B. $490 C. $2,325 D. $465
A. $784 Units Available: 25 + 75 = 100 Units Sold: 22 + 70 = 92 Units Left: 8 FIFO: Use the last price ($98) $98 * 8 = 784
The Retained Earnings Account had a beginning balance of $60,000 and an ending balance of $70,000. If $20,000 of dividends were declared and paid during the period, net income must have been A. $20,000 B. $30,000 C. $10,000 D. $50,000
B. $30,000
If total liabilities increased by $42,000 during a period of time and stockholders' equity decreased by $18,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n) A. $24,000 decrease B. $24,000 increase C. $42,000 increase D. $60,000 increase
B. 24,000 increase
Bayside Technical Services signed a contract on a six−month job for a client, starting on March 1. Bayside will collect $18,000 from its customer when the job is finished but the revenue is earned evenly over the six months. On March 31, before adjusting entries are made, Bayside's Accounts Receivable account had a debit balance of $5,000. After the March 31 monthly adjusting entry has been made, what will be the balance in Accounts Receivable? A. Debit balance of $3,000 B. Debit balance of $8,000 C. Credit balance of $15,000 D. Debit balance of $18,000
B. Debit balance of $8,000 18,000 for 6 months = 3,000 a month 3,000 a month + 5,000 Accounts Receivable Balance = 8,000
Bayside Technical Services signed a contract on a six−month job for a client, starting on March 1. Bayside will collect $24,000 from its customer when the job is finished but the revenue is earned evenly over the six months. On March 31, before adjusting entries are made, Bayside's Accounts Receivable account had a debit balance of $4,000. After the March 31 monthly adjusting entry has been made, what will be the balance in Accounts Receivable? A. Credit balance of $20,000 B. Debit balance of $8,000 C. Debit balance of $24,000 D. Debit balance of $4,000
B. Debit balance of $8,000 24,000 for 6 months = 4,000 a month 4,000 a month + 4,000 Accounts Receivable Balance = 8,000
What type of relationship exists with an unearned revenue adjusting entry? A. Receivable/revenue B. Liability/revenue C. Asset/revenue D. Expense/liability
B. Liability/revenue
The revenue recognition principle A. does not allow the use of the Unearned Revenues Account B. allows a seller to record revenue whenever it is earned C. requires debits to revenue accounts until cash is received D. is also the matching principle
B. allows a seller to record revenue whenever it is earned
The time period assumptions states that the economic life of a business can be divided into A. perpetual time periods B. artificial time periods C. cyclical time periods D. equal time periods
B. artificial time periods
Resources owned by a business are referred to as A. stockholders' equity B. assets C. revenues D. liabilities
B. assets
Two categories of expenses in merchandising are A. operating expenses and financing expenses B. cost of goods sold and operating expenses C. sales and cost of goods sold D. cost of goods sold and financing expenses
B. cost of goods sold and operating expenses
The Hot Sundaes Company purchased a computer for $3,000 on December 1. It is estimated that the annual depreciation on the computer will be $600. If financial statements are made on December 31, the company should make the following adjusting entry A. debit Depreciation Expense $600, credit Accumulated Depreciation $600 B. debit Depreciation Expense $50, credit Accumulated Depreciation $50 C. debit Depreciation Expense $2,400, credit Accumulated Depreciation $2,400 D. debit Office Equipment $3,000, credit Accumulated Depreciation $3,000
B. debit Depreciation Expense $50, credit Accumulated Depreciation $50
An example of an accelerated depreciation method is A. straight-line. B. double-declining-balance. C. units-of-activity. D. depletion.
B. double-declining balance
The expense recognition principle matches A. customers with businesses B. expenses with revenues C. assets with liabilities D. creditors with businesses
B. expenses with revenues
The entry to write off an account receivable under the allowance method will ________. A. increase total assets B. have no effect on net income C. reduce net income D. increase net income
B. have no effect on net income
Which of the following is NOT an accounting assumption? A. time period B. integrity C. going concern D. economic entity
B. integrity
Gross profit equals the difference between A. net income and operating expenses B. net sales revenues and costs of goods sold C. net sales revenues and operating expenses D. net sales revenues and cost of goods sold plus operating expenses
B. net sales revenues and costs of goods sold
Vintner Company's ending inventory is understated by $3,000. The effect of this error on the current year's cost of goods sold and net income, respectively, are A. overstated; overstated B. overstated; understated C. understated; understated D. understated; overstated
B. overstated; understated
When using the allowance method, the write-off of a receivable ________. A. decreases net income B. reduces the amount of the Allowance for Bad Debts account C. involves a contra-revenue account D. affects the net realizable value of accounts receivable
B. reduces the amount of the Allowance for Bad Debts account
If goods in transit are shipped FOB destination A. the buyer has legal title to the goods until they are delivered B. the seller has legal title to the goods until they are delivered C. the transportation company has legal title to the goods while the goods are in transit D. no one has legal title to the goods until they are delivered
B. the seller has legal title to the goods until they are delivered
Following is a list of account balances of Nabers Delivery Services as of December 31, after the first year of operations. Accounts Receivable 5,000 Accounts Payable 5,000 Salaries Expense 4,000 Repairs Expense 600 Truck 9,000 Equipment 10,000 Notes Payable 8,500 Cash 11,500 Supplies Expense 1,400 Service Revenue 31,000 Gasoline Expense 3,200 Salaries Payable 200 What is the amount of total liabilities at the end of the year? A. $22,900 B. $13,700 C. $13,500 D. $19,700
B. $13,700 Liabilities = Accounts Payable + Notes Payable + Salaries Payable 13,700 = 5,000 + 8,500 +200
Regent Plumbing Corporation provides plumbing services. Selected transactions of Regent Plumbing Corporation are described as follows: a) Completed a plumbing repair project for a local lawyer and received $3,500 cash. b) Paid $5,000 cash for equipment to be used for plumbing repairs. c) Borrowed $11,000 from a local bank and deposited the money in the checking account. d) Paid $900 rent for the year. e) Paid $200 cash for plumbing supplies to be used next year. f) Completed a plumbing repair project for a local lawyer and received $3,000 cash. Calculate the net income. Assume plumbing supplies of $200 are left at the end of the accounting period. A. $700 B. $2,100 C. $2,800 D. $3,000
B. $2,100 Net Income = Revenue - Expenses 2100 = 3000 - 900
Adkins Company is hired on December 15, 2018 to perform services, beginning on December 16, 2018. Under this agreement, Adkins will earn $4,400 monthly and receive payment on January 15, 2019. What amount of service revenue should be recorded for the year ending December 31, 2018? A. 0 B. $2,200 C. $4,400 D. There is not enough information to answer this.
B. $2,200 4,400 due on Jan 15 Dec 16 - Dec 31 = 1/2 month 4,400 / 2 = 2,200
Following is a list of account balances of Lincoln Lawn Services as of December 31, after the first year of operations. Accounts Receivable 6,000 Accounts Payable 5,000 Salaries Expense 7,000 Repairs Expense 900 Truck 11,000 Equipment 12,000 Notes Payable 26,100 Cash 20,000 Supplies Expense 200 Service Revenue 32,000 Gasoline Expense 7,200 Salaries Payable 1,200 Calculate the net income. A. $49,000 B. $31,100 C. $16,700 D. $17,900
C. $16,700 Net Income = Revenue - Expenses 16,700 = 32,000 - 7,000 - 900 - 200 - 7,200
The balances of select accounts of Donovan, Inc. as of December 31, 2018 are given below. Debit Credit Building $140,000 Cash 10,000 Office Supplies 800 Furniture 5,000 Prepaid Insurance 600 Accumulated Depreciation—Furniture $4,000 Land 30,000 Accumulated Depreciation—Building 4,700 Accounts Receivable 4,000 What amount of total long−term assets would be shown on the balance sheet at December 31, 2018? A.$170,000 B. $175,000 C. $166,300 D. $140,000
C. $166,300 Long-term Assets = Building + Furniture + Land - Accumulated Depreciation--Furniture - Accumulated Depreciation--Building 166,300 = 140,000 + 5,000 + 30,000 - 4,000 - 4,700
What is the amount of depreciation, using the double-declining-balance method for the second year of use for equipment costing $9,000, with an estimated residual value of $600 and an estimated life of three years? A. $6,000 B. $3,000 C. $2,000 D. $400
C. $2,000 - Double-declining method: Step 1: Do straight-line percentage. 100% / 3 years = 33.3% Step 2: Determine the double-declining-balance rate by multiplying the straight-line rate by 2. 33.3% x 2 = 66.6% Step 3: Multiply the double-declining-balance rate from Step 2 times the book value. 66.6% x 9,000 = 6,000 Book value year 1 = 3,000 (9,000 - 6,000) Second year depreciation = 3,000 x 66.6% Second year depreciation = 2,000
At October 1, 2012, Metz Industries had an Accounts Payable balance of $60,000. During the month, the company made purchases on the account of $50,000 and payments on the account of $80,000. At October 31, 2012, the Accounts Payable balance is A. $20,000 credit B. $80,000 credit C. $30,000 credit D. $60,000 credit
C. $30,000 credit
If total liabilities decreased by $30,000 during a period of time and stockholders' equity increased by $35,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a a) $65,000 increase b) $5,000 increase c) $5,000 decrease d) $65,000 decrease
C. $5,000 decrease
Cannus Company signed a $6,000 ninety day note payable on November 1 that bears interest at a rate of 7%. The total interest to be accrued on this note at December 31 is A. $30 B. $60 C. $70 D. $90
C. $70
Hudson Landscaping Service bought equipment for $9,600 on January 1, 2019. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2019, the book value of this equipment shown on the balance sheet will be A. $9,760 B. $9,600 C. $8,640 D. $10,560
C. $8,640. Depreciation per year = 9,600 / 5 = 1,920 Book value on June 30 = 9,600 - (1,920 x 6 / 12) = 960 9,600 - 960 = 8,640
Lankston Company began the year by issuing $60,000 of common stock for cash. The company recorded revenues of $550,000, expenses of $480,000, and paid dividends of $30,000. What was Lankston's net income for the year? A. $40,000 B. $100,000 C. $70,000 D. $130,000
C. 70,000
Jones Supply Services paid $350 cash, the amount owed from the previous month, to a materials supplier. Which of the following accounts decrease? A. Office Supplies B. Retained Earnings C. Accounts Payable D. Accounts Receivable
C. Accounts Payable
Which of the following expenditures incurred in connection with acquiring machinery is a proper charge to the asset account? A. Freight B. Installation costs C. Both A and B D. Neither A nor B
C. Both A and B - All amounts spent to get a fixed asset in place and ready for use are proper charges to the asset account.
A business makes a cash payment of $12,000 to a creditor. Which of the following accounts is credited? A. Accounts Payable B. Accounts Receivable C. Cash D. Bank
C. Cash When a payment is made in cash, Accounts Payable is debited and Cash is credited, because assets are decreased with the loss of cash. Accounts Payable $12,000 Cash $12,000
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? A. Cash increases and Service Revenue increases B. Accounts Receivable increases and Service Revenue increases C. Cash increases and Accounts Receivable decreases D. Cash increases and Accounts Payable decreases
C. Cash increases and Accounts Receivable decreases
Which of the following journal entries would be recorded if a corporation issued common stock and received $3,000? A. Cash 3,000 Service Revenue 3,000 B. Cash 3,000 Unearned Revenue 3,000 C. Cash 3,000 Common Stock 3,000 D. Common Stock 3,000 Cash 3,000
C. Cash 3,000 Common Stock 3,000
Which of the following is False? A. Intangible assets are concurrent assets that do not have physical substance. B. Obligations excepted to be paid after one year are classified as long-term liabilities C. Current assets are listed in their order of magnitude (size) D. Property, plant, and equipment are assets with relatively long useful lives that are used in operating the business.
C. Current assets are listed in their order of magnitude (size)
Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? A. Freight Expense B. Freight-in C. Inventory D. Freight-out
C. Inventory
Which of the following is NOT considered an external user of accounting information? A. Bankers B. Taxing Authority C. Manager D. Labor Unions
C. Manager
Lawton Corporation records business transactions in dollars and disregards changes in the value of the dollar over time. Which accounting principle does this represent? A. Accounting period assumption B. Economic entity assumption C. Monetary unit assumption D. Going concern assumption
C. Monetary unit assumption The monetary unit assumption states that all transactions are expressed by a single currency, like the dollar.
A list of the accounts and their balances at the end of the period, after journalizing and posting the closing entries, is called ___. A. Pre-closing balance sheet B. Adjusted trial balance C. Post-closing balance sheet D. Chart of Accounts
C. Post-closing trial balance
A business performed services for a customer of $26,000 on account. Which of the following accounts is credited? A. Accounts Receivable B. Accounts Payable C. Service Revenue D. Cash
C. Service Revenue Service was performed, but customer paid on account, so Sales Revenue is credited and Accounts Receivable is debited.
Depreciation is the process of A. valuing an asset at its fair market value B. increasing the value of an asset over its useful life in a rational and systematic manner C. allocating the cost of an asset over its useful life in a rational and systematic manner D. writing down an asset to its real value each accounting period
C. allocating the cost of an asset over its useful life in a rational and systematic manner
When is a physical inventory usually taken? A. when goods are not being sold or received B. when the company has its greatest amount of inventory C. at the end of a company's fiscal year D. both B and C
C. at the end of a company's fiscal year
A post-closing trial balance contains A. real and nominal accounts B. permanent and temporary accounts C. balance sheet or permanent accounts D. balance sheet and retained earrings statement accounts
C. balance sheet or permanent accounts
Different companies using the same accounting principles is an application of A. materiality B. consistency C. comparability D. full disclosure
C. comprability
Under the accrual basis of accounting A. cash must be received for revenue to be recognized B. net income is calculated by calculating cash outflows against cash inflows C. events that change a company's financial statements are recognized in the period they occur rather than the period in which cash is paid or received D. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
C. events that change a company's financial statements are recognized in the period they occur rather than the period in which cash is paid or received
Accounting is the information system that ___, ____, and ___ the economic events of an organization to interested users. A. identifies, informs, and analyzes B. records, analyzes, and issues C. identifies, records, and communicates D. analyzes, informs, and issues
C. identifies, records, and communicates
Transactions are initially recorded in the A. ledger B. trial balance C. journal D. balance sheet
C. journal
The recording process occurs A. once a year B. once a month C. repeatedly during the accounting period D. infrequently in a manual accounting system
C. repeatedly during the accounting period
The credit terms offered to a customer by a business firm were 2/10, n/30, which means A. a customer must pay the bill within 10 days B. the customer can deduct a 2% discount if the bill is paid within 10 and 30 days of the invoice date C. the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date D. two sales can be made within 10 days of the invoice date and no returns thereafter
C. the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date
The LIFO inventory method assumes that the cost of the latest units purchased are A. the last to be allocated to cost of goods sold B. the first to be allocated to ending inventory C. the first to be allocated to cost of goods sold D. not allocated to cost of goods sold or ending inventory
C. the first to be allocated to cost of goods sold
A company that uses the periodic inventory system provided the following information: 1. Beginning inventory $4,000 2. Purchases $150,000 3. Purchase discounts $2,300 4. Purchase returns and allowances $700 At the end of the period, the physical count of inventory reveals that $17,000 worth of inventory is on hand. What is the amount of cost of goods sold? A. $147,000 B. $151,000 C. $134,000 D. $168,000
C. $134,000 Cost of Goods Sold = Beginning Inventory + Purchases - Purchase Discounts - Purchase Returns and Allowances - Inventory on Hand 134,000 = 4,000 + 150,000 - 2,300 - 700 - 17,000
Elston Company compiled the following financial information as of December 31, 2012 Revenues $420,000 Common stock 90,000 Equipment 120,000 Expenses 375,000 Cash 105,000 Dividends 30,000 Supplies 15,000 Accounts payable 60,000 Accounts receivable 45,000 Retained earnings, 1/1/12 225,000 Elston's assets on December 31, 2012 are A. $705,000 B. $510,000 C. $240,000 D. $285,000
D. $285,000
At December 31, 2012, Morris Company's inventory records indicated a balance of $652,000. Upon further investigation it was determined that this amount included the following: $112,000 in inventory purchases made my Morris Company shipped from the seller 12/27/12 terms FOB Destination, but not due to be received until January 2nd. $74,000 in goods sold by Morris Company with terms FOB Destination on December 27th the goods not expected to reach their destination until January 6th. $6,000 of goods received on consignment from Dollywood Company. What is Morris Company's correct ending inventory balance at December 31, 2012? A. $540,000 B. $646,000 C. $460,000 D. $534,000
D. $534,000
These are selected account balances on December 31, 2012. Land $100,000 Land (held for future use) $150,000 Buildings $600,000 Inventory $200,000 Equipment $450,000 Furniture $100,000 Accumulated Depreciation $300,000 What is the total amount of property, plant, and equipment that will appear on the balance sheet? A. $1,300,000 B. $1,100,000 C. $1,600,000 D. $950,000
D. $950,000
A business has the following transactions: - The business received $16,000 cash and issued common stock to stockholders. - The business purchases $700 of office supplies on account. - The business purchases $2,000 of furniture on account. - The business performs services to various clients totaling $13,000 on account. - The business pays out $3,000 for salaries expense and $3,500 for rent expense. - The business pays $700 to a supplier for the office supplies purchased earlier. - The business collects $1,000 from one of its clients for services rendered earlier in the month. At the end of the month, all journal entries are posted to the ledger. Accounts Payable will appear as which of the following? A. Accounts Payable 700 2000 2700 Bal. B. Accounts Payable 700 2000 700 3400 Bal. C. Accounts Payable 700 2,000 700 Bal. 2,000 D. Accounts Payable 700 700 2000 2000 Bal.
D. Accounts Payable 700 700 2000 2000 Bal.
Adjusting entries are made to ensure that A. expenses are recognized in the period in which they are incurred B. revenues are recorded in the period in which they are earned C. Balance Sheet and Income Statement have the correct balances at the end of an accounting period D. All of the above are correct
D. All of the above are correct
A business purchases equipment by paying $6,276 in cash and issuing a note payable of $19,177. Which of the following occurs? A. Cash is credited for $6,276, Equipment is credited for $25,453, and Notes Payable is debited for $19,177. B. Cash is debited for $6,276, Equipment is credited for $19,177, and Notes Payable is debited for $12,901. C. Cash is debited for $6,276, Equipment is debited for $19,177, and Notes Payable is credited for $25,453. D. Cash is credited for $6,276, Equipment is debited for $25,453, and Notes Payable is credited for $19,177.
D. Cash is credited for $6,276, Equipment is debited for $25,453, and Notes Payable is credited for $19,177
Williams Enterprises prepaid 8 months of office rent totaling $9,000 on October 1, 2019. Assuming Williams records deferred expenses using the alternate treatment, what would be the entry on October 1, 2019? A. Debit Rent Expense and credit Cash for $9,000 B. Debit Cash and credit Unearned Rent for $9,000 C. No entry is needed until the expense is incurred D. Debit Prepaid Rent and credit Cash for $9,000
D. Debit Prepaid Rent and credit Cash for $9,000 Prepaid Rent $9,000 Cash $9,000
In a period of rising prices, the inventory method that will show the highest net income is A. Allowance Method B. Units-of-Activity Method C. LIFO D. FIFO
D. FIFO
GAAP refers to A. general accounting and auditing principles B. guidelines for American accounting procedures C. General Association of Accounting Practitioners D. generally accepted accounting principles
D. Generally Accepted Accounting Principles
Which of the following journal entries would be recorded if a business purchased $800 of office supplies on account? A. Accounts Payable 800 Office Supplies 800 B. Office Supplies 800 Cash 800 C. Cash 800 Office Supplies 800 D. Office Supplies 800 Accounts Payable 800
D. Office Supplies 800 Accounts Payable 800
Which of the following is NOT an internal control activity for cash? A. the amount of cash on hand should be kept to a minimum B. banking facilities should be used as much as possible C. employees who have access to cash should be bonded D. all payments should be made with currency, not checks
D. all payments should be made with currency, not checks
An accrued expense account represents expenses that have A. been used and paid B. been paid but not used C. not been used or paid D. been used but not paid
D. been used but not paid
Current assets are listed a) alphabetically b) by importance c) by longevity d) by liquidity
D. by liquidity
Liabilities are generally classified on a balance sheet as A. small liabilities and large liabilities B. present liabilities and future liabilities C. tangible liabilities and intangible liabilities D. current liabilities and long-term liabilities
D. current liabilities and long-term liabilities
Screech's Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is A. debit Laundry Supplies Expense $2,000, credit Laundry Supplies $2,000 B. debit Laundry Supplies $4,500, credit Laundry Supplies Expense $4,500 C. debit Laundry Supplies $2,000, credit Laundry Supplies Expense $2,000 D. debit Laundry Supplies Expense $4,500, credit Laundry Supplies $4,500
D. debit Laundry Supplies Expense $4,500, credit Laundry Supplies $4,500
A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is A. debit Salaries Payable, $16,000; credit Cash, $16,000 B. debit Salaries Expense, $16,000; credit Cash, $16,000 C. debit Salaries Expense, $16,000; credit Accounts Payable, $16,000 D. debit Salaries Expense, $16,000; credit Salaries Payable, $16,000
D. debit Salaries Expense, $16,000; credit Salaries Payable, $16,000
The procedure of transferring journal entries to the ledger accounts is called A. journalizing B. ledgering C. recording D. posting
D. posting
Howard Company had a transaction that caused a $5,000 increase in both assets and total liabilities. This transaction could have been a(n) A. purchase of office equipment for $5,000 cash B. investment of $5,000 cash in the business by the stockholders C. repayment of a $5,000 bank loan D. purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance
D. purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance
Watson Foods, Inc. reported the following transactions for September 2019. a) The business received $22,000 cash and issued common stock. It was credited to Common Stock. b) The business purchased office equipment for $9,000 for which $3,500 cash was paid and the balance was put on a note payable. c) Paid insurance expense of $1,800 cash. d) Paid the September utility bill for $900 cash. e) Paid $2,000 cash for September rent. f) The business had sales of $10,000 in September. Of these sales, 60% were cash sales, and the balance was credit sales. g) The business paid $7,000 cash for office furniture. What are the total liabilities at the end of September, 2019? A. $1,800 B. $10,000 C.$9,000 D.$5,500
D. $5,500 Liabilities = Note Payable 5,500 = (9,000 - 3,500)
Roadside, Inc. had the following balances and transactions during 2018: Beginning Merchandise Inventory 40 units at $70 March 10 Sold 38 units June 10 Purchased 80 units at $80 October 30 Sold 74 units What is the amount of the company's ending Merchandise Inventory, as disclosed in the December 31, 2018 balance sheet, using the periodic LIFO inventory costing method? A. $640 B. $480 C. $420 D. $560
D. $560 Units Available: 40 + 80 = 120 Units Sold: 38 + 74 = 112 Units Left: 8 LIFO: Use first price ($70) $70 * 8 = 560
Accounts Receivable has a balance of $8,000, and the Allowance for Bad Debts has a credit balance of $450. The allowance method is used. What is the net realizable value of Accounts Receivable after a $160 account receivable is written off? A. $7,710 B. $8,000 C. $7,390 D. $7,550
D. $7,550 Net Realizable Value of Accounts Receivable = (Accounts Receivable - Write off) - (Allowance for Bad Debts - Write Off) 7,550 = (8,000 - 160) - (450 - 160)
The balances of select accounts of Sandra, Inc. as of December 31, 2018 are given below: Debit Credit Building 130,000 Cash 5,000 Office Supplies 800 Furniture 5,000 Prepaid Insurance 450 Accumulated Depreciation—Furniture $1,000 Land 32,000 Accumulated Depreciation—Building 4,600 Accounts Receivable 2,300 The insurance has been prepaid until June 30, 2019. Determine the amount of total current assets reported on the balance sheet at December 31, 2018. A. $6,250 B. $5,800 C. $12,300 D. $8,550
D. $8,550 Current assets = Cash + Office Supplies + Prepaid Insurance + Accounts Receivable 8,550 = 5,000 + 800 + 450 + 2,300
Jacob, Inc. had the following balances and transactions during 2019: Beginning Merchandise Inventory 11 units at $92 March 10 Sold 8 units June 10 Purchased 33 units at $89 October 30 Sold 27 units What is the amount of the company's ending Merchandise Inventory, as disclosed in the December 31, 2019 balance sheet, using the periodic weighted−average inventory costing method? (Round the unit costs to two decimal places and total costs to the nearest dollar.) A. $326 B. $109 C. $89 D. $808
D. $808 $92 * 11 = 1012 $89 * 33 = 2937 1012 + 2937 = 3949 3949 / 44 Units = 89.75 89.75 * 9 (11 - 8 + 33 - 27) = 807.75
TRUE OR FALSE: Laramie, Inc. signed a contract with a service provider for security services at a rate of $310 per month for the period of January through June. Laramie, Inc. will pay the service provider the entire amount at the end of June. Laramie, Inc. makes adjusting entries each month. During the month of June, it should record total security expense of $620.
FALSE
TRUE OR FALSE: On June 1, Edison, Inc. borrowed $27,000 on a one−year Note Payable with an interest rate of 10% per year. It will repay the principal and interest at the end of the one−year period. The company makes accrual adjustments at the end of each month. The company should record interest expense of $2,700 on June 30.
FALSE