Account I Final Exam

Which side of the account increases the cash account? a. Debit b. Neither a debit nor a credit c. Credit d. Either a debit or a credit

a. Debit

Which of the following pairs of accounts could not appear in the same adjusting entry? a. Interest Income and Interest Expense b. Rent Expense and Prepaid Rent c. Salaries Payable and Salaries Expense d. Fees Earned and Unearned Fees

a. Interest Income and Interest Expense

Apr. 14 Equipment 15,000 Cash 5,000 Notes Payable 10,000 ???????????? Which is the best explanation for this journal entry? a. Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future. b. Purchased equipment on account. c. Purchased equipment; paid cash of $10,000, with the remainder to be received in the future. d. Purchased equipment with cash.

a. Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future.

A credit balance in which of the following accounts would likely indicate an error? a. Salary Expense b. Fees Earned c. Accounts Payable d. Janet James, Capital

a. Salary Expense

The debt created by a business when it makes a purchase on account is referred to as an a. account payable b. asset c. expense payable d. account receivable

a. account payable

The balance in the supplies account before adjustment at the end of the year is $6,175. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,593 would be a. debit Supplies Expense, $4,582; credit Supplies, $4,582 b. debit Supplies, $4,582; credit Supplies Expense, $4,582 c. debit Supplies Expense, $1,593; credit Supplies, $1,593 d. debit Supplies, $1,593; credit Supplies Expense, $1,593

a. debit Supplies Expense, $4,582; credit Supplies, $4,582 ($6,175-$1,593)

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry? a. increases the balance of a liability account b. decreases the balance of an owner's equity account c. decreases the balance of an expense account d. increases the balance of an asset account

a. increases the balance of a liability account

Adjusting entries are a. needed to bring accounts up to date and match revenue and expense b. optional under generally accepted accounting principles c. the same as correcting entries d. rarely needed in large companies

a. needed to bring accounts up to date and match revenue and expense

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies a. used b. still on hand c. purchased d. required for the next accounting period

a. used

Which of the following types of accounts have a normal credit balance? a. Liabilities and expenses b. Revenues and capital c. Capital and drawing d. Assets and liabilities

b. Revenues and capital

A cash payment is recorded in the cash account as a. neither a debit nor a credit b. a credit c. a debit d. either a debit or a credit

b. a credit

Buster Industries pays weekly salaries of $36,800 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is a. debit Drawing, $14,720; credit Cash, $14,720 b. debit Salary Expense, $14,720; credit Salaries Payable, $14,720 c. debit Salary Expense, $14,720; credit Drawing, $14,720 d. debit Salaries Payable, $14,720; credit Cash, $14,720

b. debit Salary Expense, $14,720; credit Salaries Payable, $14,720 ($36,800/5) x 2

Adjusting entries affect at least one a. asset and one owner's equity account b. income statement account and one balance sheet account c. revenue and one owner's equity account d. revenue and the dividends account

b. income statement account and one balance sheet account

The ____ is where a transaction can first be found in the accounting records. a. balance sheet b. journal c. chart of accounts d. income statement

b. journal

A debit signifies a decrease in a. drawing b. revenues c. expenses d. assets

b. revenues

Profit is the difference between a. the assets purchased with cash contributed by the owner and the cash spent to operate the business b. the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services c. the incoming cash and outgoing cash d. assets and liabilities

b. the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services

The accounts in the ledger of Monroe Entertainment Co. are listed below. All accounts have normal balances. Accounts Payable $499 Fees Earned $2,201 Accounts Receivable 977 Insurance Expense 487 Prepaid Insurance 4,566 Land 1,757 Cash 1,095 Wages Expense 715 Drawing 339 Capital 7,236 Total assets are a. $7,236 b. $3,795 c. $8,395 d. $2,201

c. $8,395

The accounting equation may be expressed as a. Assets = Revenues − Liabilities b. Assets + Liabilities = Owner's Equity c. Assets − Liabilities = Owner's Equity d. Assets = Equities − Liabilities

c. Assets − Liabilities = Owner's Equity

Which of the following entries records the payment of an account payable? a. Debit Cash; Credit Accounts Payable b. Debit Accounts Receivable; Credit Cash c. Debit Accounts Payable; Credit Cash d. Debit Cash; Credit Supplies Expense

c. Debit Accounts Payable; Credit Cash

The asset created by a business when it makes a sale on account is termed a. unearned revenue b. prepaid expense c. accounts receivable d. accounts payable

c. accounts receivable

How does paying a liability in cash affect the accounting equation? a. assets increase; liabilities decrease b. assets increase; liabilities increase c. assets decrease; liabilities decrease d. liabilities decrease; owner's equity increases

c. assets decrease; liabilities decrease

The process of initially recording a business transaction is called a. posting b. balancing c. journalizing d. closing

c. journalizing

Using accrual accounting, revenue is recorded and reported only a. when cash is received at the time services are rendered b. if cash is received after the services are rendered c. when the services are rendered without regard to when cash is received d. when cash is received without regard to when the services are rendered

c. when the services are rendered without regard to when cash is received

The unearned rent account has a balance of $69,067. If $16,343 of the $69,067 is unearned at the end of the accounting period, the amount of the adjusting entry is a. $85,410 b. $16,343 c. $69,067 d. $52,724

d. $52,724 ($69,067-$16,343)

Which of the following entries records the collection of cash from cash customers? a. Accounts Receivable, debit; Fees Earned, credit b. Fees Earned, debit; Accounts Receivable, credit c. Fees Earned, debit; Cash, credit d. Cash, debit; Fees Earned, credit

d. Cash, debit; Fees Earned, credit

A debit balance in which of the following accounts would likely indicate an error? a. Supplies b. Edgar Martin, Drawing c. Salaries Expense d. Notes Payable

d. Notes Payable

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry. Wages Expense 4,500 Wages Payable 4,500 a. Record wages paid last month. b. Record payment of wages. c. Record wages paid in advance. d. Record wages expense incurred and to be paid next month.

d. Record wages expense incurred and to be paid next month.

Which of the following accounts is an owner's equity account? a. Accounts Payable b. Cash c. Prepaid Insurance d. Ross Morris, Capital

d. Ross Morris, Capital

Calculator In which of the following types of accounts are decreases recorded by credits? a. revenues b. liabilities c. owner's equity d. assets

d. assets

In which order are the accounts listed in the chart of accounts? a. assets, expenses, liabilities, owner's equity, revenues b. owner's equity, assets, liabilities, revenues, expenses c. assets, liabilities, revenues, expenses, owner's equity d. assets, liabilities, owner's equity, revenues, expenses

d. assets, liabilities, owner's equity, revenues, expenses

Smokey Company purchases a one-year insurance policy on July 1 for $1,128. The adjusting entry on December 31 is a. debit Insurance Expense, $658; credit Prepaid Insurance, $658 b. debit Prepaid Insurance, $564; credit Cash, $564 c. debit Insurance Expense, $470; credit Prepaid Insurance, $470 d. debit Insurance Expense, $564; credit Prepaid Insurance, $564

d. debit Insurance Expense, $564; credit Prepaid Insurance, $564 ($1,128/12 x 6)

Prepaid expenses are eventually expected to become a. expenses in the period when they are paid b. revenues when services are performed c. revenues when the liability is no longer owed d. expenses when their future economic value expires or is used up

d. expenses when their future economic value expires or is used up

Debts owed by a business are referred to as a. owner's equity b. accounts receivable c. expenses d. liabilities

d. liabilities

Using accrual accounting, expenses are recorded and reported only a. when they are incurred and paid at the same time b. if they are paid after they are incurred c. if they are paid before they are incurred d. when they are incurred, whether or not cash is paid

d. when they are incurred, whether or not cash is paid