Accounting 120 Quiz and Test ?'s
FastForward has beginning equity of $257,000, net income of $55,000, withdrawals of $48,000 and an additional investment by the owner of $6,000. Its ending equity is: a. $270,000 b. $240,000 c. $268,000 d. $274,000
A
If Lacy's Department Store charges 8 percent sales tax, the amount of sales tax collected on a $225 sale would be: a. $18.00 b. $180.00 c. $28.12 d. $2.81
A
Net income can best be described as: A. Net cash received by a company during the year B. Revenues minus expenses C. The amount of profits retained in a company for the year. D. Resources owned by a company
A
The J. Godfrey, Capital account has a credit balance of $17,000 on the adjusted trial balance. If total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $19,000, what is the ending balance in the J. Godfrey, Drawing account that would be found on the balance sheet? a. $19,000 b. $15,400 c. $23,400 d. $13,400 e. $0
A
The accounting equation is defined as: A. Assets= Liabilities + Owner's Equity B. Assets= Liabilities - Owner's Equity C. Net Income= Revenues - Expenses D. Liabilities + Revenues = Assets
A
The accounting equation is defined as: A. Assets=Liabilities + Owners' Equity B. Assets = Liabilities - Owners' Equity C. Net Income = Revenues - Expenses D. Liabilities + Revenues = Assets
A
T/F Account that appear in the balance sheet are often called temporary (nominal) accounts.
False
T/F In double-entry accounting system, total amount debited must always equal total amount credited
False
T/F Internal users of financial information include lenders, shareholders, brokers, and managers.
False
T/F Recording the payment of the owner's personal telephone bill would be a debit to telephone expense in the books of the business.
False
T/F The closing process takes place before financial statements are prepared.
False
T/F The journal is known as the book of final entry because financial statements are prepared from it.
False
T/F A work sheet is a tool to help bring together information needed in adjusting the account and preparing the financial statements
True
T/F An expense account is normally closed by debiting Income Summary and crediting the expense account
True
T/F Closing entries are designed to transfer the end-of-period balances in the revenue accounts, the expense accounts, and the withdrawals account to owner's capital.
True
T/F Generally Accepted Accounting Principles are the basic assumptions, concepts, and guidelines used in preparing financial statements and for recording accounting information.
True
T/F In a double-entry accounting system, total amount debited must always equal total amount credited.
True
T/F Items such as sales slips, invoices, checks, and purchase orders are source documents.
True
T/F Posting is the transfer of journal entry information to the ledger
True
T/F The closing process takes place after financial statements have been prepared
True
T/F The first step in the accounting cycle is to analyze transactions and events to prepare for journalizing.
True
T/F The legitimate claims of a business's creditors take precedence over claims of the business owner. In other words, liability payments must come before any payments to the owner.
True
T/F The work sheet is not a required financial statement
True
T/F Withdrawals by the owner are a form of business expense
True
T/F Withdrawals by the owner are not a form of business expense
True
8th step of cycle
post-closing trial balance
5th step of cycle
prepare the formal financial statements
4th step of cycle
prepare the worksheet
7th step of cycle
journalize and post closing entries
A column in journals and ledger accounts used to cross reference journal and ledger entries is the: a. posting reference column b. debit column c. credit column
A
The journal entry to record the payment of salaries should include: a. a debit to Salaries Expense and a credit to Cash b. A debit to Capital and a credit to Cash c. a debit to Cash and a credit to Salaries Expense d. a debit to Salaries Expense and a credit to Accounts Payable
A
The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the : a. Income summary account b. closing account c. Balance column account d. Contra account e. Nominal account
A
When an entry is made in the general journal: a. accounts to be debited should be listed first b. assets should be listed first c. accounts to be increased should be listed first d. accounts may be listed in any order
A
Which of the following users of information would be considered "Outside Users" to the organization: A. Banks B. Managers C. Owners D. Employees
A
1st step of acc cycle
Analyze the transaction
A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements, and which is an optional tool in the accounting process is: a. Adjusted trial balance b. worksheet c. post closing trial balance d. unadjusted trial balance e. general ledger
B
A company provides periodic reports called: A. Audits B. Financial Statements C. Tax Returns D. Summaries
B
A credit is defined as: a. an increase in an account b. right side of an account c. a decrease in an account d. left side of an account e. an increase to an asset account
B
A debit is defined as: a. An increase in an account b. The left hand side of a T-account c. a decrease in an account d. the right hand side of a T-account e. an increase to a liability account
B
A payment to an owner is called a(n): A. Liability B. Withdrawal C. Expense D. Contribution E. Investment
B
Determine the net income of a company for which the following information is available for the month of May: Employee Salaries Expense: $180,000 Interest Expense: $10,000 Rent Expense: $20,000 Consulting Revenue: $400,000 a. $210,000 b. $190,000 c. $230,000 d. $400,000
B
If assets are $365,000 and equity is $120,000, then liabilities are: A. $120,000 B. $245,000 C. $365,000 D. $485,000 E. $610,000
B
If assets are $99,000 and liabilities are $32,000, then equity equals: A. $32,000 B. $67,000 C. $99,000 D. $131,000
B
In what order are the following financial statements prepared: (1) Balance Sheet, (2) Income Statement, and (3) Statement of Owner's Equity A. 1,2,3 B. 2,3,1 C. 1,3,2 D. 3,2,1
B
The J. Godfrey, Capital account has a credit balance of $17,000 on the adjusted trial balance. If total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $19,000, what is the ending balance in the J. Godfrey, Capital account that would be found on the balance sheet? a. $8,000 b. $13,400 c. $23,400 d. $17,000 e. $32,400
B
The following transactions occurred in July: 1. Received $900 Cash for services provided to a customer during July. 2. Received $2,200 cash investment from Barbara Hanson, the owner of the business. 3. Received $750 from a customer in partial payment of his account receivable which arose from sales in June. 4. Provided services to a customer on credit, $375. 5. Borrowed $6,000 from the bank by signing a promissory note. 6. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July? a. $900 b. $1,275 c. $2,525 d. $3,275 e. $11,100
B
The journal entry to record the purchase of equipment for a $100 cash down payment and a balance of $400 due in 30 days would include a. a debit to Equipment for $100 and a credit to accounts payable for $400 b. a debit to Equipment for $500, a credit to Cash for $100, and a credit to Accounts Payable for $400 c. a debit to Equipment for $100 and a credit to accounts payable for $400 d. debit to Equipment for $500 and a credit to Cash for $500
B
The process of transferring general journal information to the ledger is: a. Double-entry accounting b. Posting c. Balancing an account d. Journalizing e. Not required unless debits do not equal credits
B
The record in which transaction are first recorded is the: a. ledger b. journal c. trial balance d. cash account
B
The statement of owner's equity: a. Reports how equity changes at a point in time b. Reports how equity changes over a period of time c. Reports on cash flows for operating, financing, and investing activities over a period of time. d. Reports on cash flows for operating, financing, and investing activities at a point in time.
B
Unearned revenues are: a. Revenues that have been earned but not yet collected in cash b. Liabilities created when a customer pays in advance for products or services before the revenue is earned. c. Recorded as an asset in the accounting records. d. Increases to owners' capital
B
When closing entries are made: A. All ledger accounts are closed to start the new accounting period. B. All temporary accounts are closed but not the permanent accounts. C. All real accounts are closed but not the nominal accounts. D. All permanent accounts are closed but not the nominal accounts. E. All balance sheet accounts are closed.
B
When closing entries are made: a. All ledger accounts are closed to start the new accounting period. b. all temporary accounts are closed but not the permanent accounts. c. all real accounts are closed but not the nominal accounts d. All permanent accounts are closed but not the nominal accounts. e. All balance sheet accounts are closed.
B
Which of the following is not an asset account? A. Office Supples B. Accounts Payable C. Equipment D. Accounts Receivable
B
Which of the following statements is correct? a. For every transaction recorded in the general journal, the year, month, and day on which the event occurred are written in the Date column. b. when a transaction is journalized, the total of the amounts debited must equal the total of the amounts credited c. Journalizing transactions is the last step of the accounting cycle d. The general journal cannot accommodate every type of transaction that a business may have
B
Pn 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 owner's equity as of July 1 of the current year? A. $8,300 B. $13.050 C. $20,500 D. $31,100 E. $40,400
D
Which of the following statements is correct? a. for every transaction recorded in the general journal, the year, month, and day on which the event occurred are written in the Date column. b. When a transaction is journalized, the total of the amounts debited must equal the total of the amounts credited. c. Journalizing transactions is the last step of the accounting cycle. d. The general journal cannot accommodate every type of transaction that a business may have .
B
Which of the following statements is true? a. owner's capital must be closed each accounting period b. a post-closing trial balance should include only permanent accounts c. information on the work sheet can be used in place of preparing financial statements. d. by using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts e. closing entries are only necessary if errors have been made.
B
Which of the following transactions does not include an increase to revenue? a. sold services on account b. collected on an accounts payable c. received cash for service performed d. all of above should be recorded as an increase to revenue e. none of above should be recorded as an increase to revenue
B
A company had the following account and balances year-end: Cash $29,000 Accounts Receivable $32,000 Accounts Payable $19,000 Fees Earned $64,000 Rent Expense $15,000 Insurance Expense $4,800 Supplies $4,000 Sam, Capital $18,800 Sam, Withdrawals $17,000 If all of the accounts have normal balances, what are the totals for the trial balance? a. $55,400 b. $68,850 c. $101,800 d. $210,450 e. $245,440
C
Assets, Liabilities, and equity accounts are not closed; these accounts are called: a. Nominal accounts b. Temporary Accounts c. Permanent Accounts D. Contra Accounts E. Accrued accounts
C
Creditors' claims to a business's resources are referred to as: A. Expenses B. Assets C. Liabilities D. Owner's Equity
C
GAAP stands for: A. General's Accepted Articulated Practices B. Gross Appalling Artichokes' Parade C. Generally Accepted Accounting Principles D. Generally Approved Accounting Practices
C
On January 1, a company purchased a computer for $3,000 with a useful life of three years, and a salvage value of $600. Calculate the annual depreciation expense and select the correct adjusting journal entry for the year. a. Debit Depreciation Expense - Computer $1,000 and Credit Accumulated Depreciation - Computer $1,000 b. Debit accumulated depreciation - computer $800 and credit depreciation expense - computer $800 c. debit depreciation expense - computer $800 and credit accumulated depreciation - computer $800 d. Debit accumulated depreciation - computer $1,000 and credit depreciation expense - computer $1,000
C
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 owner's equity as of July 1 of the current year? a. $49,700 b. $40,400 c. $31,100 d. $20,500
C
The financial statement that represents the accounting equation is the : A. Income Statement B. Ants in the park statement C. Balance Sheet D. Statement of Owner's Equity
C
The following information is available for the Travis Travel Agency. After these closing entries what will be the balance in the Jay Travis, Capital account? Total revenue $125,000 Total Expense $60,000 Jay Travis, Capital $80,000 Jay Travis, Withdrawals $15,000 a. $65,000 b. $80,000 c. $130,000 d. $145,000 e. $280,000
C
The income summary account is used: a. to adjust and update asset and liability accounts b. to determine the appropriate withdrawal amount c. to close the revenue and expense accounts d. to replace the income statement under some circumstances e. to replace the capital account in some businesses.
C
The journal entry to record the payment of a monthly utility bill would include: a. a debit to Utilities Expense and a credit to Capital. b. a debit to Capital and a credit to Cash c. a debit to Utilities Expense and a credit to cash d. a debit to Utilities Expense and a credit to Accounts Payable
C
The journal entry to record the withdrawal of cash by Sue Snow, the owner, to pay a personal utility bill would include: a. a debit to Sue Snow, Capital, and a credit to cash b. a debit to Utilities Expense and a credit to cash c. a debit to Sue Snow, Drawing, and a credit to cash d. a debit to Sue Snow, Drawing and a credit to Utilities expense
C
The record in which transactions are first recorded is the: a. Account balance b. Ledger c. Journal d. Trial Balance e. Cash account
C
Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are: a. Total assets decrease and equity increases. b. Both total assets and total liabilities decrease. c. Total assets, total liabilities, and equity are unchanged. d. Both total assets and equity are unchanged and liabilities increase.
C
Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are: a. Total assets decrease and equity increases. b. Both total assets and total liabilities 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.
C
Walton employees earn $400/day and are paid for a five-day work week. The month ends on Thursday of the week; therefore the journal entry to record four days accused wages is: a. debit wages expense $1,200; credit wage payable $1,200 b. debit wage expense $400; credit wage payable$400 c. debit wage expense $1,600; credit wage payable $1,600 d. debit wage expense $2,000; credit wage payable $2,000
C
Which financial statement is prepared for one date In time? A. Income Statement B. Statement of Owner's Equity C. Balance Sheet D. Statement of Nothingness
C
Which of the following is the usual final step in the accounting cycle? a. journalizing transactions b. preparing an adjusted trial balance c. preparing post-closing trial balance d. preparing the financial statements e. preparing a work sheet
C
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. $12,230. b. $12,430. c. $43,300. d. $43,430. e. $61,430.
C
A debit is defined as: a. an increase in an account b. The right hand side of a T-account c. A decrease in an account d. The left-hand side of an account e. An increase to a liability account
D
A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a: a. Balance Sheet b. Income Statement c. Chart of accounts d. Trial Balance
D
A schedule of accounts receivable is prepared? a. daily b. weekly c. quarterly d. monthly
D
Closing entries are required: a. if management has decided to cease operating the business. b. only if the company adheres to the accrual method of accounting c. if a company's bookkeeper forgets to prepare reversing entries d. If the temporary accounts are to reflect correct amounts for each account period. e. In order to satisfy the internal revenue service
D
GAAP stands for: a. General's Accepted Accounting Practices b. Generally Approved Accounting Practices c. Grinch's Approved Accounting Practices d. Generally Accepted Accounting Principles
D
If Larisa Toarka, the owner of Toarka Electronics proprietorship, uses cash of the business to pay for the family's home mortgage payment, the business should record this use of cash with an entry to a. Debit Salary Expense and credit cash b. debit Larisa Toarka, Salary and credit cash c. debit cash and credit Larisa Toarka, withdrawals d. debit Laris Toarka, Withdrawals and credit cash e. Debit Mortagae Payable and credit cash
D
In what order are the following financial statements prepared: (1) Balance Sheet, (2) Income Statement, (3) Statement of Stockholders' Equity. A. 1,2,3 B. 2,1,3 C. 1,3,2 D. 2,3,1
D
Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' 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. Credit to Management Fees Earned for $60,000
D
Net Income: a. decreases equity b. equals assets minus liabilities c. represents the amount of assets owners put into a business d. is the excess of revenues over expenses
D
The closing process is necessary in order to: a. calculate net income or net loss for an accounting period b. ensure that all permanent accounts are closed to zero at the end of each accounting period. c. ensure that the company complies with state laws. d. ensure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account e. ensure that management is aware of how well the company is operating.
D
The current ratio: a. Is used to measure a company's profitability b. Is used two measure the relation between assets and long-term debt. c. measures the effect of operating income on profit d. Is used to help evaluate a company's ability to pay its short-term obligations. e. Is calculated by dividing current assets by equity.
D
The financial statements should be completed in the following order: a. balance sheet, trial balance, income statement, statement of owner's equity. b. income statement, statement of owner's equity, adjusted trial balance. c. worksheet, trial balance, income statement, balance sheet d. income statement, statement of owner's equity, balance sheet e. statement of owner's equity, income statement, balance sheet
D
Which of the following Is not a balance sheet account classification? A. Assets B. Owner's Equity C. Liabilities D. Revenues
D
Supplies have a ledger balance of $1,500, but a physical count shows $1,000 on hand. What is the effect on the financial statements if the supplies account is not adjusted? a. liabilities will be overstated and expenses will be understated b. owner's capital will be overstated and net income will be understated. c. net income understated, assets understated d. revenue will be overstated and expenses will be overstated e. assets will be overstated and expenses will be understated
E
Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? A. Assets increase by $75,000 and expenses increase by $75,000 B. Assets increase by $75,000 and expenses decrease by $75,000 C. Assets decrease by $75,000 and expenses decrease by $75,000 D. Liabilities increase by $75,000 and expenses decrease by $75,000 E. Assets increase by $75,000 and liabilities increase by $75,000
E
Explain why accounting is referred to as "the language of business"
It is used to communicate important financial information to owners, manager, and other parties.
6th step of cycle
Journalize and post adjusting entries
2nd step of cycle
Journalize the transaction
What are two of the three key characteristics of a sole proprietorship?
Owned by one person Owner is legally responsible for the debts and taxes of the business.
What are two of the three characteristics of a partnership?
Owned by two or more people. All owners are responsible for the debts and taxes of the business.
3rd step of cycle
Post the transaction
What are two of the three key characteristics of a corporation?
Publicly or privately owned. Has a legal right to own property or do business in its own name.
9th step of cycle
analyze the financial results