ACCT 2301 Ch 1 - Ch 11 Exams

2 Yellow Company had a balance of $34,000 in Accounts Payable at the beginning of June, and purchased $104,000 of merchandise on account during the month. At the end of June, Yellow's Accounts Payable balance was $30,000. What amount did Yellow pay on account during June? A) $108,000 B) $74,000 C) $40,000 D) $104,000

A) $108,000 Pay on account = Beginning Account Payable + Account Purchase - End of Month Account Payable = 83,000 + 104,000 - 30,000 = $108,000

1 Golden Company had the following accounts and balances at the end of the year. What are total assets at the end of the year? Cash —————————————$75,000 Accounts Payable —————$14,000 Common Stock ——————-$21,000 Dividends ——————————$12,000 Operating Expenses ———-$25,000 Accounts Receivable. ———$50,000 Inventory ——————————-$44,000 Long-term Notes Payable -$33,000 Revenues ——————————-$112,000 Salaries Payable ——————-$26,000 A) $169,000 B) $119,000 C) $75,000 D) $125,000

A) $169,000 Total Assets = Cash + Accounts Receivable + Inventory = 75,000 + 5,000 + 44,000 = $169,000

2 A company completed the following transactions during the month of October: I. Purchased office supplies on account for $5,600 II. Provided services for cash of $22,000 III. Provided services on account of $37,000 IV. Collected cash from a customer on account $31,000 V. Paid the monthly rent of $4,200 What is the company's total revenue for the month? A) $59,000. B) $22,000. C) $90,000. D) $37,000.

A) $59,000. revenue = services for cash + services on account = 22,000 + 37,000 = $59,000

1 Seidner Company had the following account balances at the end of the first year of operations: Revenues ——————————-$100,000 Salaries Expense ——————$18,000 Dividends ——————————$16,000 Utilities Expense ——————$12,000 Advertising Expense ———-$10,000 Short - term Investments —$20,000 Cash —————————————$24,000 Land —————————————$50,000 Common Stock ——————-$50,000 What is the amount of net income or net loss for the year? A) $60,000 B) $70,000 C) $18,000 D) $72,000

A) $60,000 Net Income = Revenue - Expense Net Income = Revenue - (Salaries Expense + Utilities Expense + Advertising Expense) = 100,000 + (18,000 + 12,000 + 10,000) = $60,000

2 Which of the following is a business transaction? A) A company pays its employees a year - end bonus B) A company signs a contract for services to be provided during the first quarter of the next fiscal year C) A company applies for a mortgage that will be used to purchase a new office building D) A company hires a new marketing manager

A) A company pays its employees a year - end bonus

2 The normal balance of an account: A) falls on the side where increases are recorded B) falls on the side where decreases are recorded C) must be computed after every transaction D) cannot be computed in a manual accounting system

A) falls on the side where increases are recorded

1 A company issues common stock for $100,000. On a statement of cash flows, this will be reported as: A) financing cash flow B) investing cash flow C) operating cash flow D) noncash activity

A) financing cash flow

1 The principle stating that assets acquired by the business should be recorded at their actual cost on the date of purchase: A) historical cost B) objectivity C) stable - monetary - unit D) reliability

A) historical cost

3 Consider the following selected accounts from the records of Wolf Enterprises at December 31, 2021: Cost of services sold. $14,500. Service revenue. $32,000 Accumulat depreciation. $41,200. Depreciation expenses. $4,900 Selling, general, and. Other revenue. $1,100 administrative expenses. $6,300. Dividend declared $200 Retained earnings, Income tax expens. $300 December 31, 2020. $2,400. Income tax payable $900 A. Begin by preparing the closing entries for Wolf Enterprises. Record the entry to close out the revenue accounts. B. Next close out the expenses accounts C.Now close out the dividend account D. How much net income did Wold Enterprises earn during 2021? E. Prepare a T-account for Retained Earnings to show the December 31, 2021, balance of Retained Earnings. Post the beginning balance and closing entries to Retained Earnings and determine the ending balance

A. (1) Dec 31. Dr. -Service Rev 32,000 Dr. -Other Rev 1,100 —- Cr. Retained Earn. 33,100 [Retained earnings = 32,000 + 1,100 = 33,100] B. (2) Dec 31. Dr. -Retain Earn. 26,000 (Dr) ——Cr. Cost of Services Sold ——14,500 ——Cr. Selling, Gen and other ——6,300 ——Cr. Depreciation Expense ——4,900 ——Cr. Income Tax Expense ———-300 [Total Retained Earnings = 14,000 + 6,300 + 4,900 + 300 = 26,000] C. (3) Dec 31. Dr. —Retained Earnings 200 ——-Cr. Dividends— 200 D. Net income for 2021 was: NI = Revenue (1) - Expenses (2) = 33,100-26,000 = $7,100 E. Retained Earnings | Begin Balance [Cr] 2,400 Clo (2) [Dr] 26,000 | Clo (3)_[Dr]____200__|___Clo (1)__[Cr]_____33,100 | Ending Balance [Cr] 9,300 2,400 + 33,100 - 26,000 - 200 = 9,300

3 Bird - Watcher Corporation experienced four situations for its supplies. A. Calculate the amounts that have been left blank for each situation. For situations 1 and 2, journalize the needed transaction. Consider each situation separately. Situation. 1. Beginsupplies. $2,000 Purch of suppl durinthe year. —-[a]— Tot amou acco 3,400 Ending suppli _(1,090)__ Supplies Expe. $2,310 Situation. 2 Beginning suppli $700 Purch of suppl during the year ___800__ Tot amou acco —[b] Ending suppl. __(800)__ Supplies Expe —[c] Situation. 3 Beginning supplies. $700 Purch of suppl during the year ____[e]____ Tot amou acco —-[d] Ending supplies. _(500)__ Supplies Expe. 1,300 Situation. 4 Beginning supplies. $700 Purch of suppl during the year ____900___ Tot amou acco —1,600 Ending supplies. ____[f]__ Supplies Expe 1,400 For situations 1 and 2, journalize the needed transaction. Consider each situation separately. (debits first, then credits) B. Record the entry for situation 1 to record the purchase of supplies C. For situation 2, make the needed journal entry to record Supplies Expense

A. [a] 3,400 - 2000 = 1,400 [b] 700 + 800 = 1,500 [c] 1500 - 800 = 700 [d] 1,300 + 500 = 1,800 [e] 1,800 - 700 = 1,100 [f] 1,600 - 400 = 200 B. Record the entry for situation 1 to record the purchase of supplies Dr Supplies. 1,400 ——Cr Cash——— 1,400 C. For situation 2, make the needed journal entry to record Supplies Expense Dr Supplies Expense 700 ——Cr Supplies —————700

1 To be useful, accounting information must have the fundamental quantitative characteristics of: A) faithful representation and timeliness B) materiality and understandability C) relevance and faithful representation D) comparability and relevance

C) relevance and faithful representation

1 Which financial statement reports cash payments and cash receipts over a period of time? A) income statement B) statement of retained earnings C) statement of cash flows D) balance sheet

C) statement of cash flows

1 Connar Company reports the following accounts and balances at year end: Long-Term Notes Payable —$150,000 Accounts Receivable ————$30,000 Accounts Payable ——————$37,000 Building ————————————$55,000 Cash and Cash Equivalents -$85,000 Salaries Expense ——————-$20,500 Common Stock ———————-$41,000 Interest Payable ———————$1,500 Land —————————————-$40,000 Short-term Investments ——-$5,000 Income Taxes Payable ———$10,000 Equipment ——————————$59,500 Supplies ———————————-$7,000 Service Revenue ——————-$99,000 Supplies Expense ——————$18,000 Utilities Expense ——————-$8,500 Income Tax Expense ————$10,000 What is the total amount of current assets at the end of the year? Select one: A) $137,000 B) $127,000 C) $85,000 D) $115,000

B) $127,000 Total Assets = Accounts Receivable + Cash & Cash Equiv + Short-Term Inves + Supplies = 30,000 + 85,000 + 5,000 + 7,000 = $127,000 (Buildings and equipment are assets but they are non-current since they are not easily sellable in a short period of time)

1 Census Company had the following accounts and balances at the end of the year of operations. What are total liabilities at the end of the year? Cash —————————————$78,000 Accounts Payable —————$14,000 Common Stock ——————-$21,000 Dividends ——————————$12,000 Operating Expenses ———-$21,000 Accounts Receivable ———$58,000 Inventory ——————————$46,000 Long-term Notes Payable $38,000 Revenues ——————————$110,000 Salaries Payable ——————$26,000 A) $52,000 B) $78,000 C) $14,000 D) $40,000

B) $78,000 Liabilities = Accounts Payable + Long-term Notes Payable + Salaries Payable = 14,000 + 38,000 + 26,000 = $78,000

1 A construction company paid $81,000 cash for land used in the business. At the time of purchase, the land had a list price of $88,000. When the balance sheet was prepared, the fair value of the land was $84,000. At what amount should the land be reported on the balance sheet of the company? A) $88,000 B) $81,000 C) $84,000 D) $84,500

B) $81,000 historical cost principle that states assets acquired by the business should be recorded at their actual cost on the date of purchase:

2 A company completed the following transactions during the month of October: I. Purchased office supplies on account for $4,600 II. Provided services for cash of $24,000 III. Provided services on account of $14,000 IV. Collected cash from a customer on account $7,600 V. Paid the monthly rent of $18,000 What is the company's net income for the month? A) $14,000. B) $20,000. C) $38,000. D) $56,000.

B) 20,000 Net Income = revenues - expenses = (services for cash + services on account) - monthly rent = (24,000 + 14,000) - 18,000 = 38,000 - 18,000 = $20,000

2 Which accounts are increased by debits? A) Accounts Payable and Service Revenue B) Accounts Receivable and Utilities Expense C) Cash and Accounts Payable D) Salaries Expense and Common Stock

B) Accounts Receivable and Utilities Expense

2 Which error will be uncovered by a trial balance? A) The bookkeeper recorded the same journal entry three times B) The bookkeeper recorded a journal entry with a debit of $400 and a credit of $400, as a debit of $400 and a credit of $40 C) The bookkeeper recorded both the debit and credit of a journal entry as $200 instead of $700 D) The bookkeeper forgot to record a journal entry for a large amount.

B) The bookkeeper recorded a journal entry with a debit of $400 and a credit of $400, as a debit of $400 and a credit of $40

2 On March 31, Baker Company received a bill and paid for advertising costs for the current month. This payment results in a: A) credit to Advertising Revenue B) debit to Advertising Expense C) debit to Prepaid Advertising C) debit to Cash

B) debit to Advertising Expense

2 Simmons Company began the month with a balance of $83,000 in Accounts Receivable. An analysis of the account determined that sales on account for the month totaled $110,000. At the end of the month, the balance in Accounts Receivable was $88,000. From this information, it can be determined that Simmons Company had collections from customers on account of: A. $115,000 B. $61,000 C. $105,000 D. $27,000

C. $105,000 Collections from costumers = Beginning Accounts Receivable + Sales on account - End of month Account Receivable = 83,000 + 110,000 - 88,000 = $105,000

1 Wetzel Company has the following accounts and balances at the end of the first year of operations: Long-Term Notes Payable ————————————$150,000 Accounts Receivable ————————————$31,000 Accounts Payable —$38,000 Building ———————$55,000 Cash and Cash Equivalents ————————————$60,000 Salaries Expense —-$20,500 Common Stock. ——$108,000 Interest Payable. ——$6,500 Land. ————————-$43,000 Short - term investments. ————————————$27,000 Income Taxes Payable. ————————————$14,000 Equipment. —————$59,500 Supplies. ——————$30,000 Service Revenue. —$99,000 Supplies Expense—-$28,000 Utilities Expense-—-$28,500 Income Tax Expense. ————————————$23,000 What is the total amount of liabilities at the end of the year? A) $112,500 B) $205,000 C) $208,500 D) $58,500

C) $208,500 Liabilities = Long-term Notes Payable + Accounts Payable + Interest Payable + Income Taxes Payable = 150,000 + 38,000 + 6,500 + 14,000 = $208,500

1 At the end of the current accounting period, account balances were as follows: Cash, $29,000; Accounts Receivable, $41,000; Common Stock, $20,000; Retained Earnings, $10,000. Liabilities for the period were: A) $60,000. B) $50,000. C) $40,000. D) $70,000.

C) $40,000 Liabilities = assets - equity = (Cash + Account Receivable) - (Common Stock + Retained Earnings) = (29,000 + 41,000) - (20,000 + 10,000 = $40,000

1 Kolander Company has the following accounts and balances at the end of the first year of operations: Long-Term Notes Payable —$56,000 Accounts Receivable ————$32,000 Accounts Payable ——————$42,000 Building ————————————$56,000 Cash and Cash Equivalents -$80,000 Common Stock. ———————$124,000 Interest Payable. ——————-$4,500 Land. —————————————-$41,000 Short - term investments. —-$9,000 Income Taxes Payable. ———$12,000 Equipment. ——————————$63,500 Supplies. ———————————$7,000 What is the amount of Retained Earnings at the end of the year? A) $114,500 B) $164,500 C) $50,000 D) $174,000

C) 50,000 Retained earnings = Assets + Equity Assets = Accounts receivable + Building + Cash & Cash Equivalent + Land + Short-Term invest + Equipment + Supplies = 32,000 + 56,000 + 80,000 + 41,000 + 9,000 + 63,500 + 7,000 = 288,500 Equity = Liabilities + Equities Equity = Long-term notes Payable + Accounts Payable + Common Stock + Interest Payable + Income Taxes Pay = 56,000 + 42,000 + 124,000 + 4,500 + 12,000 Equity = 238,500 Retaining Earnings = Assets - Equity = 288,500 - 238,500 = $50,000

1 The balance sheet reports information about: A) liabilities, equity, and expenses B) revenues, expenses, and equity C) assets, liabilities, and equity D) assets, revenues, and liabilities

C) assets, liabilities, and equity

1 The accounting assumption that states that the business, rather than its owners, is the reporting unit is the: A) going concern assumption B) stable - monetary - unit assumption C) entity assumption D) historical cost assumption

C) entity assumption

1 Revenues are: A) decreases in retained earnings resulting from delivering goods or services to customers B) decreases in assets resulting from delivering goods or services to customers C) increases in retained earnings resulting from delivering goods or services to customers D) increases in liabilities resulting from delivering goods or services to customers

C) increases in retained earnings resulting from delivering goods or services to customers

1 Advantages of a corporation include: A) each stockholder can conduct business in the name of the corporation B) double taxation of distributed profits C) limited liability of the stockholders for the corporation's debts D) difficulty in raising large sums of capital

C) limited liability of the stockholders for the corporation's debts

2 The accounts of Yardy Company are as follows on November 30, 2015: Account —————————Balance Accounts Payable ———$26,500 Accounts Receivable —$18,600 Cash ———————————$69,000 Common Stock ————-$35,000 Dividends ————————$5,000 Insurance Expense ——-$4,100 Retained Earnings ———$29,800 Salary Expense ————-$15,000 Sales Revenue —————$25,900 Supplies ————————-$5,500 What is the total of the debit column in the trial balance at November 30, of the current year? A. $96,300 B. $234,400 C. $117,200 D. $112,200

C. $117,200 Trial Balance Debit = Account Receivable + Cash + Dividends + Insurance Expense + Salary Expense + Supplies = 18,600 + 69,000 + 5,000 + 4,100 + 15,000 + 5,500 = $117,200

1 Potter Company reports the following line items at the end of the first year of operations: Long-Term Notes Payable —$50,000 Accounts Receivable ———-$28,000 Accounts Payable —————-$37,000 Building ———————————-$55,000 Cash and Cash Equivalents $80,000 Salaries Expense ——————$20,500 Common Stock ———————-$134,000 Interest Payable ——————-$1,500 Land —————————————-$40,000 Short-term Investments ——$5,000 Income Taxes Payable ———$10,000 Equipment ——————————$59,500 Supplies ———————————-$5,000 Service Revenue ——————-$105,000 Supplies Expense ——————$20,000 Utilities Expense ——————-$13,500 Income Tax Expense ————$11,000 What is net income? A. $105,000 B. $134,000 C. $40,000 D. $60,500

C. $40,000 Net Income = Revenue - Expense Net Income = Service Revenue - (Salaries Expense + Supplies Expense + Utilities Expense + Income Tax Expense) = 105,000 - (20,500 + 20,000 + 13,500 + 11,000) = $40,000

2 Lori Nichols started an engineering firm, Engineering Enterprises P.C. During its first month of operations, the following transactions were completed: I. Lori invested $35,000 in the business, which in turn issued common stock to her. II. The business purchased equipment on account for $6,000. III. The business provided engineering services on account, $14,000. IV. The business paid salaries to the receptionist, $1,000. V. The business received cash from a customer as payment on account $7,000. VI. The business borrowed $12,000 from the bank, issuing a note payable. At the end of the month, cash equals: A) $46,000. B) $75,000. C) $35,000. D) $53,000.

D) $53,000. Cash at end of month = common stock - salaries paid + cash collected from customer + borrowed from bank = 35,000 - 1,000 + 7,000 + 12,000 = $53,000

1 Seidner Company had the following account balances at the end of the first year of operations: Revenues ——————————-$104,000 Salaries Expense ——————$13,000 Dividends ——————————$14,000 Utilities Expense ——————$11,000 Advertising Expense ———-$8,000 Short - term Investments —$20,000 Cash —————————————$38,000 Land —————————————$50,000 Common Stock ——————-$50,000 What is the amount of net income or net loss for the year? A) $22,000 B) $35,000 C) $80,000 D) $72,000

D) $72,000 Net Income = Revenue - Expense Net Income = Revenue - (Salarie Expense + Utilities Expense + Advertising Expense) = 104,000 + (13,000 + 11,000 + 8,000) = $72,000

2 An owner makes an investment of cash into the business and receives shares of stock. This transaction is recorded as a: A) debit to Cash and a credit to Stockholder Revenue B) debit to Common Stock and a credit to Cash C) debit to cash and a credit to Retained Earnings D) debit to Cash and credit to Common Stock

D) debit to Cash and credit to Common Stock

1 The ____ factor recognizes that while actions might be both economically profitable and legal, they still may not be right. A) profitability B) legal C) economic D) ethical

D) ethical

3 During 2021, Carlton Network, Inc., which designs network servers, earned revenues of $800 million. Expenses totaled $590 million. Carlton collected all but $21 million of the revenues and paid $620 million on its expenses. Requirement a. Under accrual accounting, what amount of revenue should Carlton report for 2021? How does the revenue principle help to answer this question? The amount that should be reported for the year in millions is $___[a] How does the revenue principle help to answer this question? The revenue principle says to record revenue when it has been ___[b]__, regardless of when ____[c]___ . Therefore, the amount of revenue reported is what Carlton __[d]__. Requirement b. Under accrual accounting, what amount of total expense should Carlton report for 2021? Which accounting principle helps to answer this question? The amount of total expense that should be reported for the year in millions is $__[e]__ Which accounting principle helps to answer this question? The ____[f]___ recognizes expenses in the same period in which any related revenues are earned. Requirement c. Redo parts a and b using cash basis. Explain how the accrual basis differs from the cash basis. Revenue in millions = $___[g]___ Total expenses in millions = $___[h]__ The accrual basis measures revenues ___[i]___ and expenses __[j]__, while the cash basis measures revenues __[k]__ and expenses ___[l]___ Requirement d. Which financial statement reports revenues and expenses? Which statement reports cash receipts and cash payments? The ___[m]___ reports revenues and expenses. The ___[n]___ reports cash receipts and cash payments.

Requirement a. [a] 800 (earned revenues) [b] earned [c] cash is collected [d] earned Requirement b. [e] 590 (expenses totaled) [f] expense principle Requirement c. [g] 779 (earned revenues 800 - uncollected revenues 21 = 779 [h] 620 (paid expenses) [i] as earned [j] as incurred [k] collected in cash [l] paid in cash Requirement d. [m] income statement [n] statement of cash flows

3 On January 1, 2023, a customer places an order for a new customized vehicle. The contract price is $42,000. The vehicle is delivered to the dealer and customer on April 1, 2023. What amount of revenue does the dealer record on January 1, 2023 and April 1, 2023? a. $0; $42,000 b. $14,000; $14,000 c. $21,000; $21,000 d. $42,000; $0

a. $0; $42,000 The amount of revenue arising from a contract should be recorded when the performance of the contract is completed. As such, the contract was completed on April 1 and hence the revenue would be recorded on April 1.

3 On November 1, 2022, a company using accrual accounting, pays $960,000 for a television advertising campaign. Commercials will run evenly over six months beginning on November 1, 2022. How much Advertising Expense will be reported on an income statement prepared for the year ended December 31, 2023? a. $640,000 b. $320,000 c. $960,000 d. $480,000

a. $640,000 Monthly Advertising Expense = 960,000 / 6 (months) = 160,000 - 2 Months for 2022 from November to December 31 - 4 Months for 2023 from January 1 to April 1 Advertisement for 2023 = 160,000 x 4 (months in 2023) = $640,000

4 The ending bank statement balance at November 30 is $7,070. The bank statement shows a service charge of $65, electronic funds receipts of $800 and a NSF check for $350. Deposits in transit total $2,050 and outstanding checks are $1,835. The balance per books at November 30 is $6,900. What is the adjusted book balance at November 30? a. $7,285 b. $8,705 c. $7,115 d. $7,455

a. $7,285 Adjusted Book Balance Ending Balance per books ————-$6,900 add electronic funds rece (EFT) ——800 less service charge —————————(65) less NSF check. ———————————(350) = 6,900 + 800 - 65 - 350 = $7,285

4 The New Jewelry Store sells mostly costume jewelry, but it also sells an expensive watch brand. The owner of the store is concerned about monitoring sales and inventory of the watches. He decided to perform a quick inventory count of the watches on a daily basis as a control procedure. The owner counts 63 watches at the end of business on Thursday. On Friday, a shipment of 29 watches is received. The point - of - sale terminal for Friday indicates that 4 watches were sold that day. A quick inventory of watches at the end of business on Friday indicates that 71 watches are on hand. How many, if any, watches are probably stolen? a. 17 b. 0 c. 8 d. 4

a. 17 Ending day watches = beginning watches + received watches - sold watches = 63 + 29 - 4 = 88 (# of watches that are supposed to be at end of day) stolen watches = ending day watches - watches on hand = 88 - 71 = 17 (stolen watches)

5 On December 1, Macy Company sold merchandise with a selling price of $4,000 on account to Mrs. Jorgensen, with terms 2/10, n/30. Using the gross method and ignoring cost of goods sold, what journal entry did Macy Company prepare on December 1? Macy expects no sales returns. a. Debit Accounts Receivable - Mrs. Jorgensen for $4,000 and credit Sales Revenue for $4,000. b. Debit Accounts Receivable - Mrs. Jorgensen for $3,920 and credit Cash for $3,920. c. Debit Cash for $4,000 and credit Accounts Receivable - Mrs. Jorgensen for $4,000. d. Debit Accounts Receivable - Mrs. Jorgensen for $3,920 and credit Sales Revenue for $3,920.

a. Debit Accounts Receivable - Mrs. Jorgensen for $4,000 and credit Sales Revenue for $4,000.

3 On October 1, 2022, Golde Company paid $17,400 for one year of insurance for the period, October 1, 2022 through September 30, 2023. Which of the following will be part of the adjusting entry on December 31, 2022? a. Debit Insurance Expense for $4,350 b. Debit Insurance Expense for $13,050 c. Debit Prepaid Insurance for $4,350 d. Debit Prepaid Insurance for $13,050

a. Debit Insurance Expense for $4,350 monthly insurance = 17,400 / 12 = 1,450 for 2022 from October 1 to December 31 is 3 months therefore: = monthly insurance x months for 2022 = 1,450 x 3 = 4,350 debit insurance expense

5 On May 1, 2023, Mary Smith signed a $14,000 promissory note with Continental Bank. The note is due in one year with 6% interest. What journal entry should Continental Bank prepare on May 1, 2023? a. Debit Notes Receivable - Mary Smith for $14,000 and credit Cash for $14,000. b. Debit Cash for $14,000 and credit Notes Payable - Mary Smith for $14,000. c. Debit Cash for $14,840 and credit Accounts Receivable - Mary Smith for $14,840. d. Debit Notes Receivable - Mary Smith for $14,840 and credit Cash for $14,840.

a. Debit Notes Receivable - Mary Smith for $14,000 and credit Cash for $14,000. (The bank is giving the cash, so cash account is credited. Since the note has become an asset it will be debited.)

3 A company has the following adjusted trial balance: Account. ——-Debit -—Credit Cash. ————-$1,100 Accounts Receivable ————————-1,200 Inventory ——-2,100 Supplies —-—-1,900 Prepaid Rent—500 Land ——-——-5,900 Building —-—39,700 Accumulated Depreciation- Building. ———————-$8,900 Accounts Payable ——-7,700 Unearned Revenue—-4,200 Notes Payable, due 2028 ——————————-———2,100 Common Stock ———-7,000 Retained Earnings ——2,600 Dividends —1,100 Service Revenue ——————-32,000 Rent Expense ———————-1,200 Supplies Expense ————————1,100 Salaries Expense ———————-6,700 Depreciation Expense- Building. ——1,300 Utilities Expense ————————1,300 Totals —-$65,100 —-$65,100 Which closing entry is needed? a. Debit Retained Earnings for $1,100 and credit Dividends $1,100 b. Debit Retained Earnings for $9,300, credit Salaries Expense for $6,700, credit Depreciation Expense Building for $1,300 and credit Utilities Expense for $1,300 c. Debit Retained Earnings for $2,300, credit Rent Expense for $1,200 and credit Supplies Expense for $1,100 d. all of the above

a. Debit Retained Earnings for $1,100 and credit Dividends $1,100 (the only one that works is the (c) closing entry below) All work to see which applies Closing entry. debit. Credit (a) Dr. Service Revenue. $32,600 ——Cr Retained Earnings 32,600 (b) Dr. Retained Earnings. 11,600 ————Cr. Rent Expense ——————1,200 ————Cr. Supplies Expense. ———-1,100 ————Cr. Salaries Expense. ———-6,700 ————Cr. Depreciation Expense —1,300 ————Cr. Utilities Expense. ————1,300 [Expense total = 1,200 + 1,100 + 6,700 + 1,300 + 1,300 = 11,600] (c) Dr. —Retained Earnings. 1,100 ———Cr. —————-Dividend. 1,100

3 An accountant failed to record the adjusting entry for accrued revenues. How does this error affect the balance sheet? a. The assets at the end of the period will be understated. b. The liabilities at the end of the period will be overstated. c. The assets at the end of the period will be overstated. d. The liabilities at the end of the period will be understated.

a. The assets at the end of the period will be understated.

3 The dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column of a Trial Balance Worksheet is obtained by taking the: a. Unadjusted Trial Balance Debit column plus the Debit Adjustments column minus the Credit Adjustments column. b. Unadjusted Trial Balance Debit column. c. Unadjusted Trial Balance Credit column. d. Unadjusted Trial Balance Credit column plus closing entries.

a. Unadjusted Trial Balance Debit column plus the Debit Adjustments column minus the Credit Adjustments column

4 An internal control system can be circumvented by: a. collusion, management override and human limitations. b. collusion, management override and segregation of duties. c. collusion, encryption and management override. d. nothing, if it is a good internal control system.

a. collusion, management override and human limitations.

6 Grogan Company purchases inventory on account with a cost of $1,800 and a retail price of $3,600. Grogan Company uses the perpetual inventory method. What journal entry is required on the date of purchase? a. debit Inventory for $1,800 and credit Accounts Payable for $1,800 b. debit Purchases for $3,600 and credit Cash for $3,600 c. debit Accounts Receivable for $3,600 and credit Purchases for $3,600 d. debit Purchases for $1,800 and credit Accounts Payable for $1,800

a. debit Inventory for $1,800 and credit Accounts Payable for $1,800 (while passing the entry the cost which we incurred should be considred and under perpetual inventory menthod credit should be accounts payable)

5 On December 31, 2022, the lender on a $5,900, 120 - day, 11% note dated November 5, 2022, will recognize: (Use a 365 day year and round your final answer to the nearest dollar.) a. interest receivable, $213. b. interest payable, $100. c. interest payable, $213. d. interest receivable, $100.

a. interest receivable, $213. Interest = principal x interest rate x period = 5,900 x 0.11 x (120 days/365) = $213 payable (if you're the borrower) or receivable (if you're the lender)

5 A debtor and a creditor record the same note, respectively, as a: a. note payable and note receivable. b. note receivable and note payable. c. note receivable and account receivable. d. note payable and account payable.

a. note payable and note receivable. (For a debtor, the note is payable for himself i.e the amount he is required to pay. For a creditor, the note is receivable for himself i.e the amount is receivable by him.)

5 When goods are shipped FOB destination: a. revenue is recognized when the goods are received by the customer. b. revenue is recognized only after cash payment is received. c. revenue is recognized when the invoice is mailed to the customer. d. revenue is recognized when the goods leave the shipping dock.

a. revenue is recognized when the goods are received by the customer.

4 When reporting cash on the balance sheet, companies: a. show each bank account separately. b. combine cash with accounts receivable. c. combine cash and cash equivalents. d. combine cash with long -term investments.

c. combine cash and cash equivalents.

6 When inventory is shipped from the seller to the buyer with shipping terms of FOB destination: a. the seller has title to the goods while they are in transit. b. title passes from the seller to the buyer when the goods leave the seller's shipping dock. c. the buyer has title to the goods while they are in transit. d. the goods will be included in the inventory of the buyer while in transit.

a. the seller has title to the goods while they are in transit.

6 Given the following data, calculate the cost of goods sold using the average - cost method. Round average cost per unit calculations to two decimal places. Round final answer to the nearest dollar. Date 1/1. Beginning inventory ———70 units at $30 per unit 5/10 Purchase of inventory ———20 units at $20 per unit 10/9. Purchase of inventory ———20 units at $22 per unit 12/31. Ending inventory ———-38 units a $2,940 b. $1,925 c. $5,571 d. $2,887

b. $1,925 1/1 ————-70 x 30 = 2,100 5/10 ———-20 x 20 = 400 10/9 ———-20 x 22 = 440 Total available for sale = 2,100 + 400 + 440 = $2,940 Total units = 70 + 20 + 20 = 110 units Cost per unit = 2,940 / 110 = $26.727 per unit Units sold = total units available for sale - end inventory = 110 - 38 = 72 Cost of units sold = units sold x cost per unit = 72 x 26.727 = $1,924.34

5 On December 31 of the current year, Jerome Company has an accounts receivable balance of $308,000 before any year - end adjustments. The Allowance for Doubtful Accounts has a $1,000 credit balance. The company prepares the following aging schedule for accounts receivable: Total Balance $308,000 1-30 days ————-$152,000 percent uncollectible 1% 31-60 days ———-$80,000 percent uncollectible 2% 61-90 days ———-$53,000 percent uncollectible 4% over 90 days ——$23,000 percent uncollectible 22% What is the Allowance for Uncollectible Accounts at December 31 of the current year after adjustments? a. $1,000 b. $10,300 c. $11,300 d. $9,300

b. $10,300 Allowance for Uncollectible Accounts = (152,000 x 0.01) + (80,000 x 0.02) + (53,000 x 0.04) + (23,000 x 0.22) = $10,300

4 Olde Shoppe has the following information at August 31: - Two deposits made on August 31 were not on the bank statement, totaling $5,300. - The bank collected an EFT payment on a note receivable for $2,770. Of this amount, $250 represented interest on the note. - August 31 balance in Cash was $11,667. - The bookkeeper forgot to record check #1578 for $743 which was cashed by the bank on August 15th. - The balance on the bank statement as of August 31 was $10,560. - A check printing service fee of $90 was shown on the bank statement. - A NSF check of $100. - Checks #1572, 1606, and 1548, totaling $2,356, were not shown on the bank statement, even though the company had sent the checks. What is the adjusted book balance at August 31? a. $11,667 b. $13,504 c. $13,254 d. $7,964

b. $13,504 Adjusted Book Balance Ending Balance per books ——-$11,667. add EFT. —————————————--2,770 less check #1578 —————————(743) less printing service fee —————(90) less NSF check. ——————————(100) = 11,667 + 2,770 - 743 - 90 - 100 = $13,504

3 The following accounts and balances are taken from Moore Company's adjusted trial balance: Accounts Payable —————- $8,000 Accounts Receivable ———— 3,300 Accumulated Depreciation. 1,300 Depreciation Expense. ——- 1,300 Dividends. —————————— 2,200 Insurance Expense. ————- 2,300 Interest Revenue. —————— 1,340 Prepaid Insurance. ————— 2,220 Retained Earnings, Beginning Balance ————— 10,400 Salary Expense ———————- 22,100 Service Revenue. —————— 35,800 What is the ending balance in Retained Earnings after the closing entries are completed? a. $37,140 b. $19,640 c. $9,240 d. $11,440

b. $19,640 Retained earnings Beginning balance $10,400 Revenues: = Service revenue + interest revenue = 35,800 + 1,340 = $37,140 Expenses: = Depreciation Expense + Insurance Expense + Salary Expense = 1,300 + 2,300 + 22,100 = 25,700 Net Income: = Revenue - Expenses = 37,140 - 25,700 = $11,400 Dividends = $2,200 Ending balance in Retained earnings = Beginning balance + Net Income - Dividends = 10,400 + 11,440 - 2,200 = $19,640

5 The maturity value of a 6 - month, 7% note for $25,000, dated May 12 is: (Round your final answer to the nearest dollar.) a. $875. b. $25,875. c. $25,000. d. $26,750.

b. $25,875. Maturity value = principal + interest Interest = principal x interest rate x period = 25,000 x 0.07 x (6 months/12 months) = $875 Maturity value = principal + interest = 25,000 + 875 = $25,875)

4 The ending bank statement balance at November 30 is $7,450. The bank statement shows a service charge of $85, electronic funds receipts of $500, and a NSF check for $350. Deposits in transit total $2,550 and outstanding checks are $1,435. The balance per books at November 30 is $8,500. What is the adjusted bank balance at November 30? a. $7,515 b. $8,565 c. $7,450 d. $9,615

b. $8,565 Adjusted Bank Balance Ending Bank Statement. ——$7,450 add Deposits in transit. ——-2,550 less Outstanding checks. —(1,435) = 7,450 + 2,550 - 1,435 = $8,565

3 On July 25, Henry Company's accountant prepared a check to prepay for the August through December monthly rent payments. Henry Company mailed the check on July 27 to the landlord. The landlord received the check on July 31 and cashed it on August 2. When should Henry Company record the rent expense for August associated with this transaction? Henry Company uses accrual accounting. a. July 25 b. August 31 c. August 2 d. July 27

b. August 31 The rent expense for August will become due on August 31, thus it should be recorded on August 31. The prepaid rent for the total rent for 5 months would be recorded at the time of payment. At the time of recording rent expense for August i.e. August 31, rent expense account would be debited and prepaid expense amount would be credited

4 The bookkeeper recorded a payment on account as $180 instead of the of the amount $810. What journal entry is required? a. Debit Accounts Receivable for $810 and credit Cash for $810. b. Debit Accounts Payable for $630 and credit Cash for $630. c. Debit Accounts Payable for $810 and credit Cash for $810. d. Debit Cash for $630 and credit Accounts Payable for $630.

b. Debit Accounts Payable for $630 and credit Cash for $630. Difference between what was supposed to be recorded and what was recorded = 810 - 180 = $630 Cash decreases because there is $360 more to record. There is a debit to Accounts Payable of $360 which means that the company owes money

3 Deere Company holds a $6,000 note receivable dated July 1, 2023, with 10% interest. What adjusting entry is needed on December 31, 2023? a. No entry is needed. b. Debit Interest Receivable for $300 and credit Interest Revenue for $300 c. Debit Interest Receivable for $60 and credit Interest Revenue for $60 d. Debit Interest Receivable for $600 and credit Interest Revenue for $600

b. Debit Interest Receivable for $300 and credit Interest Revenue for $300 Amount of Notes receivable = $ 6,000 Period of Accrued Interest (From July 1, 2019 to December 31, 2019) = 6 months Rate of interest = 10% Interest accrued = (6,000 x 10% x 6 months)/ 12 months = $300

5 When journalizing for the estimated sales returns, there would be a debit to: a. Sales Refunds Payable. b. Sales Returns and Allowances. c. Accounts Receivable. d. Cost of Goods Sold.

b. Sales Returns and Allowances

6 ABC Furniture Unlimited sells antique furniture. ABC will most likely use the its ending inventory. a. Average b. Specific identification c. First - in, first - out d. Last - in, first - out

b. Specific identification (If a company produces unique antique furniture, then the company must use "Specific unit cost" method for valuation of its inventory.)

5 Stelloh's Berry Farm accepted a bank- issued credit card in payment of a $2,200 sales transaction. The credit card processor charges 3% to process the transaction. The journal entry to record the sales transaction will include (Ignore cost of goods sold.): a. a debit to Accounts Receivable for $2,200, a debit to Credit Card Revenue for $66 and a credit to Sales Revenue for $2,266. b. a debit to Cash for $2,134, a debit to Credit Card Discount Expense for $66 and a credit to Sales Revenue for $2,200. c. a debit to Accounts Receivable for $2,134 and a credit to Sales Revenue for $2,134. d. a debit to Cash for $2,200 and a credit to Sales Revenue for $2,200.

b. a debit to Cash for $2,134, a debit to Credit Card Discount Expense for $66 and a credit to Sales Revenue for $2,200. card discount expense = sale transaction x card % process charge = 2,200 x 0.03 = $66 debit to cash = sale transaction - card discount expense = 2,200 - 66 = $2,134

6 On July 1, Corrao Company purchased $1,400 of inventory on account with credit terms of 3/10, net 30. Corrao Company uses the perpetual inventory system. On July 5, Corrao Company paid the amount due. What journal entry did they prepare on July 5? a. debit Accounts Receivable for $1,400 and credit Cash for $1,400 b. debit Accounts Payable for $1,400, credit Inventory for $42 and credit Cash for $1,358 c. debit Purchase Discount for $42, debit Accounts Payable for $1,316 and credit Cash for $1,358 d. debit Accounts Payable for $1,358 and credit Cash for $1,358

b. debit Accounts Payable for $1,400, credit Inventory for $42 and credit Cash for $1,358 (Under the terms of 3/10, net 30, C Company will get a discount of $42 if it pays for the inventory purchased within 10 days from the date of purchase. discount = 1,400 x 0.03 = $42 credit cash = 1,400 - 42 = $1,358

6 If inventory costs are rising and a company is using LIFO, large purchases of inventory near the end of the year will: a. not change the amount of income taxes paid. b. decrease income taxes paid. c. increase income taxes paid. d. cannot be determined.

b. decrease income taxes paid. LIFO - Last In First Out (The COGS, cost of goods sold, will be at higher rate towards the end of the year)

4 A fidelity bond is a(n): a. contract prohibiting former employees from working for a competitor. b. insurance policy that reimburses a company for any losses due to employee theft. c. promise by a company to safeguard customers' personal information. d. employment contract for a specified period of time.

b. insurance policy that reimburses a company for any losses due to employee theft.

3 Closing entries: a. are the same as adjusting entries. b. prepare the accounts for the next period's transactions. c. are made at the beginning of each accounting period. d. brings all asset account balances to zero.

b. prepare the accounts for the next period's transactions

3 An expense occurred in 2022, but it is not paid until 2023. Using accrual accounting, the expense should appear on: a. the 2023 income statement. b. the 2022 income statement. c. whichever income statement the business prefers. d. both the 2022 and 2023 income statements.

b. the 2022 income statement. As expense occurred in 2022, therefore using accrual accounting the expense should appear on the 2022 income statement irrespective of payment year.

5 When evaluating the collectability of accounts receivable: a. the Uncollectible - Account Expense is a contra account. b. the allowance method uses estimates developed from the company's collection experience. c. the direct write - off method uses the Allowance for Uncollectible Accounts to record bad debts. d. the Allowance for Uncollectible Accounts is an operating expense in the selling, general and administrative category.

b. the allowance method uses estimates developed from the company's collection experience.

4 Lori's Company has the following items: cash in a checking account, $3,000; cash in a savings account, $6,000; high - grade government securities due in one month (purchased last month), $3,566; accounts receivable, $3,000. How much should appear as Cash and Cash Equivalents on the balance sheet? a. $12,000 b. $6,000 c. $12,566 d. $15,566

c. $12,566 Cash and cash equivalents = Cash in checking account + Cash in savings account + High grade government securities = 3,000 + 6,000 + $ 3,566 = $12,566

3 A construction company purchased a new bulldozer for $126,000 on January 1, 2023. The company estimates that the bulldozer will have a useful life of nine years and then be worthless. Using the straight - line depreciation method, yearly depreciation expense will be: a. $0. b. $126,000. c. $14,000. d. $63,000.

c. $14,000. Straight line depreciation yearly expense = bulldozer purchase price / useful life = 126,000 / 9 = $14,000

5 Lennon Company signed a 12 - month, $51,000, 9% note on June 1, 2023. The amount of interest to be accrued on December 31, 2023, is: (Round your final answer to the nearest dollar.) a. $2,295. b. $4,590. c. $2,678. d. $383.

c. $2,678. June 1 - Dec 31 is 7 months Accrued Interest = Principal x interest rate x period = 25,000 x 0.09 x (7 month/12 months) = $2,678

5 The balance in Accounts Receivable was $660,000 at the beginning of the year and $770,000 at the end of the year. Credit sales for the year totaled $4,140,000. During the year, $400,000 in customer accounts were written off. How much cash was collected from customers during the period? a. $4,430,000 b. $4,030,000 c. $3,630,000 d. $4,650,000

c. $3,630,000 Beg Balance Account receivable $660,000 add credit sales ——————————-4,140,000 less customer write off ——————-(400,000) less closing balance ————————(770,000) = 660,000 + 4,140,000 - 400,000 - 770,000 = $3,630,000

3 Doorglam paid $77,000 for office furniture. The furniture is depreciated using the straight - line method and has an estimated service life of 7 years and no residual value. After three years of use, the accumulated depreciation of the furniture will be: a. $77,000. b. $44,000. c. $33,000. d. $66,000.

c. $33,000. Annual Depreciation = 77,000 / 7 (years) = 11,000 Accumulated Depreciation (3years) = 11,000 x 3 = $33,000

4 When reporting cash on the balance sheet, companies: a. show each bank account separately. b. combine cash with accounts receivable. c. combine cash and cash equivalents. d. combine cash with long - term investments.

c. combine cash and cash equivalents. cash flow refers to the net amount of cash and cash equivalents being transferred in and out of a company

6 The cost of the inventory that a business has sold to customers is called: a. gross profit. b. purchases. c. cost of goods sold. d. inventory.

c. cost of goods sold

3 The book value of a plant asset is the: a. accumulated depreciation less the cost of the asset. b. balance in the accumulated depreciation account. c. cost of the asset less the accumulated depreciation. d. cost of the asset.

c. cost of the asset less the accumulated depreciation.

3 On August 1 of the current year, Trevor Beck received $4,800 for legal services to be performed evenly throughout the next six months. The adjusting entry on December 31 of the current year would include a: a. debit to Unearned Service Revenue of $800. b. credit to Unearned Service Revenue of $4,000. c. credit to Service Revenue of $4,000. d. debit to Service Revenue of $800.

c. credit to Service Revenue of $4,000. = 4,800 / 6 = 800 = 800 x 5 (from August 1 to December 31) = 4,000

5 Under the allowance method, the entry to write off a $11,600 uncollectible account includes a: a. debit to Accounts Receivable for $11,600 and credit to Allowance for Uncollectible Accounts for $11,600. b. debit to Accounts Receivable for $11,600 and credit to Uncollectible - Account Expense for $11,600. c. debit to Allowance for Uncollectible Accounts for $11,600 and credit to Accounts Receivable for $11,600. d. debit to Uncollectible Account Expense for $11,600 and credit to Allowance for Uncollectible Accounts for $11,600.

c. debit to Allowance for Uncollectible Accounts for $11,600 and credit to Accounts Receivable for $11,600.

5 On October 1, 2023, the Early Bank lends money to a customer on a six month note. The bank accrues interest on the note at December 31, 2023. The bank's journal entry on December 31, 2023 would include a: a. debit to Cash and a credit to Interest Revenue for three months of interest. b. debit to Interest Revenue and a credit to Interest Receivable for three months of interest. c. debit to Interest Receivable and a credit to Interest Revenue for three months of interest. d. debit to Cash and a credit to Interest Payable for three months of interest.

c. debit to Interest Receivable and a credit to Interest Revenue for three months of interest. Interest revenue is earned for 3 months from Oct 1 to Dec 31 - Interest revenue is an income and always has a credit balance. - Interest is earned but not received in cash. - Interest earned but not received is known as interest receivable and always has a debit balance since Early Bank is the lender -The entire interest will be received at the end of 6 months ie. when the note becomes matured.

4 Internal controls are designed to accomplish five objectives that include compliance with legal requirements, promote operational efficiency, safeguard assets, encourage employees to follow company policy and: a. prevent misappropriation of assets. b. prevent collusion. c. ensure accurate, reliable accounting records. d. prevent fraud.

c. ensure accurate, reliable accounting records.

3 If adjusting entries are NOT prepared, which financial statements are misstated? a. balance sheet only b. statement of retained earnings only c. income statement, balance sheet and statement of retained earnings d. income statement only

c. income statement, balance sheet and statement of retained earnings

4 A company can limit employees' access to assets by: a. processing the company's cash payments through one employee who handles the bookkeeping and the check preparation. b. allowing persons who have record - keeping responsibilities be part of the mailroom function. c. keeping the supply of unused checks under lock and key. d. all of the above.

c. keeping the supply of unused checks under lock and key.

4 For good internal control: a. the purchasing agent should prepare an EFT for payment. b. the purchasing agent should also receive the goods. c. the purchasing agent should not receive the goods or approve the invoice for payment. d. the purchasing agent should also approve the invoice for payment.

c. the purchasing agent should not receive the goods or approve the invoice for payment.

3 Under accrual accounting, revenue is recorded: a. at the end of every month. b. when the cash is received, regardless of when the services are performed. c. when the services are performed, regardless of when the cash is received. d. only if the cash is received at the same time the services are performed.

c. when the services are performed, regardless of when the cash is received

5 The following account balances were extracted from the accounting records of Thomas Corporation at the end of the year: Accounts Receivable ———-$1,104,000 Allowance for Uncollectible Accounts (Credit)-——$36,000 Uncollectible - Account Expense —————————$65,000 What is the net realizable value of the accounts receivable? a. $1,169,000 b. $1,140,000 c. $1,104,000 d. $1,068,000

d. $1,068,000 net realizable value = Accounts Receivable - Allowance for Uncollectible Accounts = 1,104,000 - 36,000 = 1,068,000

5 A company that uses the allowance method, writes - off a receivable of $7,000. Prior to the journal entry, the credit balance in the Allowance for Uncollectible Accounts was $21,432 and Accounts Receivable were $2,010,000. After the entry to write - off the receivable is made, the net realizable value of Accounts Receivable will be: a. $2,010,000. b. $1,981,568. c. $2,003,000. d. $1,988,568.

d. $1,988,568. Accounts Receivable write off = Accounts Receivable - write off = 2,010,000 - 7,000 = 2,003,000 Allowance for uncollectible Accounts write off = Allowance for Uncollectible Accounts - write off = 21,432 - 7,000 = 14,432 net realizable value of Accounts Receivable = Accounts Receivable write off - Allowance for uncollectible Accounts write off = 2,003,000 - 14,432 = $1,988,568

4 New Store has the following information at August 31: - Two deposits made on August 31 were not on the bank statement, totaling $5,300. - The bank collected an EFT payment on a note receivable for $2,750. Of this amount, $150 represented interest on the note. - August 31 balance in Cash was $13,187. - The bookkeeper forgot to record check #1578 for $843 which was cashed by the bank on August 15th. - The balance on the bank statement as of August 31 was $12,000. - A check printing service fee of $40 was shown on the bank statement. - A NSF check of $100. - Checks #1572, 1606, and 1548, totaling $2,346, were not shown on the bank statement, even though the company had sent the checks. What is the adjusted bank balance at August 31? a. $16,141 b. $14,610 c. $17,160 d. $14,954

d. $14,954 Adjusted Bank Balance Ending Bank Statement ——$12,000 add Deposits in transit. ——-5,300 less Outstanding checks. —(2,346) = 12,000 + 5,300 - 2,346 = $14,954

5 Jensen Corporation uses the percentage - of - sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,019,000 and management estimates 5% will be uncollectible. The Allowance for Doubtful Accounts prior to adjustment has a debit balance of $23,000. After all adjusting entries are made, the balance in Allowance for Uncollectible Accounts will be: a. $100,950. b. $23,000. c. $24,150. d. $77,950.

d. $77,950. Allowance Uncollectible Accounts = net sales for current year amount x % uncollectible = 2,019,000 x 0.05 = 100,950 Balance in Allowance for Uncollectible Accounts = Allowance Uncollectible Accounts - Allowance for Doubtful Accounts debit balance = 100,950 - 23,000 = $77,950

4 What is the purpose of fraudulent financial reporting? a. Net income and total assets are understated so managers can receive their bonuses. b. Net income and total assets are overstated so managers can receive their bonuses. c. A company can borrow money that would not otherwise be available. d. B and C

d. B and C

4 Which journal entry is prepared for a NSF check returned by the bank? a. No entry is prepared. b. Debit Cash and credit Accounts Payable. c. Debit Cash and credit Notes Payable. d. Debit Accounts Receivable and credit Cash.

d. Debit Accounts Receivable and credit Cash.

4 Dooley Company sent a deposit of $8,000 to the bank. The bank credited Dooley Company's checking account for a deposit of $800. In reconciling the bank statement, the bookkeeper saw the deposit of $800 instead of the bank recording it at $8,000. Which journal entry should Dooley Company prepare? a. Debit Cash for $7,200 and credit Deposits for $7,200. b. Debit Cash for $7,200 and credit Revenue for $7,200. c. Debit Cash for $7,200 and credit Accounts Receivable for $7,200. d. No journal entry is required.

d. No journal entry is required. Since, the error in recording has been made by the bank, the company doesn't need a journal entry.

3 On June 1, 2023. Starbucks paid the rent of $78,000 for 30 of its stores in Washington and California. The rent covers the period, June 1, 2023 through November 30, 2023. On June 1, 2023, Starbucks will record _________. On June 30, 2023, Starbuck will record _______. a. nothing; Rent Expense of $13,000 b. nothing; Rent Expense of $78,000 c. Rent Expense of $78,000; nothing d. Prepaid Rent of $78,000; Rent Expense of $13,000

d. Prepaid Rent of $78,000; Rent Expense of $13,000 Monthly rent = 78,000 / 6 (from June to August) = $13,000

4 What is Fraud? a. Fraud is the intentional misrepresentation of facts made for the purpose of persuading another individual to act in a way that causes injury or damage to that individual. b. Fraud is the misappropriation of assets. c. Fraud is untruthful financial reporting. d. all of the above

d. all of the above

4 Which of the following are examples of the misappropriation of assets? a. An employee overstates an expense reimbursement request after a company trip. b. an employee's theft of inventory c. a kickback scheme in the purchasing function d. all of the above

d. all of the above

5 Under the allowance method for estimating uncollectible accounts: a. the Allowance for Uncollectible Accounts will normally have a credit balance. b. a company sets up an Allowance for Uncollectible Accounts to estimate the amount of the receivables the company does not expect to collect. c. the Allowance for Uncollectible Accounts is a contra account to gross Accounts Receivable. d. all of the above.

d. all of the above. (Allowance method generally represents the amount of uncollectible accounts , since it provides an estimate of future bad debts that improves the accuracy of the company's financial statements and normally it has a credit balance)

4 Three key duties that must always be separated under a good system of internal controls are: a. asset handling, recordkeeping and safeguarding of assets. b. asset handling, hiring and safeguarding of assets. c. record keeping, transaction analysis and transaction approval. d. asset handling, recordkeeping and transaction approval.

d. asset handling, recordkeeping and transaction approval.

3 A company started the year with $600 of supplies. During the year, the company purchased an additional $1,100 of supplies. There were $700 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the accounting period includes a: a. debit to Supplies Expense for $100. b. debit to Supplies for $700. c. debit to Supplies for $500. d. debit to Supplies Expense for $1,000.

d. debit to Supplies Expense for $1,000. Adjusting entry at end of accounting period = beginning supplies + additional purchased - supplies on hand = 600 + 1,100 - 700 = $1,000

4 A bank reconciliation included an outstanding check of $850 for the payment of salaries. The journal entry to record this reconciling item: a. should debit Cash and credit Salaries Expense for $850. b. should debit Accounts Payable and credit Cash for $850. c. should debit Salaries Expense and credit Cash for $850. d. is not required.

d. is not required. While issuing check to creditor the company is already recorded in its books. Therefore, No entry is required to do on bank reconciliation.

1 Verifiability means that the accounting information: A) is understandable B) must be capable of being checked for accuracy, completeness and reliability C) is timely and understandable D) is material and relevant

must be capable of being checked for accuracy, completeness and reliability