Financial Accounting Chapters 1,2,3,4 Clicker Questions

An account that normally has a debit balance may occasionally have a credit balance? A. True B. False

A

Which of the following accounts decrease with a credit? A. Accounts receivable B. Accounts payable C. Accrued revenue D. Accrued expenses E. B and D F. A and C G. B and C

F

Which of the following companies has the " best " Debt Ratio ? A. Assets $500,000 Liabilities $300,000 Equity $ 200,000 B. Assets $750,000 Liabilities $375,000 Equity $375,000 C. Assets $375,000 Liabilities $200,000 Equity $175,000

B

Magazine Inc. sells a 36 month subscription to a customer for $72 on April 1st, 2016. How much income can it record for the period April 1, 2016 through September 30, 2016 ? A. $36 B. None C. $12 D. $72 E. None of the above

C

Assume that Turner Inc. purchased insurance for the year 2016 on January 1st and paid $ 18,000. What would be the balance in prepaid insurance on September 30th, 2016? A. $6000 B. $9000 C. $13500 D. None of the above

D

Assume that a company works a normal 5 day work week (M-F). Also assume employees are paid every Friday for that weeks work. If May 31st is a Wednesday and employees earn $1250 a day, what should the liability be in the accrued payroll account on May 31st ? A. There shouldn't be a liability B. $1250 C. $6250 D. $3750 E. None of the above

D

On January 1st, 2016 The TI Magazine Company enters into 4 transactions : 1.) They sell magazine subscriptions totaling $ 18,000 . The subscriptions run for the 3 year period January 1, 2016- December 31, 2018 2.) They pay a total of $ 6,000 for 2 years of rent in advance on their offices 3.) They buy an office copier for $ 5000 that they determine has a 5 year life 4.) They buy $ 2,000 of office supplies. At December 31, 2016 there is $ 1,500 of supplies remaining and they didn't buy any additional supplies during 2016.  If these were the only transactions for TI what was TI's 2016 net income? A. $2,500 B. $2,000 C. $3,000 D. $1,000 E. $500 F. $ 1,500 G. No idea

F

A business renders services to a client and issues a sales invoice. The amount will be collected from the customer at a future date. Which of the following would be true at the time the invoice is issued ? A. Total assets will increase B. Net income will decrease C. Stockholders equity will decrease D. Total liabilities will decrease

A

Based on the following accounts what is the total of the Company's non-current assets at year end? Cash-2,500 Furniture-75,000 Accumulated Depreciation-furniture- 32,000 Prepaid Expenses- 12,000 12,000 Long term investment- 20,000 Accounts receivable- 8,000 Land-60,000 A. 123,000 B. 155,000 C. 103,000 D. 135,000 E. None of the above

A

Based on the following transactions compute income on the "cash basis ". 1.) Performed services and were paid $ 2,000 2.) Performed services "on account "of $ 1,500 3.) Paid utility bills totaling $ 500 4.) Paid salaries of $ 200 5.) Received a bill for prior month telephone usage of $ 150 6.) A client paid $ 200 for prior month services which you had recorded previously as a receivable. A. $1,500 B. $1,300 C. $ 2,850 D. $ 1,750 E. $3,000

A

If a company is using the accrual basis of accounting, when should it record it's earned revenue ? A. When services are rendered, even though cash may be received at a later date B. When cash is received, even though services may be rendered at a later date C. When services are completely rendered and cash is received D. When cash is received 30 days after completion of the services

A

On January 1 the Canon Company has total assets of $20,000. They then have 4 transactions as follows:1.) Earn fees of $5,000 for services. The client promises to pay in 30 days2.) The same client makes a payment of $2,000 bringing their balance down to $3,000.3.) Make a payment on a note payable of $1,0004.) Buy a $ 10,000 car. $5,000 in cash and $5,000 in a note payable How much are total assets after these transactions ? A. $ 29,000 B. $ 27,000 C. $ 30,000 D. $ 18,000 E. $ 34,000

A

The following information is available for Abe Inc. Office Supplies Account Beginning balance-$ 7,500 Office Supplies Used- $9,000 Ending balance-$8,500 From the above information calculate the amount of office supplies purchased A. $ 10,000 B. $ 8,000 C. $ 1,000 D. None of the above

A

Under the revenue recognition policy it's possible to record revenue before cash is received . A. True B. False

A

Which account has a "normal" credit balance ? A. Accumulated depreciation-trucks B. Trucks C. Insurance expense D. Prepaid insurance E. Accrued revenue

A

Which of the following are the 5 basic journals? A. General, cash disbursements, cash receipts, purchases and sales. B. Sales, cash disbursements, general ledger, dividend and payroll C. Payroll, purchases, income, revenues and expenses D. Cash disbursements, cash receipts, dividends, purchases and general ledger

A

Which of the following is true of expenses? A. Expenses decrease stockholders equity so an expense accounts normal balance is a debit B. Expenses increase stockholders equity so an expense accounts normal balance is a debit C. Expenses increase stockholders equity so an expense accounts normal balance is a credit D. Expenses decrease stockholders equity so an expense accounts normal balance is a credit

A

Which of the following statements is true if the income statement debit column exceeds the income credit column of a worksheet? A. The company incurred a net loss B. The liabilities are greater than the assets C. The retained earnings account increased during the period D. The company made a net profit

A

A business makes a payment of $1400 on a notes payable , consisting of a $200 interest payment and a $1200 principal payment. Which of the following journal entries would be recorded? A. Notes payable is credited for $1400. Cash is debited for $1200 and interest expense is debited for $200. B. Cash is credited for $1400. Notes payable is debited for $1200 and interest expense is debited for $200 C. Notes payable is credited for $1200, cash is credited for $200 and interest expense is debited for $1400 D. Cash is credited for $1200, interest expense is credited for $200 and notes payable is debited for $1400.

B

Based on the following information compute the company's current ratio: Cash- $50,000 Accounts payable- $25,000 Accounts rec.- $30,000 Accrued expenses- $10,000 Building- $20,000 Accum. Deprec.-bldg.- $5,000 Prepaid expenses- $8,000 Long term debt- $12,000 A. 2.94 B. 2.51 C. 1.87 D. 2.08 E. None of the above

B

Based on the following selected accounts included in the general ledger , calculate the Company's debt ratio Cash $ 5,000 Utilities payable $ 2,000 Building $12,000 Retained earnings $22,000 Land $20,000 Service revenue $80,000 Accounts payable $15,000 Salaries expense $46,000 A. 40.54 % B. 45.94 % C. 217.64 % D. 94.87 % E. I don't remember how to do this

B

If an adjusting entry includes a debit to Rent Expense, that would indicate that the payment of rent had been previously recorded as a ( n ) _______ A. Accrued expense B. Prepaid expense C. Accrued revenue D. Unearned revenue

B

In the case of unearned revenue, the adjusting entry at the end of the period includes a debit to service revenue. Assume the unearned revenue is initially recorded as a liability. A. True B. False

B

On August 1, 2014 the ABC Company paid $ 5,600 in advance for 8 months of rent. After adjusting entries are made, what is the balance in prepaid rent at December 31, 2014? A. $5,600 B. $2,100 C. $3,500 D. $2,800

B

On February 1st, 2016 Mark Inc. had supplies inventory totaling $2300. During February they used $1500 of supplies. At the end of the month they had supplies inventory totaling $1800. How much in supplies did they purchase during February ? A. $200 B. $1000 C. $500 D. $700 E. None of the above

B

Prepaid rent is an expense account and hence it appears on the income statement A. True B. False

B

Recipes Inc. purchased $ 2,000 of supplies on account. Under the accrual basis of accounting , no entry is made until the amount is paid. A. True B. False

B

Scott Camera Shop started the year with total assets of $75,000 and total liabilities of $80,000. During the year the business earned revenues of $120,000 and incurred expenses of $70,000. Scott made no additional capital contributions during the year but did pay a $5,000 distribution. What is the total amount of owner's equity at the end of the year? A. $ 50,000 B. $40,000 C. $45,000 D. $35,000 E. None of the above

B

The correct order to prepare the Financial Statements is: A. Balance sheet, cash flow statement, statement of retained earning, income statement B. Income statement, statement of retained earnings, balance sheet, cash flow statement C. Income statement, balance sheet, statement of retained earnings, cash flow statement D. Cash flow statement, balance sheet, statement of retained earnings, income statement

B

Which one of the following is the only one that is correct? A. Assets- $ 10,000 Liabilities-$20,000 Equity- $ 10,000 B. Equity-$ 50,000 Assets-$60,000 Liabilities $ 10,000 C. Liabilities $20,000 Assets-$10,000 Equity-$10,000 D. Equity $ 30,000 Liabilities $5,000 Assets $ 25,000

B

A Company pays a $5000 dividend to it's shareholders at the end of the year. The correct journal entry will: A. Increase assets and decrease equity B. Decrease equity and decrease liabilities C. Decrease equity and decrease assets D. Increase liabilities and decrease assets E. Increase equity and increase assets

C

A Company purchases a new car for $ 20,000. They give the dealer $ 5,000 in cash and sign a note for $ 15,000. What effect does the transaction have on the equity of the company ? A. Increase B. Decrease C. No effect

C

A Company purchases a new machine on June 30th, 2015. The machine costs $25,000. The company estimates the machine has a 10 year life. What will be the balance in accumulated depreciation for the machine on June 30th, 2018? A. $5000 B. $2500 C. $7500 D. $10,000

C

A company buys a bus on June 30th, 2013 for $ 20,000. The bus has no residual value. Management estimates the bus has a 5 year life. What is the net book value of the bus on December 31, 2014? A. $6,000 B. $16,000 C. $14,000 D. $10,000 E. $12,000 F. $13,000

C

A journal entry for a $ 75 payment for rent expense was posted as a debit to salaries expense and a credit to cash. Which of the following statements correctly states the effect of the error on the trial balance? A. The sum of the credits will exceed the sum of the debits by $ 150 B. The sum of the debits will exceed the sum of the credits by $ 150 C. The sum of the debits will equal the sum of the credits D. The sum of the debits will exceed the sum of the credits by $ 75

C

A partial unadjusted trial balance contains the following accounts in no particular order. What was the income of the company ? Cash- $7,000 Accrued expenses $2,000 Revenue-$ 18,000 Insurance expense- $1,500 Rent expense-$5,000 Unearned revenue- $4,000 Prepaid expense- $3,500 Accrued revenue- $5,000 A. $7,000 B. $16,000 C. $11,500 D. $ 15,000 E. None of the above

C

At the end of the current year, the accountant FAILED to make two entries. One was for $ 2,000 of accrued wages which will be paid in the following year and one for interest payable of $ 1,500 which will also be paid in the following year. Which of the following is one or more of the effects of these errors? A. Liabilities are overstated B. Equity is understated C. Liabilities are understated D. Net income is understated E. A and C F. B and D

C

Based on the following information compute the Company's return on assets for 2016: Total Revenue- $4,500,000 Total assets- $50,000,000 Total Expenses- $2,000,000 Total assets December 31, 2016- $60,000,000 Dividends Paid- $ 100,000 Total liabilities January 1, 2016- $40,000,000 Total liabilities December 31, 2016- $45,000,000 A. 4.16%] B. 20.00% C. 4.55% D. 4.16% E. None of the above

C

The Expo Co. works a normal 5 day work week ( M-F ), however employees can work Saturday and get paid time and ½. The company has 10 employees who each make $ 500 per day. The employees get paid each Wednesday for the prior 2 weeks. The final payment made for payroll for October , 2016 was on Wednesday, October 19th for the two weeks ended October 14th. This year October 31st is a Monday. In addition 5 employees worked a ½ day on Saturday, October 22nd. How much is the correct balance in accrued payroll on October 31st ? A. $58,750 B. $53,750 C. $56,875 D. $55,000 E. $51,875 F. $55,000 G. $60,000 H. No idea

C

Which of the following best defines accounting financial statements? A. Financial statements are the information system that measures business activities. B. Financial statements are the verbal statements made to business news organizations by chief financial officers. C. Financial statements are documents that report on a business in monetary terms providing information to help people make financial decisions D. Financial statements process information into reports

C

Which of the following is a temporary account? A. Prepaid insurance B. Accrued expenses C. Insurance expense D. Accumulated depreciation E. Capital stock

C

Which of the following statements is incorrect? A. Cash , land and prepaid expenses normally have debit balances B. Revenue, capital stock and accrued expenses normally have credit balances C. Interest expense, accumulated depreciation and land normally have debit balances D. Prepaid expenses, rent expense and interest expense normally have debit balances

C

You pick up a financial statement and see the following numbers: Which one is the only one that could be correct ? A. Assets- $10,000 Liabilities - $ 5,000 Equity- $ 15,000 B. Equity- $ 20,000 Assets- $ 15,000 Liabilities- $ 35,000 C. Liabilities- $ 18,000 Assets- $ 40,000 Equity- $ 22,000 D. Assets- $ 75,000 Equity- $ 35,000 Liabilities- $ 110,000

C

A journal entry for a $250 payment to purchase office supplies was erroneously recorded as a debit to office supplies for $520 and a credit to cash for $250. Which of the following statements correctly states the effect of the error on the trial balance? A. The sum of the debits will exceed the sum of the credits by $250 B. The sum of the debits will exceed the sum of the credits by $520 C. The sum of the credits will exceed the sum of the debits by $270 D. The sum of the debits will exceed the sum of the credits by $270

D

Based on the following information compute the Company's Debt Ratio : Cash- $50,000 Accounts payable- $15,000 Inventory- $60,000 Salaries payable- $8,000 Rent Expense- $5,000 Capital stock-$18,000 Prepaid expenses- $4,000 Notes payable- $11,000 A. 28.6% B. 335.29% C. 52.9% D. 29.8% E. None of the above

D

The accountant for Sparks Inc. failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year. Which of the following statements is true ? A. Liabilities will be overstated B. Assets will be overstated C. Equity will be understated D. Equity will be overstated

D

The unadjusted trial balance shows a loss of $ 10,000. The company erroneously debited the purchase of a $ 10,000 car to the prepaid expense account and erroneously credited the accounts payable account instead of the loan payable account for a $ 20,000 bank loan. The correct income or (loss) of the company was ? A. 10,000 income B. $20,000 income C. $20,000 loss D. $10,000 loss E. None of the above

D

Which of the following are permanent accounts? A. Accounts payable and dividends B. Furniture and depreciation expense C. Cash and service revenue D. Accounts receivable and accrued expenses E. Interest payable and rent expense F. Capital stock and dividends

D

Which of the following statements is true of the common stock account ? A. It is a liability account that has a normal debit balance B. It is an equity account that has a normal debit balance C. It is a liability account that has a normal credit balance D. It is an equity account that has a normal credit balance

D

Of the following accounts which ones should have normal credit balances ? Cash, Accounts payable, Unearned revenues, sales revenues, accrued revenues, capital stock, prepaid insurance and accumulated depreciation. A. Accounts payable, sales revenue and prepaid insurance B. Accounts payable, cash and accumulated depreciation C. Capital stock, accrued revenues and accumulated depreciation D. Sales revenues, prepaid insurance and unearned revenues E. None of the above

E

Which of the following accounts increase with a debit? A. Insurance expense B. Plant and equipment C. Service revenue D. Capital stock E. A and B F. C and D G. B and D H. A and C

E

Which of the following statements is correct? A. Prepaid expenses are decreased with a debit B.Notes payable is increased with a debit C. Rent expense is increased with a debit D. Accounts payable is increased with a credit E. C and D F. A and B

E

Which of the following accounts increase with a credit ? A. Cash and notes payable B. Common stock and salary expense C. Notes payable and service revenue D. Accounts receivable and service revenue E. Common stock and notes payable F. C and E G. B and D

F

The Company has the following account balances at December 31, 2012: Notes payable long term- $7,800 Accounts payable-3,700 Prepaid rent- $2,300 Accounts receivable-$6,200 Salary payable- $3,000 Depreciation expense-$6,000 Revenue- $29,400 Equipment- $15,000 Supply inventory- $500 Cash- $3,500  The correct current ratio is: A. 1.50 B. 0.65 C. 1.79 D. 2.40 E. 3.20 F. None of the above

f