Acc 201 exam 1 final multi choice

At November 1, 20XX, Johnson Inc. had an Accounts Receivable balance of $200,000. During the month, the company made sales on account of $300,000. In addition, Johnson Inc. collected $400,000 from customers that owed them money. At November 30, 2018, the Accounts Receivable balance is a. $100,000 debit b. $100,000 credit c. $500,000 debit d. $300,000 credit

A

MZ company has three factories that cost $1,000,000. The current market value of the factories is $1,500,000. The factories will be reported as assets at a. $1,500,000 b. $500,000 c. $1,000,000 d. $2,500,000

C

The right side of a t-account is a. the balance of an account. b. the debit side. c. the credit side. d. blank.

C

An income statement a. summarizes the changes in retained earnings for a specific period of time. b. reports the changes in assets, liabilities, and stockholders' equity over a period of time. c. reports the assets, liabilities, and stockholders' equity at a specific date. d. presents the revenues and expenses for a specific period of time

D

Ashley's Accessory Shop started the year with total assets of $210,000 and total liabilities of $120,000. During the year the business recorded $330,000 in revenues, $165,000 in expenses, and dividends of $60,000. The net income reported by Ashley's Accessory Shop for the year was a. $120,000. b. $150,000. c. $195,000. d. $165,000.

D

(a) In the first column at the right, indicate the nature of each account, using the following abbreviations: Asset - A Liability - L None of the above - N Expense - E Revenues - R (b) In the second column, indicate the normal balance by inserting Dr. or Cr. Type of Normal Account Balance a. Supplies ...................................... b. Notes Payable ............................... c. Service Revenue............................ d. Dividends..................................... e. Accounts Payable.......................... f. Salaries and Wages Expense............ g. Common Stock.............................. h. Accounts Receivable....................... i. Equipment................................... j. Notes Receivable...........................

type of account and normal account balance a. asset debit b. liability credit c.revenue credit d. none of above debit e. liability credit f. expense debit g. none credit h. asset debit i. asset debit j. asset debit

*Use the following information to answer the questions for 5 and 6 Bell Company compiled the following financial information as of December 31, 20XX: Service revenue $2,000,000 Common stock 500,000 Accounts payable 300,000 Notes payable 400,000 Operating expenses 1,000,000 Cash 280,000 Supplies 20,000 Unearned revenue 10,000 Dividends 80,000 Inventory 40,000 Land 800,000 Equipment 400,000 Retained earnings, 1/1/20XX 600,000 Bell's liabilities on December 31, 20XX are a. $710,000 b. $700,000 c. $310,000 d. $790,000

A

A debit is NOT the normal balance for which account listed below? a. Revenue b. Cash c. Accounts Receivable d. Dividends

A

Chris Harper earned a salary of $550 for the last week of January. She will be paid on Feb 1. The adjusting entry for Chris' employer at Jan 31 is: a. Dr. Salaries and Wages Expense $550 Cr. Salaries and Wages Payable $550 b. Dr Salaries and Wages Expense $550 Cr Cash $550 c. Dr Salaries and Wages Payable $550 Cr Cash $550 d. No entry is required

A

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. Revenue recognized $19,000 Accounts receivable 3,000 Expenses incurred 7,250 Accounts payable (related to expenses) 750 Supplies purchased with cash 1,800 a. $11,750 b. $14,000 c. $9,500 d. $12,200

A

If total liabilities decreased by $75,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $60,000 decrease b. $60,000 increase c. $75,000 increase d. $90,000 increase

A

Payment of a $2,000 Accounts Payable a. decreases an asset $2,000; decreases a liability $2,000 b. increases an asset $2,000; decreases an asset $2,000 c. increases a liability $2,000; decreases stockholders' equity $2,000 d. decreases an asset $2,000; decreases stockholders' equity $2,000

A

Powers Corporation received a cash advance of $500 from a customer. As a result of this event, a. assets increased by $500 (Debited). b. equity increased by $500 (Credited). c. liabilities decreased by $500 (Debited). d. Both assets and equity increased by $500 (Debited and Credited).

A

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) a. account payable. b. account receivable. c. revenue. d. expense.

A

What is the principle that indicates that when assets are acquired, they should be recorded at the amount paid for them? a. historical cost principle. b. fair value principle. c. full disclosure principle. d. consistency principle.

A

When revenues exceed expenses, which of the following is true? a. a net income occurs b. a net loss occurs c. assets equal liabilities d. liabilities are decreased

A

Which of the following accounts is increased with a debit? a. Land b. Service Revenue c. Interest Payable d. Common Stock

A

Which of the following financial statements is concerned with the company at a point in time? a. Balance sheet b. Income statement c. Retained earnings statement d. Statement of cash flows

A

An expense incurred; not yet paid or recorded.

Accrued Expenses

Interest expense incurred; not yet paid.

Accrued Expenses

A revenue recognized; not yet collected or recorded.

Accrued Revenues

Rent not yet collected; already recognized.

Accrued Revenues

Presented here are five economic events. For each item, indicate whether the event increased (+), decreased (-), or had no effect (NE) on assets, liabilities, and stockholders' equity. a. Received cash for services rendered. _______ _______ _______ b. Purchased supplies on account. _______ _______ _______ c. Paid employees' salaries. _______ _______ _______ d. Dividends paid in cash. _______ _______ _______ e. Expenses paid in cash.

Assets, lliabilities, stockholeder equity a. ___+____ __NE_____ ___+____ b __+_____ __+_____ ___NE____ c. __-_____ ___NE____ ___-____ d. ____-___ ____NE___ ____-___ e. ____-___ ____Ne___ ___-____

*Use the following information to answer the questions for 5 and 6 Bell Company compiled the following financial information as of December 31, 20XX: Service revenue $2,000,000 Common stock 500,000 Accounts payable 300,000 Notes payable 400,000 Operating expenses 1,000,000 Cash 280,000 Supplies 20,000 Unearned revenue 10,000 Dividends 80,000 Inventory 40,000 Land 800,000 Equipment 400,000 Retained earnings, 1/1/20XX 600,000 5. Bell's assets on December 31, 20XX are a. $1,880,000. b. $1,540,000. c. $2,140,000. d. $1,480,000.

B

A law firm has billed their clients for services performed. They subsequently received payments from their clients. What entry will the law firm make upon receipt of the payments? a. Debit Unearned Service Revenue and credit Service Revenue b. Debit Cash and credit Accounts Receivable c. Debit Accounts Receivable and credit Service Revenue d. Debit Cash and credit Service Revenue

B

As of January 1, 20XX, Grandma M's Homemade Ice Cream Shop had a balance in its retained earnings account of $20,000. During the year Grandma M's had revenues of $100,000 and expenses of $105,000. In addition, the business paid cash dividends of $2,000. What is the balance in Retained Earnings at December 31, 20XX for Grandma M's Homemade Ice Cream Shop? a. $23,000 b. $13,000 c. $17,000 d. $27,000

B

If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be: a. debit Unearned Service Revenue and credit Cash. b. debit Unearned Service Revenue and credit Service Revenue. c. debit Unearned Service Revenue and credit Prepaid Expense. d. debit Unearned Service Revenue and credit Accounts Receivable.

B

The Harris Company purchased equipment for $15,000 on December 1. It is estimated that annual depreciation on the computer will be $3,000. If financial statements are to be prepared on December 31, the company should make the following adjusting entry: a. debit Depreciation Expense, $3,000; credit Accumulated Depreciation, $3,000. b. debit Depreciation Expense, $250; credit Accumulated Depreciation, $250. c. debit Depreciation Expense, $12,000; credit Accumulated Depreciation, $12,000. d. debit Equipment, $15,000; credit Accumulated Depreciation, $15,000.

B

The cost of assets consumed or services used is also known as a. a revenue. b. an expense. c. a liability. d. an asset.

B

The expense recognition principle matches: a. customers with businesses. b. expenses with revenues. c. assets with liabilities. d. creditors with businesses.

B

The first step in the recording process is to a. prepare financial statements. b. analyze the transaction in terms of its effect on the accounts. c. post to a journal. d. prepare a trial balance.

B

The periodicity assumption states a. the business will remain in operation for the foreseeable future. b. the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared. c. every economic entity can be separately identified and accounted for. d. only those things that can be expressed in money are included in the accounting records.

B

The revenue recognition principle state that: a. Expenses should be matched with revenues b. Revenue should be recognized in the accounting period in which a performance obligation is satisfied c. The fiscal year should correspond with the calendar year d. The economic life of a business can be divided into artificial time periods.

B

The right to receive money in the future is called a(n) a. account payable. b. account receivable. c. liability. d. revenue.

B

To show how successfully your business performed during a period of time, you would report its revenues and expenses in the which financial statement? a. balance sheet. b. income statement. c. statement of cash flows. d. retained earnings statement.

B

When a company performs a service but has not yet received payment, it a. debits Service Revenue and credits Accounts Receivable. b. debits Accounts Receivable and credits Service Revenue. c. debits Service Revenue and credits Accounts Payable. d. makes no entry until cash is received.

B

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account? a. Asset, debit b. Liability, credit c. Revenues, credit d. Expense, debit

B

Which of the following is a liability? a. Accounts Receivable b. Unearned Service Revenue c. Service Revenue d. Dividends

B

Which of the following statements about the accrual basis of accounting is False? a. Events that change a company's financial statements are recorded in the periods in which the events occur. b. Revenue is recorded only when cash is received, and expense is recorded only when cash is paid. c. Revenue is recognized in the period in which services are performed d. This basis is in accordance with GAAP (Generally accepted accounting principles)

B

As of 1/1/xx, Dexter & Company had total assets of $100,000 and total liabilities of $45,000. If total assets increased by $15,000 during the year and total liabilities decreased by $10,000, what is the amount of stockholders equity at the end of the year? (hint - use accounting equation) a. $115,000 b. $45,000 c. $70,000 d. $60,000

C

Assets, liabilities, and stockholders' equity are found on what financial statement? a. Income Statement b. Statement of Cash Flows c. Balance Sheet d. Retained Earnings Statement

C

At August 1, 20XX, Longwood Inc. had a Cash balance of $50,000. During the month, the company had cash receipts of $150,000. In addition, Longwood Inc. had cash disbursements (payments) of $180,000. At November 30, 2018, the Cash balance is a. $80,000 debit b. $80,000 credit c. $20,000 debit d. $20,000 credit

C

Debits a. increase both assets and liabilities. b. decrease both assets and liabilities. c. increase assets and decrease liabilities. d. decrease assets and increase liabilities.

C

If a company fails to adjust an Unearned Rent Revenue account for rent that has been recognized, what effect will this have on that month's financial statements? a. Assets will be understated and revenues will be understated. b. Liabilities will be understated and revenues will be understated. c. Liabilities will be overstated and revenues will be understated. d. Assets will be overstated and revenues will be understated.

C

In the first month of operations, the total of the debit entries to the Cash account amounted to $3,000 and the total of the credit entries to the Cash account amounted to $1,800. The Cash account has a a. $1,800 credit balance. b. $3,000 debit balance. c. $1,200 debit balance. d. $1,800 credit balance.

C

On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is: a. debit Rent Expense, $24,000; credit Prepaid Rent, $4,000. b. debit Prepaid Rent, $4,000; credit Rent Expense, $4,000. c. debit Rent Expense, $4,000; credit Prepaid Rent, $4,000. d. debit Rent Expense, $24,000; credit Prepaid Rent, $20,000

C

On July 7, 20XX, Shireman Enterprises received cash $1,400 for services rendered. The entry to record this transaction will include a. a debit to Service Revenue of $1,400. b. a credit to Accounts Receivable of $1,400. c. a debit to Cash of $1,400. d. a credit to Accounts Payable of $1,400.

C

Which accounts normally have credit balances? a. Revenues, liabilities, and dividends b. Revenues, liabilities, and assets c. Revenues, liabilities, and retained earnings d. Revenues, liabilities, and expenses

C

Which of the following steps in the accounting process is done after analyzing business transactions? a. Preparing the financial statements b. Preparing a trial balance c. Entering transactions in a journal d. Posting journal entries

C

A building costing $400,000 is purchased by paying $150,000 cash and signing a note payable for the remainder. The journal entry should include a a. debit to Notes Payable. b. debit to Cash. c. credit to Notes Receivable. d. debit to Building.

D

Adjusting entries are made to ensure that: a. expense are recognized in the period in which they are incurred. b. revenues are recorded in the period in which the performance obligation is satisfied. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. All of these answer choices are correct

D

Adjustments for prepaid expenses: a. decrease assets and increase revenues. b. decrease expenses and increase assets c. decrease revenues and increase assets d. decrease assets and increase expenses

D

Debit means a. an account is increasing. b. the right side of an account. c. an account is decreasing. d. the left side of an account.

D

La More Company had the following transactions during 20X1. • Sales of $9,000 on account • Collected $4,000 for services to be performed in 20X2 • Paid $2,650 cash in salaries • Purchased airline tickets for $500 in December for a trip to take place in 20X2 What is La More's 20X1 net income using cash basis accounting? a. $10,350 b. $1,350 c. $9,850 d. $850

D

The best definition of assets is the a. cash owned by the company. b. collections of resources belonging to the company and the claims on these resources. c. owners' investment in the business. d. resources belonging to a company that have future benefit to the company.

D

The primary purpose of the trial balance is to a. disclose the complete effect of a transaction in one place. b. make sure a journal entry is not posted twice. c. transfer journal entries to the ledger accounts. d. prove the equality of the debit and credit amounts after posting.

D

The primary source used in the preparation of the financial statements is the: a. trial balance. b. post-closing trial balance. c. general trial balance. d. adjusted trial balance

D

What organization issues U.S. accounting standards? a. Security Exchange Commission b. International Accounting Standards Committee c. International Auditing Standards Committee d. Financial Accounting Standards Board

D

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? a. Monetary unit assumption b. Economic entity assumption c. Periodicity assumption d. Going concern assumption

D

Which of the following accounts is increased with a debit? a. Accounts Payable b. Common Stock c. Service Revenue d. Inventory

D

Which of the following are part of the recording process? a. Analyzing transactions b. Entering Transactions in a journal c. Posting journal entries d. All of the above

D

Which of the following categories are not found on a classified balance sheet? a. Long-term investments b. Property, Plant, and Equipment c. Long-Term Liabilities d. Service Revenue

D

Which of the following is an asset? a. Dividends b. Common Stock c. Service Revenue d. Accounts Receivable

D

Which of the following is not classified properly as a current asset? a. Supplies b. Short-term Investments c. A fund to be used to purchase a building within the next year d. A receivable from the sale of an asset to be collected in two years

D

Which of the following would not be considered an internal user of accounting data for the Xanadu Company? a. President of the company b. Production manager c. Merchandise inventory clerk d. President of the employees' labor union

D

An expense not yet incurred; paid in advance.

Prepaid Expenses

Office supplies on hand that will be used in the next period.

Prepaid Expenses

A revenue not yet recognized; collected in advance.

Unearned Revenues

Subscription revenue collected; not yet recognized.

Unearned Revenues

Which of the following statement about an account is true? a. The right side of an account is the debit, or increase side. b. An account is an individual accounting record of increases and decreases in specific assets, liability, and stockholders equity items. c. There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. d. The left side of an account is the credit, or decrease, side.

b

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance (Debit or Credit). Increase (+), Decrease (-). a. Salaries and Wages Expense. _______ _______ _______ b. Accounts Receivable. _______ _______ _______ c. Service Revenue. _______ _______ _______ d. Dividends _______ _______ _______ e. Retained Earnings.

debit credit normal balance a. __+_____ ___-_____ ____dr___ b. ___+____ ___-____ ____dr___ c. ____-___ ___+____ ___Cr____ d. ___+____ ___-____ ___Dr____ e. ___-____ ___+____ ___Cr____