Accounting Exam 1 Multiple Choice

$180 overstated

A $20 credit to Sales was posted as a $200 credit. By what amount is the Sales account in error?

Debit another asset account for $2,300

A bookkeeper has debited an asset account for $5,100 and credited a liability account for $2,800. Which of the following would be an incorrect way to complete the recording of this transaction.

73.5%

A company has $72,000 in current assets and $98,000 in current liabilities. What is the current ratio?

Debit Cash $2,600; credit Accounts Receivable $2,600

A law firm collected $2,600 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?

c

Amada Company billed a customer for $5,500 of services provided on account. This transaction appears in T-accounts as follows

increase assets and liabilities by $58,000

Assume that Red Door Boutique purchased supplies on account for $58,000. How would this transaction affect Red Door's equity?

a

Assume that the weekly payroll of Hunter Hardware Inc. is $1,000. The end of the year, December 31, falls on Tuesday. Hunter Hardware will pay its employees on Friday for the full week. What adjusting entry will Hunter Hardware make on Tuesday December 31? (Use five days as a full work week)

deferred expense

Assume that you prepay Fun Facts Magazine for a package of seven magazines a month for six months. Which type of account should you have in your accounting records?

$96,000

Barstock Inc. began the year with total assets of $177,000 and liabilities of $112,000. During the year, the business earned revenue of $103,000 and incurred expenses of $48,000. The stockholders received cash dividends of $24,000 and no additional stock has been issued. How much is stockholders' equity at year-end?

$50,000

During 2016, Duncan Company's total assets increased $50,000 and total liabilities decreased $30,000. During the same year, the company's investors invested an additional $60,000 and the company paid dividends of $30,000. What must have been the company's net income for 2016?

$21,280

During 2018, a company provided services for cash of $33,600 and services on credit of $24,000. The company collected accounts receivable of $12,800 and incurred operating expenses of $36,320, $22,400 of which were paid during the year. The amount of net income (loss) for the year is:

Securities and Exchange Commission (SEC)

Financial markets in the United States are regulated by which of the following organizations?

credit to unearned revenue of $120

Fun Facts Magazine gains a client who prepays $120 for a package of seven magazines per month for six months. Fun Facts Magazine collects the $120 in advance and will provide the magazines later. Which of the following will be included in the journal entry when Fun Facts Magazine records receipt of this $120 prepayment?

d

Gi Gi's Dance Studio provided $330 of dance instruction and rented out its dance studio to the same client for another $190. The client paid immediately. Identify the general journal entry below that Gi Gi's will make to record the transaction.

Credit to Unearned Management Fees for $78,000

Golddigger Services Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $78,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a

Liabilities understated

Hughes Copies Inc erroneously recorded a purchase of equipment on account by debiting Equipment and crediting Cash. What will be an effect of this error on the trial balance?

increased $46,000

If the liabilities of a business increased $77,000 during a period of time and the equity in the business decreased $31,000 during the same period, the assets of the business must have

$12,700

Joe Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: 1. Jackson invested $28,000 cash in the business in exchange for common stock 2. Jackson contributed $103,000 of equipment to the business 3. The company paid $2,300 cash to rent office space for the month of March 4. The company received $19,000 cash for repair services provided during March 5. The company paid $6,500 for salaries for the month of March 6. The company provided $3,300 of services to customers on account 7. The company paid cash of $800 for utilities for the month of March 8. The company received $3,400 cash in advance from a customer for repair services to be provided in April 9. The company paid Jackson $5,300 cash as a dividend Based on this information, net income for March would be:

net income of $27,000

Last year, Internet Service Company (ISC) sold services on account for $75,000 and incurred expenses totaling $48,000. At the end of the year, the balance for Accounts Receivable was $10,000, and the balance for Accounts Payable was $8,000. What was ISC's net income or net loss for the year?

$32,300

May 31 of the current year, the assets and liabilities of Riser Inc. are as follows: Cash $21,500, Accounts Receivable $7400, Supplies $750, Equipment $12,150, Accounts Payable $9500. What is the amount of equity as of May 31 of the current year?

$120,000

On April 1, 2016, Above and Beyond Technologies paid $160,000 for rent on warehouse space one year in advance. If Above and Beyond makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 income statement for rent expense?

overstates assets

On July 1, Miyoni paid $48,000 for a two-year insurance policy, debiting prepaid insurance for the full amount. If the adjusting entry is not made December 31, the end of the accounting period, how does the error affect this year's financial statements?

Debit Office supplies $520; credit Accounts payable $520

Paul's Landscaping purchased $520 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

$322,000,000

Red Door Boutique is famous for fashion wristwatches and leather purses. At the end of a recent year, Red Door's total assets added up to $485,000,000 and liabilities were $163,000,000. How much was Red Door's equity?

$9,000 decrease

Rico's Taqueria had cash inflows from operating activities of $29,000, cash outflows from investing activities of $24,000, and cash outflows from financing activities of $14,000. Calculate the net increase or decrease in cash

$660,000

Rocky Company has beginning equity of $600,000, net income of $100,000, dividends of $60,000 and investments by owners in exchange for stock of $20,000. Its ending equity is

$103,000

Suppose Howard Corporation has Furniture totaling $158,000, Cash of $18,000 and a $64,000 Note Payable. In addition, the business has Accounts Payable of $52,000 and Accounts Receivable of $43,000. How much is Howard's stockholders' equity?

c

Terry Baxter is a stockholder of Alpha Corp. In exchange for additional shares of common stock, Baxter provided Alpha Corp with $75,000 of computer equipment. The journal entry to record this transaction is as follows

increases an asset with a debit and increases a revenue with a credit

The adjustment for accrued revenues

carried forward to the next accounting period

The distinguishing feature of a permanent account is that any balance in the account at the end of an accounting period is

expenses are recorded when they are incurred during a period

The matching principle requires that

a corporation, a partnership, and a sole proprietorship

The three principle forms of business organization are

b

The unadjusted trial balance shows a $2,200 balance for the Office Supplies account. At the end of the period, the office manager determines that the value of supplies on hand is $800. What adjusting entry will be made

increase stockholders' equity by $80,000

Thomas Jones, starting his own business, made an investment of a building to the company. The building is valued at $800,000 with a $720,000 outstanding mortgage payable. The effect of this transaction on the accounting equation of the business would be to:

Account

What is the detailed record of all increases and decreases that have occurred in a specific individual asset, liability, or equity during a specific period.

expenses understated

What is the impact on the financial statements if an adjusting entry for a deferred expense is not made?

Salaries and Wages Payable; balance sheet

When employees work for a company in June but are not paid until July, the June financial statements will include ____________ on the ____________

when services are rendered

When should a company record earned revenue under accrual accounting?

d

Which journal entry records a $5,500 payment for office supplies that were previously purchased on account?

ledger

Which of the following is a collection of all the accounts, the changes in those accounts, and their balances?

Unearned Revenue is increased with a credit

Which of the following statements is correct?

corporation

Which type of business organization is a taxable entity, separate and apart from its owners?

be the same as the calendar year

a company's fiscal year may

closing entries

a series of journal entries at the end of the accounting period to remove the balances from the temporary accounts so that they can accumulate data for the following accounting period are called

an account

an individual record of increases and decreases in specific assets, liabilities, and stockholders' equity is called

as an expense on the income statement

as supplies and PPE assets on the balance sheet are consumed, they are reflected

Financial Accounting Standards Board

currently, the organization with the primary responsibility for formulating U.S. generally accepted accounting principles is the

$77,600

if the beginning Cash account balance of Rainbow Inc. was $20,000, the ending balance was $33,600, and the total cash paid out during the period was $64,000, what amount of cash was received during the period?

notes to the financial statements

in which of the following would information regarding the procedures followed to value a company's assets appear?

decreases assets

the entry to record the payment of accounts payable

results of operations for a specific period

the income statement reports the

liabilities

the obligations that an entity must pay in money or services at some time in the future because of past transactions or events are called?

common stock and retained earnings

the primary components of the stockholder's equity section of a balance sheet for a corporation are

financing activities, operating activities, investing activities

the three types of business activities in which every business, regardless of organizational form, its industry, or its size, is involved are:

a liability

unearned revenue is always

financial accounting

which field of accounting provides information to external decision makers such as investors and lenders?

going concern

which of the following assumptions that underlies the preparation of financial statements assumes that companies will continue their operations over time?

purchasing equipment with payment due in 30 days

which of the following does not affect stockholders' equity

expenses

which of the following is a temporary account category?

to close the income statement accounts and prepare them for the following year's activity

which of the following is not a reason for which adjusting entries are made?

unearned revenue

which of the following is not shown in the statement of stockholders' equity?

notes payable

which of the following normally has a credit balance?

senior company management

which one of the following is not an external user of financial information?