MGT 11 CH 1 Study Q

6. On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. Alberts pays the invoice on October 8 and takes the appropriate discount. The journal entry that Robertson makes on October 8 is:

e

9. On July 22, a company that uses the perpetual inventory system purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 1, what would be the appropriate journal entry? What if they paid on Aug 7th ?

e

A company that uses the perpetual inventory system purchased merchandise inventory at a cost of $4,300 with credit terms 3/15, net 45. If the company elects to pay within the discount period, what would be the appropriate journal entry to record the payment?

e

1. An example of an operating activity is: a) Paying wages. b) Purchasing office equipment. c) Borrowing money from a bank. d) Selling stock. e) Paying off a loan.

paying wages

2. A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error? a) $150 understated b) $135 overstated c) $150 overstated d) $15 understated e) $135 understated

$135 overstated

3. A company had no office supplies at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? a. $75 b. $125 c. $175 d. $250 e. $325

$175

3. What is the total amount of current assets based on the following information, assuming all accounts have a normal balance? a. $74,800 b. $37,647 c. $60,265 d. $23,112 e. $60,953

$23,112

3. On January 1, Acme College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester, which spans four months beginning on January 2. What amount of tuition revenue should the college recognize on January 31? a. $300,000 b. $600,000 c. $800,000 d. $900,000 e. $1,200,000

$300,000

2. Which of the following is a TRUE statement concerning a company's financial statements? Balance sheet and income statement data combined contain the complete financial picture of a given company. A trial balance is another name for a balance sheet. Another name for the income statement is the earnings statement. Dividends paid to a company's shareholders are shown on the income statement. The balance sheet shows the financial position of a company for a period of time.

Another name for the income statement is the earnings statement

3. The main purpose of adjusting entries is to: a) Record external transactions and events. b) Record internal transactions and events. c) Recognize assets purchased during the period. d) Recognize debts paid during the period. e) Correct errors.

Record internal transactions and events.

. On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. The journal entry or entries that Robertson will make on October 1 is:

d

3. Which of the following accounts would not be impacted by adjusting journal entries? a) Accounts Receivable b) Consulting Fee Earned c) Unearned Consulting Fees d) Cash e) Wages Payable

d) Cash

3. On April 30, 2014, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2014? a. $500 b. $4,000 c. $6,000 d. $14,000 e. $18,000

$4,000

3. On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. Using the straightline method, what is the amount that should be recorded as depreciation on December 31? a. $27,000 b. $24,900 c. $29,100 d. $135,000 e. $10,500

. $24,900

3. Which of the following assets is not depreciated? a. Store fixtures b. Computers c. Land d. Buildings e. Vehicles

. Land

3. Expenses incurred but unpaid that are recorded during the adjusting process with a debit to an expense and a credit to a liability are: a) Intangible expenses b) Prepaid expenses c) Unearned expenses d) Net expenses e) Accrued expenses

Accrued expenses

2. Wisconsin Rentals purchased office supplies on credit. The journal entry made by Wisconsin Rentals to record this transaction will include Debit to Accounts Payable. Debit to Accounts Receivable. Credit to Cash. Credit to Accounts Payable. Credit to Retained Earnings.

Credit to Accounts Payable.

2. Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for a six-month contract in advance. Management Services' journal entry to record this transaction will include a: Debit to Unearned Management Fees for $60,000 .Credit to Management Fees Earned for $60,000. Credit to Cash for $60,000. Credit to Unearned Management Fees for $60,000. Debit to Management Fees Earned for $60,000.

Credit to Unearned Management Fees for $60,000

2. Rocky Industries received its telephone bill in the amount of $300 and immediately paid it. Which of the following will Rocky's journal entry to record this transaction include? Debit to Telephone Expense for $300 Credit to Accounts Payable for $300. Debit to Cash for $300. Credit to Telephone Expense for $300. Debit to Accounts Payable for $300.

Debit to Telephone Expense for $300

3. On May 1, 2014, Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30, 2015. The cash receipt was recorded as unearned fees. At December 31, 2014, $500 of the fees had been earned. The adjusting entry on December 31, 2014, should include a: a. Debit to Unearned Fees for $500. b. Credit to Unearned Fees for $500 c. Credit to Earned Fees for $1,000. d. Debit to Earned Fees for $1,000. e. Debit to Earned Fees for $500.

Debit to Unearned Fees for $500

3. Which of the following accounts would be closed at the end of the accounting period? a) Accounts Receivable b) Unearned Consulting Fees c) Fees Earned d) Retained Earnings e) Land

Fees Earned

2. Which financial statements are prepared for a period of time? a) Income statement, statement of retained earnings, balance sheet and statement of cash flows. b) Balance sheet. c) Income statement, statement of retained earnings, and statement of cash flows. d) Income statement and balance sheet. e) Statement of retained earnings and statement of cash flows.

Income statement, statement of retained earnings, and statement of cash flows

3. The current ratio: a. Is used to measure a company's profitability. b. Is used to measure the relation between assets and long-term debt. c. Measures the effect of operating income on profit. d. Is used to help evaluate a company's ability to pay its short-term obligations. e. Is calculated by dividing current assets by equity.

Is used to help evaluate a company's ability to pay its short-term obligations.

2. The debt ratio is used: a) To measure the amount of equity relative to the expenses. b) To reflect the risk associated with a company's debts. c) Only by banks when a business applies for a loan. d) To determine how much debt a firm should pay off. e) To determine who a company owes.

To reflect the risk associated with a company's debts.

3.. A post-closing trial balance includes: a) All ledger accounts with balances, none of which can be temporary accounts. b) All ledger accounts with balances, none of which can be permanent accounts. c) All ledger accounts with balances, which include some temporary and some permanent accounts. d) Only revenue and expense accounts. e) Only asset accounts.

a) All ledger accounts with balances, none of which can be temporary accounts.

7. On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. On October 4, Alberts returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Robertson must make on October 4 is:

b

On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. On October 4, Alberts returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Robertson must make on October 4 is:

b

Merchandise inventory: a) Is a long-term asset. b) Is a current asset. c) Includes supplies. d) Is classified with investments on the balance sheet. e) Must be sold within one month.

b) Is a current asset.

2. A company failed to post a $50 debit to the Office Supplies account. The effect of this error will be that the: a) Office Supplies account balance will be overstated. b) Trial balance will not balance. c) Error will overstate the debits listed in the journal. d) Total debits in the trial balance will be larger than the total credits. e) Trial balance will be in balance.

b) Trial balance will not balance.

2. Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction

c

On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. The journal entry or entries that Robertson will make on October 1

c

1. Internal users of accounting information always include: a) Shareholders b) Managers c) Lenders d) Suppliers e) Customers

manager

1. An example of a financing activity is: a) Buying office supplies. b) Obtaining a long-term loan. c) Buying office equipment. d) Selling inventory. e) Buying land.

obtaining a long term loan

1. Which of the following elements are found on the balance sheet? a) Service revenue. b) Net income. c) Operating activities. d) Utilities expense. e) Retained earnings.

retained earnings

1. The principle that (A) requires revenue to be recognized at the time it is earned, (B) allows the inflow of assets associated with revenue to be in a form other than cash, and (C) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services is called the: a) Going-concern principle. b) Cost principle. c) Revenue recognition principle. d) Objectivity principle. e) Business entity principle.

revenue from recognition principle

1. Which of the following elements are found on the income statement? a) Cash b) Accounts receivable c) Common stock d) Retained earnings e) Salaries expense

salaries expense

1. An asset is: a) Only acquired with cash. b) Something the company owns. c) Only contributed by stockholders. d) A company's obligation to pay. e) Is also called contributed capital.

something the company owns