Account Exam Prep

The ending balance of Accounts Receivable was $12,000. Services billed to customers during the year were $21,500, and collections on account from customers were $23,600. What was the beginning balance of Accounts Receivable? A. $14,100 B. $33,500 C. $9,900 D. $33,100

A. $14,100

At the beginning of the year, Vici Ventures had accounts receivable of $220,000. At the end of the year, the company had accounts receivable of $340,000. During the year, Vici had total sales of $1,000,000, 70% of which were credit sales. What was Vici's receivables turnover ratio for the year? A. 2.50. B. 3.57. C. 2.94. D. 146 days.

A. 2.50.

Which of the following accounts would be reported as assets on the balance sheet? A. Cash, accounts receivable, and inventories. B. Cash, retained earnings, and accounts receivable. C. Inventories, property and equipment, and common stock. D. Cash, accounts payable, and notes payable.

A. Cash, accounts receivable, and inventories.

Which of the following statements is incorrect? A. Financial statements should be prepared directly from information in the unadjusted trial balance. B. An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded. C. An adjusted trial balance is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger. D. Financial statements can be prepared directly from information in the adjusted trial balance.

A. Financial statements should be prepared directly from information in the unadjusted trial balance.

Which of the following correctly describes the effect of a journal entry involving the recording of a sales return? A. Gross profit decreases. B. Net sales increases. C. Current assets remain the same. D. Net income increases.

A. Gross profit decreases.

On December 31 of the current year, Martins Company made an entry debiting Supplies Expense and crediting Supplies for $12,600. The Supplies account had a $15,300 balance on January 1, and a balance of $11,400 on December 31. Only one purchase of supplies was made during the month, on account. The journal entry for that purchase was A. debit Supplies 8,700 and credit Accounts Payable, $8,700. B. debit Supplies $8,700 and credit Cash, $8,700. C. debit Supplies $16,500 and credit Accounts Payable, $16,500. D. debit Supplies Expense, $8,700 and credit Accounts Payable, $8,700.

A. debit Supplies 8,700 and credit Accounts Payable, $8,700.

The following is an example of an error that will be discovered on the trial balance: A.An entry was journalized and posted as a debit to wages expense for $20,000 and a debit to wages payable for $20,000. B. An entry was journalized and posted as a debit to cash for $50 and a credit to sales revenue $50 when we collected a customer's account. C. An entry was journalized and posted as a debit to cash for $500 and credited to accounts payable for $500 when a sale was made to a credit customer D. None of these errors would be discovered on the trial balance

A.An entry was journalized and posted as a debit to wages expense for $20,000 and a debit to wages payable for $20,000.

On January 1, 2016, the ledger of Van Le Corp. correctly showed supplies of $1,000. During 2016, supplies purchases amounted to $5,000. A count of supplies on hand at December 31, 2016, showed $1,200. The 2016 income statement should report supplies expense amounting to A. $ 5,200. B. $ 4,800. C. $ 4,600. D. $ 6,000.

B. $ 4,800.

On October 1, 2021, Stripes Inc. lends $100,000 to another company and accepts a 24-month, 6% note. What is the amount of interest revenue Stripes will report in its 2023 income statement? A. $0. B. $4,500. C. You Answered $6,000. D. $12,000.

B. $4,500.

Clark Company estimated the net realizable value of its accounts receivable as of December 31, 2019, to be $165,000, based on an aging schedule of accounts receivable. Clark has also provided the following information: The accounts receivable balance on December 31, 2019 was $175,000. Uncollectible accounts receivable written off during 2019 totaled $12,000. The allowance for doubtful accounts balance on January 1, 2019 was $15,000. How much is Clark's 2019 bad debt expense? A. $10,000. B. $7,000. C. $13,000. D. $3,000.

B. $7,000.

The CHS Company has provided the following information: Accounts receivable written-off as uncollectible during the year amounted to $11,500. The accounts receivable balance at the beginning of the year was $150,000. The accounts receivable balance at the end of the year was $210,000. The allowance for doubtful accounts balance at the beginning of the year was $14,000. The allowance for doubtful accounts balance at the end of the year after the recording of bad debt expense was $12,900. Credit sales during the year totaled $900,000. How much cash was received from collections of accounts receivable? A. $888,500. B. $828,500. C. $690,000. D. $701,500.

B. $828,500.

Making insurance payments in advance is an example of: A. A deferred revenue transaction. B. A deferred expense transaction. C. An accrued revenue transaction. D. An accrued expense transaction.

B. A deferred expense transaction.

Which of the following correctly describes credit terms of 2/10, n/30? A> A two percent discount for early payment is available if the invoice is paid before the tenth day of the month following the month the sale. B. A two percent discount for early payment is available if the invoice is paid within ten days of the date of sale. C. A ten percent discount for early payment is available if the invoice is paid within two days of the date of the invoice. D. A two percent discount for early payment is available if the invoice is paid after the tenth day, but before the thirtieth day of the invoice date.

B. A two percent discount for early payment is available if the invoice is paid within ten days of the date of sale.

For the year ended December 31, a company has revenues of $317,000 and expenses of $196,000. The company paid $50,000 in dividends during the year. The balance in the Retained earnings account before closing is $81,000. Which of the following entries would be used to close the dividends account? A. Debit Retained earnings $81,000; credit Income Summary $81,000. B. Debit Retained earnings $50,000; credit Dividends $50,000. C. Debit Income Summary $50,000; credit Retained earnings $50,000. D. Debit Dividends $50,000; credit Retained earnings $50,000.

B. Debit Retained earnings $50,000; credit Dividends $50,000.

Which of the following statements correctly describes the effect of recording the collection of a $10,000 account receivable for which a 2% sales discount was recorded at the time of collection? A. Current assets will remain the same. B. Gross profit will decrease $200. C. Accounts receivable will decrease $9,800. D. Net sales will increase $9,800.

B. Gross profit will decrease $200.

The assumption that amounts are reported using a common scale (such as the dollar in the United States) is the: A. Periodicity assumption. B. Monetary unit assumption. C. Going concern assumption. D. Economic entity assumption.

B. Monetary unit assumption.

Lena Company has provided the following data for its 2019 operations (ignore income taxes): 2019 revenues were $99,000. 2019 expenses were $47,800. Dividends declared and paid during 2019 totaled $9,500. Total assets at December 31, 2019 were $177,000. Total liabilities at December 31, 2019 were $89,000. Common stock at December 31, 2019 was $28,000. Which of the following is correct? A. Total stockholders' equity at December 31, 2019 was $236,000. B. Retained earnings at December 31, 2019 were $60,000. C. Retained earnings at December 31, 2019 were $41,700. D. 2019 net income was $41,700.

B. Retained earnings at December 31, 2019 were $60,000.

The following entry appears in Sterling Company's general journal on October 1, 2019: Supplies 26,000 Accounts Payable 20,000 Cash 6,000 Before the journal entry above, the company had liabilities of $230,000 and owners' equity of $220,000. Total assets immediately after the above transaction has been recorded amount to: A. $430,000. B. $450,000. C. $470,000. D. $476,000.

C. $470,000.

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? A. Assets increase by $75,000 and expenses decrease by $75,000. B. Assets decrease by $75,000 and expenses decrease by $75,000. C. Assets increase by $75,000 and liabilities increase by $75,000. D. Assets increase by $75,000 and expenses increase by $75,000

C. Assets increase by $75,000 and liabilities increase by $75,000.

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show: A. Assets overstated, net income understated, and equity overstated. B. Assets overstated and equity understated. C. Assets, net income, and equity overstated. D. Assets and equity both understated.

C. Assets, net income, and equity overstated.

Enhancing qualitative characteristics of accounting information include: A. Faithful representation and relevance. B. Cost effectiveness and materiality. C. Comparability and consistency. D. Relevance and comparability.

C. Comparability and consistency.

A company borrowed $4,000 from National City Bank on June 1. On August 31, the company paid off the loan plus $100 interest. The correct entry to record the August 31 payment of the loan plus interest is: A. Debit Cash 4,000 Debit Notes Payable 100 Credit Interest Expense 4,100 B. Debit Cash 4,000 Debit Interest Expense 100 Credit Notes Payable 4,100 C. Debit Notes Payable 4,000 Debit Interest Expense 100 Credit Cash 4,100 D. Debit Notes Payable 4,000 Debit Interest Expense 100 Credit Cash 3,900

C. Debit Notes Payable 4,000 Debit Interest Expense 100 Credit Cash 4,100

On July 8, Ray Inc. sold 100 printers to Office Rental Company at $600 each and offered a 2% discount for payment within 10 days. On July 15, Office Rental Company paid the full amount in cash. Which of the following would be included in the journal entry recorded by Ray Inc. on July 15? A. Credit Accounts Receivable $58,800 B. Credit Sales Revenue $58,800 C. Debit Sales Discounts $1,200 D. Credit Sales Discounts $1,200

C. Debit Sales Discounts $1,200

Which of the following is true of the unearned revenue account? A. It normally has a debit balance. B. It is increased with debit entries. C. It is increased with credit entries. D. It is an owners' equity account.

C. It is increased with credit entries.

Which of the following best describes the balance sheet? A. It provides information pertaining to a company's liabilities for a period of time. B. It includes a listing of assets, liabilities, and stockholders' equity at their market values. C. It provides information pertaining to a company's economic resources and the sources of financing for those resources. D. It includes a listing of assets at their market values.

C. It provides information pertaining to a company's economic resources and the sources of financing for those resources.

Which is the correct sequence of the following steps in the accounting cycle? A. Prepare adjusted trial balance, post adjusting entries, and prepare financial statements. B. Prepare journal entries, analyze transactions, prepare adjusted trial balance. C. Post adjusting journal entries, prepare adjusted trial balance, prepare financial statements. D. Prepare adjusting entries, prepare financial statements, prepare adjusted trial balance.

C. Post adjusting journal entries, prepare adjusted trial balance, prepare financial statements.

A company purchased supplies for $2,000. Due to an error in posting, the supplies account was debited for only $200 when accounts payable was credited for $2,000. During which phase of the accounting cycle would this error be discovered? A. Analysis of each transaction. B. Preparation of the financial statements. C. Preparation of the trial balance. D. Recording the transaction in the journal.

C. Preparation of the trial balance.

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $195,000; Total Liabilities of $15,000; and Total Paid-in capital of $60,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, dividends during the year totaled $48,000. Assuming no other changes to Retained earnings, the balance in the Retained earnings account at the end of the year would be: A. $171,000. B. $174,000. C. $120,000. D. $123,000.

D. $123,000.

In its first year of operations, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash paid toward them); Prepaid $8,000 cash for costs that will not be expensed until next year. Net income under the cash basis of accounting is: A. $17,000. B. $25,000. C. $21,000. D. $13,000.

D. $13,000.

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of equity as of August 31 of the current year? A. $12,100. B. $49,100. C. $10,900. D. $32,100.

D. $32,100.

The following account balances were listed on the trial balance of Huan Company at the end of the period: Account Balance Accounts Payable $ 30,600 Cash ? Common Stock 30,000 Equipment 13,500 Land 45,000 Notes Payable 60,000 What is the correct balance in the cash account? A. $57,900 B. $31,500 C. $2,100 D. $62,100

D. $62,100

During its first year of operations, Bethany Company entered into the following transactions: a. Borrowed $20,000 from the bank by signing a promissory note. b. Issued stock to owners for $40,000. c. Purchased $4,000 of supplies on account. d. Paid $1,600 to suppliers as payment on account for the supplies purchased. What is the amount of total assets at the end of the year? A. $64,000 B. $22,400 C. $60,000 D. $62,400

D. $62,400

On January 1, 2019, Miller Corporation had retained earnings of $8,000,000. During 2019, Miller reported net income of $1,500,000, declared dividends of $500,000, and issued common stock for $1,000,000. What were Miller's retained earnings on December 31, 2019? A. $7,000,000. B. $7,500,000. C. $9,500,000. D. $9,000,000.

D. $9,000,000.

On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: A. Debit Prepaid Insurance, $360; credit Insurance Expense, $360. B. Debit Prepaid Insurance, $1,800; credit Cash, $1,800. C. Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. D. Debit Insurance Expense, $360; credit Prepaid Insurance, $360.

D. Debit Insurance Expense, $360; credit Prepaid Insurance, $360.

What is the role of Public Company Accounting Oversight Board? A. Independent, private-sector group that is primarily responsible for setting financial reporting rules in the United States. B. Enforce proper application of financial reporting rules for companies whose securities are publicly traded. C. Develop a single set of high-quality, understandable global accounting standards. D. Ensure that auditors follow strict guidelines when conducting their audits.

D. Ensure that auditors follow strict guidelines when conducting their audits.

When using the allowance method for accounting for bad debts, accounts receivable is reported on the balance sheet at the expected net realizable value. When a particular receivable from a customer ultimately is determined to be uncollectible and is written off, the recording of this event will: A. Decrease the net realizable value of the accounts receivable. B. Have an effect that is not determinable from the information given. C. Increase the net realizable value of the accounts receivable. D. Have no effect on the net realizable value of the accounts receivable.

D. Have no effect on the net realizable value of the accounts receivable.

If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period, the assets of the business must have: A. Increased $30,000. B. Decreased $105,000. C. Decreased $45,000. D. Increased $45,000.

D. Increased $45,000.

Redwing Company sold inventory costing $500 to a customer on account for $700. Which of the following does not correctly describe the collection of $686 cash when the customer takes advantage of a sales discount? A. Gross profit decreases $14. B. Accounts receivable decrease $700. C. Net sales decrease $14. D. Net income is not affected.

D. Net income is not affected.

Which of the following would cause a trial balance to be out of balance? A. A transaction was recorded twice. B. A transaction was not recorded. C. A transaction was posted to the wrong accounts. D. Only the credit portion of a transaction was recorded.

D. Only the credit portion of a transaction was recorded.

The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Notes Payable as a $4,700 debit. What effect would this error have on the trial balance? A. The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700. B. The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700. C. The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400. D. The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.

D. The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.