Accounting Exam 1

All of the following are expenses EXCEPT​ for: A.Dividends. B.Salary Expense. C.Cost of Goods Sold. D.Depreciation Expense.

A

All of the following statements are true except one. Which statement is​ false? A. Adjusting entries are required for a business that uses the cash basis. B. Accrual accounting produces better information than​ cash-basis accounting. C. A fiscal year may end on some date other than December 31. D. The expense recognition principle directs accountants to identify and measure all expenses incurred and deduct them from revenues earned during the same period.

A

On October ​1, Thornwood Apartments received $ 6,000 from a tenant for four​ months' rent. The receipt was credited to Unearned Rent Revenue. Thornwood​'s ​year-end is December ​31, which is when it makes its adjusting entries for the year. What adjusting entry needs to be made by Thornwood on December​ 31? Review Only A.Unearned Rent Revenue 4,500 Rent Revenue 4,500 B.Cash 1,500 Rent Revenue 1,500 C.Unearned Rent Revenue 1,500 Rent Revenue 1,500 D.Rent Revenue 1,500 Unearned Rent Revenue 1,500

A

The following accounts and balances are taken from Evan​ Company's adjusted trial​ balance: Accounts Payable - $10,000 Accounts Receivable - ​3,000 Accumulated Depreciation - 1,400 Depreciation Expense - 1,500 Dividends - 2,400 Insurance Expense - 2,300 Interest Revenue - 1,240 Prepaid Insurance - 2,320 Retained Earnings - 10,500 Salary Expense - 24,100 Service Revenue - 37,800 In the closing​ process, which accounts are​ credited? A.Depreciation​ Expense, Dividends, Insurance​ Expense, Salary Expense B.Depreciation​ Expense, Insurance​ Expense, Salary​ Expense, Prepaid Insurance C.Accounts​ Receivable, Prepaid​ Insurance, Salary Expense D.Interest​ Revenue, Service Revenue

A

The left side of a Tminusaccount is always​ the: A.debit side. B. credit side. C.increase side. D.decrease side.

A

Which of the following accounts is not​ closed? A. Accumulated Depreciation B. Interest Revenue C. Depreciation Expense D. Dividends

A

Which statement is​ false? A.Dividends are increased by credits. B.Liabilities are decreased by debits. C.Assets are increased by debits. D.Revenues are increased by credits.

A

he journal entry to record the receipt of land and a building and the issuance of common stock A.debits Land and Building and credits Common Stock. B.debits​ Land, Building, and Common Stock. C.debits Common Stock and credits Land and Building. D.debits Land and credits Common Stock.

A

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual​ accounting, the doctor recognizes​ revenue: A.in July. B.in March. C.in either March or July. D.at a time that cannot be determined from the facts.

B

Examples of liabilities​ include: A. accounts payable and common stock. B. accounts payable and note payable. C.investments and note payable. D.accounts payable and dividends.

B

Here are key figures from the balance sheet of Paris​, ​Inc., at the end of 2016 ​(amounts in​ thousands): December 31, 2016 Total assets (of which 40% are current) . . . . . . . . $7,000 Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 700 Bonds payable (long-term) . . . . . . . . . . . . . . . . 1,100 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 4,300 Total liabilities and stockholders' equity . . . . . . . . 7,000 Paris​'s current ratio at the end of 2016 is A. 1.56. B. 4.00. C. 10.00. D. 0.65.

B

If adjusting entries are not​ prepared, which financial statements are​ misstated?' A.statement of retained earnings only B.income​ statement, balance sheet and statement of retained earnings C.balance sheet only D.income statement only

B

Lori Nichols started an engineering​ firm, Engineering Enterprises P.C. During its first month of​ operations, the following transactions were​ completed: I. Lori invested $ 34,000 in the​ business, which in turn issued common stock to her. II. The business purchased equipment on account for $ 6,000. III. The business provided engineering services on​ account, $ 11,000. IV. The business paid salaries to the​ receptionist, $ 6,000. V. The business received cash from a customer as payment on account $ 6,000. VI. The business borrowed $ 10,000 from the​ bank, issuing a note payable. At the end of the​ month, cash​ equals: A.$ 38,000. B. $ 44,000. C. $ 73,000. D.$ 34,000.

B

Lorna Company has the following account balances at the end of the first year of​ operations: Accounts Payable ​$37,000 Revenues ​$104,000 Cost of Goods Sold ​$40,000 Salaries Expense ​$13,000 Dividends Declared and Paid ​$10,000 Utilities Expense ​$14,000 Advertising Expense ​$9000 Shortminusterm Investments ​$20,000 Cash ​$32,000 Land ​$50,000 Common Stock ​$50,000 What is the ending balance in Retained​ Earnings? A.$40,000 B.$18,000 C.$28,000 D.$27,000

B

NextTalk​, a new​ company, completed these transactions. 1. Stockholders invested $ 51,000 cash and inventory with a fair value of $ 30,000. 2. Sales on​ account, $ 22,000. What will NextTalk​'s total assets​ equal? A. $51,000 B. $103,000 C. $81,000 D. $73,000

B

On December 1 of the current​ year, Prepaid Rent was debited​ $10,800 for three months of​ rent, to cover the period December 1 to February 28. The amount of the adjusting entry on December 31​ is: A. $0. B. $3,600. C. $10,800. D. $7,200.

B

The accountant for Trumbull Corp. failed to make the adjusting entry to record depreciation for the current year. The effect of this error is which of the​ following? A.Net income is overstated and liabilities are understated B.Assets, net​ income, and​ stockholders' equity are all overstated. C.Assets are​ overstated; stockholders' equity and net income are understated. D.Assets and expenses are​ understated; net income is understated.

B

The entry to close Management Fee Revenue would be which of the​ following? A. Retained Earnings Management Fee Revenue B. Management Fee Revenue Retained Earnings C. Management Fee Revenue Service Revenue D. Management Fee Revenue does not need to be closed.

B

The proper order for the accounting process​ is: A.transaction​ occurs, posting, journalizing. B.transaction​ occurs, transaction​ analyzed, journalizing, and posting. C. transaction occurs​, ​posting, transaction​ analyzed, journalizing. D.posting, transaction​ occurs, journalizing.

B

Which is the CORRECT order for items to appear on the income​ statement? A.revenues, net​ income, operating expenses B.revenues, operating​ expenses, net income C.cost of goods​ sold, revenues, net income D.interest​ expense, revenues, income from operations

B

Which transaction increases​ stockholders' equity? A.dividends that are declared and paid B.sale of common stock C.payment of operating expenses D.expenses greater than revenues for the period

B

Accounts Payable can be found on a...

Balance Sheet

Cash can be found on a...

Balance Sheet

Inventory can be found on a...

Balance Sheet

Long-term debt can be found on a...

Balance Sheet

Common Stock can be found on a...

Balance sheet

Retained earnings can be found on a...

Balance sheet and statement of retained earnings

A company performed services for a customer for cash. This transaction increased assets​ and: A.decreased​ stockholders' equity. B.increased expenses. C.increased revenues. D. increased liabilities.

C

An adjusting entry that debits an expense and credits a liability is which​ type? A.Cash expense B.Prepaid expense C.Accrued expense D.Depreciation expense

C

An important rule of debits and credits​ is: A.debits increase liability accounts. B.debits decrease asset accounts. C.credits increase revenue accounts. D. credits increase expense accounts.

C

A​ business' receipt of a $ 115,000 ​building, with a $ 75,000 mortgage​ payable, and issuance of $ 40,000 of common stock will A. increase assets by $ 40,000. B. increase​ stockholders' equity by $ 115,000. C. increase​ stockholders' equity by $ 40,000. D. decrease assets by $ 75,000.

C

If a real estate company fails to accrue commission​ revenue, A.revenues are​ understated, and net income is overstated. B.liabilities are​ overstated, and​ owners' equity is understated. C.assets are​ understated, and net income is understated. D.net income is​ understated, and​ stockholders' equity is overstated.

C

In​ 1990, Johnson Company purchased a building for​ $200,000. In​ 2017, a real estate professional says the building has a fair value of​ $1,000,000. In​ 2017, a similar building down the street recently sold for​ $900,000. What​ value, before consideration of accumulated​ depreciation, is reported for the building on the balance sheet at December​ 31, 2017? A.$900,000 B.$1,000,000 C.$200,000 D.$600,000

C

Receiving a payment from a customer on​ account: A. decreases​ stockholders' equity. B.decreases liabilities. C.has no effect on total assets. D.increases​ stockholders' equity.

C

The​ owners' equity of a business is equal​ to: A.paidminusin capital plus assets. B.assets plus liabilities. C.assets minus liabilities. D.revenues minus expenses.

C

A company completed the following transactions during the month of​ October: I. Purchased office supplies on​ account, $ 5,600. II. Provided services for​ cash, $ 24,000. III. Provided services on​ account, $ 33,000. IV. Collected cash from a customer on​ account, $ 29,000. V. Paid the monthly rent of $ 3,200. What was the​ company's total revenue for the​ month? A.$ 33,000 B.$ 86,000 C.$ 24,000 D.$ 57,000

D

A company started the year with $ 200 of supplies. During the​ year, the company purchased an additional $ 1,200 of supplies. There were $ 500 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the accounting period includes​ a: A.debit to Supplies for $ 1,000. B.debit to Supplies for $ 500. C.debit to Supplies Expense for $ 300. D.debit to Supplies Expense for $ 900.

D

Accounting: A.processes data into reports and communicates the data to decision makers. B.is often called the language of business. C.measures business activities. D.is all of the above.

D

Adjusting entries A.update the accounts. B.do not debit or credit Cash. C.are needed to measure the​ period's net income or net loss. D.all of the above.

D

If the credit to record the payment of an account payable is not​ posted, A.expenses will be understated. B.cash will be understated. C.liabilities will be understated. D.cash will be overstated.

D

Interest earned on a note receivable at December 31 equals​ $375. What adjusting entry is required to accrue this​ interest? A.Interest Expense 375 Interest Payable 375 B. Interest Payable 375 Interest Expense 375 C.Interest Expense 375 Cash 375 D.Interest Receivable 375 Interest Revenue 375

D

On August 1 of the current​ year, Trevor Beck received $ 6,600 for legal services to be performed evenly throughout the next six months. The adjusting entry on December 31 of the current year would include​ a: A.credit to Unearned Service Revenue of $ 5,500. B.debit to Service Revenue of $ 1,100. C.debit to Unearned Service Revenue of $ 1,100. D.credit to Service Revenue of $ 5,500.

D

On July​ 25, Henry​ Company's accountant prepared a check for the August rent payment. Henry Company mailed the check on July 27 to the landlord. The landlord received the check on July 31 and cashed it on August 2. When should Henry Company record the rent expense associated with this​ transaction? Henry Company uses accrual accounting. A.July 25 B.July 27 C.August 2 D.August 31

D

The Houston Mavericks basketball team receives $ 6,000 for season tickets on August 1. By December​ 31, $ 3,600 of the revenue has been earned. The adjusting entry to be made on December 31 includes​ a: A.credit to Prepaid Revenue of $ 2,400. B.credit to Unearned Revenue of $ 3,600. C.debit to Ticket Revenue of $ 3,600. D.debit to Unearned Revenue of $ 3,600.

D

The account Unearned Revenue is​ a(n) A.asset. B.revenue. C.expense. D.Liability.

D

The journal entry to record a payment on account will A.debit Accounts Payable and credit Retained Earnings. B.debit Cash and credit Expenses. C.debit Expenses and credit Cash. D.debit Accounts Payable and credit Cash.

D

The journal entry to record the purchase of supplies on account A.debits Supplies Expense and credits Supplies. B.credits Supplies and debits Cash. C.credits Supplies and debits Accounts Payable. D.debits Supplies and credits Accounts Payable.

D

Which of the following is not an asset​ account? A.Salary Expense B.Common Stock C.Service Revenue D.None of the listed accounts is an asset.

D

Which statement is​ false? A.A trial balance can verify the equality of debits and credits. B.A trial balance lists all the accounts with their current balances. C.A trial balance can be taken at any time. D.A trial balance is the same as a balance sheet.

D

​Sullivan, ​Inc., purchased supplies for $ 1,600 during 2016. At yeardash​end, Sullivan had $ 500 of supplies left. The adjusting entry should A.debit Supplies $ 1,100. B.credit Supplies $ 500. C.debit Supplies $ 500. D.debit Supplies Expense $ 1,100.

D

T/F - Accounts Receivable is increased with a credit.

False

T/F - Common stock and retained earnings are increased with debits.

False

T/F - Following current U.S.​ GAAP, the carrying value of a building can be increased to its fair value.

False

T/F - Generally accepted accounting principles​ (GAAP) are the accounting guidelines formulated by the Securities and Exchange Commission.

False

T/F - Posting is the process of copying data from the ledger to the journal.

False

T/F - The expense recognition principle recognizes expenses in the period they are paid.

False

T/F - The revenue principle states that revenue should be recorded in the same period as the cash is received.

False

T/F - The three factors that influence business and accounting decisions are​ economic, legal, and financial.

False

T/F - Under cashminusbasis ​accounting, stockholders' equity is increased when company makes a​ sale, not when the company collects the cash at a later date.

False

The two types of accounting​ are:

Financial & managerial

Interest revenue can be found on a...

Income Statement

Salary Expense can be found on a...

Income Statement

Sales revenue can be found on a...

Income statement

Net income can be found on a...

Income statement and statement of retained earnings

T/F - Accounting is often called the language of business.

True

T/F - Every adjusting entry must affect both the income statement and the balance sheet.

True

T/F - Every business transaction involves both at least one debit and at least one credit.

True

T/F - Generally Accepted Accounting Principles​ (GAAP) require the use of accrual accounting.

True

T/F - In a journal​ entry, the sum of the debits must always equal the sum of the credits.

True

T/F - The account is the basic summary device of accounting.

True

T/F - The amount of prepaid insurance that is used up during a period of time is recorded as Insurance Expense.

True

T/F - ​Owners' equity is called​ stockholders' equity for a corporation.

True

Dividends can be found on a...

statement of retained earnings