REVIEWER ACCTG 1

Multiple Choice

Identify the choice that best completes the statement or answers the question.

1. Profit is the difference between

a. assets and liabilities b. the incoming cash and outgoing cash c. the assets purchased with cash contributed by the owner and the cash spent to operate

the business d. the assets received for goods and services and the amounts used to provide the goods

and services

2. Public accountants are normally a. Certified Public Accountants b. Forensic accountants c. Certified Internal Auditors d. Certified Management Accountants

3. Which of the following is the best description of accounting’s role in business? a. Accounting provides stockholders with information regarding the market value of the

company’s stocks. b. Accounting provides information to managers to operate the business and to other

stakeholders to make decisions regarding the economic condition of the company. c. Accounting provides creditors and banks with information regarding the credit risk rating

of the company. d. Accounting is not responsible for providing any form of information to stakeholders.

That is the role of the Information Systems Department.

4. The business entity concept means that a. the owner is part of the business entity b. an entity is organized according to state or federal statutes c. an entity is organized according to the rules set by the FASB d. the entity is an individual economic unit for which data are recorded, analyzed, and

reported

5. The objectivity principle requires that a. business transactions must be consistent with the objectives of the entity b. the Financial Accounting Standards Board must be fair and unbiased in its deliberations

over new accounting standards c. accounting principles must meet the objectives of the Security and Exchange Commission d. amounts recorded in the financial statements must be based on independently verifiable

evidence

6. If total liabilities decreased by $25,000 during a period of time and owner's equity increased by $30,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a. $65,000 increase b. $5,000 decrease c. $5,000 increase d. $65,000 decrease

7. A business paid $9,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to a. increase one asset, decrease another asset b. increase an asset, increase a liability c. decrease an asset, decrease a liability d. increase an asset, increase owner's equity

8. The monetary value charged to customers for the performance of services sold is called a(n) a. asset b. net income c. capital d. revenue

9. Goods purchased on account for future use in the business, such as supplies, are called a. prepaid liabilities b. revenues c. prepaid expenses d. liabilities

10. The asset created by a business when it makes a sale on account is termed a. accounts payable b. prepaid expense c. unearned revenue d. accounts receivable

11. Owner's equity is increased by a. cash b. revenue c. accounts receivable d. all are correct

12. How does the owner withdrawing cash from the business affect the accounting equation? a. assets decrease; owner's equity decreases b. assets decrease; owner's equity increases c. assets increase; liabilities decrease d. no effect on the assets, liabilities, or owner's equity

13. On November 1 of the current year, the assets and liabilities of Jim Chu, M.D., are as follows: Cash, $10,000; Accounts Receivable, $8,200; Supplies, $1,050; Land, $25,000; Accounts Payable, $6,530. What is the amount of owner's equity (Jim Chu's capital) as of November 1 of the current year? a. $37,720 b. $44,430 c. $21,500 d. $50,780

14. Al Shea is the sole owner and operator of SawTooth Company. As of the end of its accounting period, December 31, 2007, SawTooth Company has assets of $925,000 and liabilities of $285,000. During 2008, Al Shea invested an additional $50,000 and withdrew $30,000 from the business. What is the amount of net income during 2008, assuming that as of December 31, 2008, assets were $980,000, and liabilities were $255,000? a. $ 95,000 b. $ 65,000 c. $165,000 d. $725,000

15. If beginning capital was $65,000, ending capital is $43,000, and the owner's withdrawals were $16,000, the amount of net income or net loss was a. net income of $37,000 b. net income of $8,000 c. net loss of $22,000 d. net loss of $6,000

16. Rivers Computer Makeover Company purchased $15,000 of Computer and Office Equipment. The company paid $3,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in six monthly installments. How will this transaction affect the accounting equation? a. Increase Assets (Computer and Office Equipment $15,000) and decrease Liabilities

(Accounts Payable $15,000) b. Increase Total Assets by a net amount of $12,000 (increase Computer and Office

Equipment $15,000 and decrease Cash $3,000) and increase Liabilities (Notes Payable $12,000)

c. Increase Total Assets by a net amount of $15,000 (increase Computer and Office Equipment $12,000 and increase Cash $3,000) and decrease Liabilities (Accounts Payable $15,000)

d. Increase Assets (Computer and Office Equipment $12,000) and increase Liabilities (Accounts Payable $12,000)

17. There are four transactions that affect Owner’s equity. Which are the two transactions that increase Owner’s equity? a. Revenues and expenses b. Expenses and owner’s withdrawals c. Revenues and Owner’s investments d. Owner’s Investments and Expenses

18. There are four transactions that directly affect Owner’s Equity. Which are the two transactions that decrease Owner’s Equity? a. Owner’s withdrawals and expenses b. Revenues and expenses c. Owner’s investments and revenues d. Owner’s investments and expenses

19. The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n) a. prior period statement b. statement of owner's equity c. income statement d. balance sheet

20. All of the following are financial statement(s) of a proprietorship except the a. statement of retained earnings b. statement of owner's equity c. income statement d. statement of cash flows

21. Which of the following financial statements reports information as of a specific date? a. income statement b. statement of owner's equity c. statement of cash flows d. balance sheet

22. Cash investments made by the owner to the business are reported on the statement of cash flows in the a. financing activities section b. investing activities section c. operating activities section d. supplemental statement

23. A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing a. the Income Statement. b. the Balance Sheet. c. the Statement of Cash Flows. d. cannot be determined.

24. If the owner wanted to know how money flowed into and out of the company, what financial statement would she use? a. Income Statement b. Statement of Cash Flows c. Balance Sheet d. None are correct.

25. The statement of cash flows is separately in three major sections. They are as follows: a. Operating, Investing, and Financing b. Revenues, Expenses, and Net Income c. Assets, Liabilities, and Owner’s Equity d. Investments, Withdrawals, and Income

26. Accounts a. do not reflect money amounts b. are not used by entities that manufacture products c. are records of increases and decreases in individual financial statement items d. are only used by large entities with many transactions

27. A group of related accounts that comprise a complete unit is called a a. journal b. liability c. ledger d. transaction

28. Revenue should be recognized when a. cash is received b. the service is performed c. the customer places an order d. the customer charges an order

29. The gross increases in owner's equity attributable to business activities are called a. assets b. liabilities c. revenues d. net income

30. An account is said to have a debit balance if a. the amount of the debits exceeds the amount of the credits b. there are more entries on the debit side than on the credit side c. its normal balance is debit without regard to the amounts or number of entries on the

debit side d. the first entry of the accounting period was posted on the debit side

31. Which of the following types of accounts have a normal credit balance? a. assets and liabilities b. liabilities and expenses c. revenues and liabilities d. capital and drawing

32. Which one of the statements below is not a purpose for the journal? a. to show increases and decreases in accounts b. to show a chronological order by date c. to show a complete transaction in one place d. to help locate errors

33. Which of the following applications of the rules of debit and credit is true? a. decrease Prepaid Insurance with a credit and the normal balance is a credit b. increase Accounts Payable with a credit and the normal balance is a debit c. increase Supplies Expense with a debit and the normal balance is a debit d. decrease Cash with a debit and the normal balance is a credit

34. Which of the following describes the classification and normal balance of the fees earned account? a. asset, credit b. liability, credit c. owner's equity, debit d. revenue, credit

35. The classification and normal balance of the drawing account is a. an expense with a credit balance b. an expense with a debit balance c. a liability with a credit balance d. owner's equity with a debit balance

36. In which of the following types of accounts are increases recorded by debits? a. assets, liabilities b. drawing, liabilities c. expenses, liabilities d. assets, expenses

37. A credit balance in which of the following accounts would indicate a likely error? a. Fees Earned b. Salary Expense c. Peter Penn, Capital d. Accounts Payable

38. A debit balance in which of the following accounts would indicate a likely error? a. Salaries Expense b. Notes Payable c. N. McGee, Drawing d. Supplies

39. Which of the following entries records the withdrawal of cash by Joe, owner of a proprietorship, for personal use? a. debit Joe, Capital; credit Cash b. debit Joe, Drawing; credit Cash

c. debit Salaries Expense; credit Cash d. debit Salaries Expense; credit Salaries Payable

40. Office supplies purchased by J's Appliance Repair on account were returned. Which of the following entries for J's Appliance Repair records this transaction? a. Cash, debit; Office Supplies, credit b. Office Supplies, debit; Accounts Receivable, credit c. Accounts Payable, debit; Office Supplies, credit d. Office Supplies, debit; Accounts Payable, credit

41. Cash was paid by J's Appliance Repair to creditors on account. Which of the following entries for J's records this transaction? a. Cash, debit; J's, Capital, credit b. Accounts Payable, debit; Cash, credit c. Accounts Receivable, debit; Cash, credit d. Accounts Payable, debit; Account Receivable, credit

42. Which of the following entries records the acquisition of office supplies on account? a. Office Supplies, debit; Cash, credit b. Cash, debit; Office Supplies, credit c. Office Supplies, debit; Accounts Payable, credit d. Accounts Receivable, debit; Office Supplies, credit

43. Which of the following entries records the payment of rent for the current month? a. Cash, debit; Rent Expense, credit b. Rent Expense, debit; Cash, credit c. Rent Expense, debit; Accounts Receivable, credit d. Accounts Payable, debit; Rent Expense, credit

44. Which of the following entries records the receipt of cash from patients on account? a. Accounts Payable, debit; Fees Earned, credit b. Accounts Receivable, debit; Fees Earned, credit c. Accounts Receivable, debit; Cash, credit d. Cash, debit; Accounts Receivable, credit

45. Which of the following entries records the billing of patients for services performed? a. Accounts Receivable, debit; Fees Earned, credit b. Accounts Payable, debit; Cash, credit c. Fees Earned, debit; Accounts Receivable, credit d. Fees Earned, debit; Cash, credit

46. Which of the following entries records the collection of cash from cash customers? a. Fees Earned, debit; Cash, credit b. Fees Earned, debit; Accounts Receivable, credit c. Cash, debit; Fees Earned, credit d. Accounts Receivable, debit; Fees Earned, credit

47. Which of the following entries records the receipt of cash for two months' rent? The cash was received in advance of providing the service. a. Prepaid Rent, debit; Rent Revenue, credit. b. Cash, debit; Unearned Rent, credit. c. Cash, debit; Prepaid Rent, credit. d. Cash, debit; Rent Expense credit.

48. A patient has a physical examination and asks the bookkeeper to mail the bill. The bookkeeper should

a. make no entry until the cash is received b. Cash, debit; Accounts Receivable, credit c. Cash, debit; Fees Earned, credit d. Accounts Receivable, debit; Fees Earned, credit

49. When amounts of a transactions are entered in an account on the right hand side, they are said to be a. credited b. debited c. added d. subtracted

50. The balance of the account is determined by a. adding all of the debits to all of the credits. b. always subtracting the debits from the credits. c. always subtracting all of the credits from the debit. d. adding all of the debits, adding all of the credits, and then subtracting the smaller sum

from the larger sum.

51. A list of the accounts is called a. ledger b. chart of accounts c. T-Account d. Debit

52. In which order are the accounts listed in the chart of accounts? a. assets, expenses, liabilities, owners’ equity, revenues b. owners’ equity, assets, liabilities, revenues, expenses c. assets, liabilities, owner’ equity, revenues, expenses d. assets, liabilities, revenues, expenses, owners’ equity

53. Which are the parts of the T account? a. title, date, total b. date, debit side, credit side c. title, debit side, credit side d. title, debit side, total

54. Which of the following is not a correct rule of debits and credits? a. assets, expenses and withdrawals are increased by debits b. assets are decreased by credits and have a normal debit balance c. liabilities, revenues and owner’s equity are increased by credits d. the normal balance for revenues and expenses is a credit

55. XYZ Hospital purchased X-ray equipment for $3,000, paid $750 down, with the remainder to be paid later. The correct entry would be a. Equipment 750

Cash 750 b. Cash 750

Accounts Payable 2,250 Equipment 3,000

c. Equipment Expense 3,000 Accounts Payable 750 Cash 2,250

d. Equipment 3,000

Accounts Payable 2,250 Cash 750

e. Cash 750 Equipment 750

56. Of the following which is true about assets a. Assets include physical and intangible assets. b. Assets include only physical assets. c. Assets are owned solely by the owner of the company d. Assets are the result of selling products or services to customers.

57. The owner’s equity will be reduced by all of the following accounts except: a. Revenues b. Expenses c. Drawing account d. All are true.

58. Expenses can best be defined as a. assets with no future value to the company. b. services that have been consumed in the process of generating revenues. c. costs that have been incurred during the course of business. d. all are true.

59. The chart of accounts classify the accounts to make identification of the accounts easier. This is done by way of assigning a number to each account. The first number identifies the classification of the type of account. Which of the following indicates the use of this classification? a. 1-Assets, 2-Liabilities, 3-Owner’s Equity, 4-Expenses, 5-Revenues b. 1-Assets, 2-Liabilities, 3-Owner’s Equity, 4-Revenues, 5-Expenses c. 1-Assets, 2-Owner’s Equity, 3-Revenues, 4-Expenses, 5-Drawing d. 1-Owner’s Equity, 2-Drawing, 3-Revenues, 4-Expenses

60.

July 14 Accounts Payable 1,000

Cash 1,000

Paid creditors on account

What effect does this journal have on the accounts? a. Decrease accounts payable, increase cash b. Increase cash, decrease accounts payable c. Increase accounts payable, increase cash d. Decrease accounts payable, decrease cash

61. Which of the following accounts would be increased with a credit? a. Land, Accounts Payable, Drawing b. Accounts Payable, Unearned revenue, BK Capital c. BK Capital, Accounts Receivable, Unearned Revenue d. Cash, Accounts Receivable, BK Capital

62. All except one of the following accounts will be increased with a debit: a. Unearned Revenues b. Land c. Accounts Receivable d. Cash

63. Expenses follow the same debit and credit rules as a. Revenues b. Drawing Account c. Capital Account d. Liabilities

64. Net income will result when a. revenues (credits) > expenses (debits) b. revenues (debits) > expenses (credits) c. expenses (credits) < revenues (debits) d. revenues (credits) = expenses (debits)

65. Which of the following situations increase owner’s equity? a. Supplies are purchased on account. b. Services are provided on account. c. Cash is received from customers. d. Utility bill will be paid next month.

66. Which of the following is true regarding normal balances of accounts? a. All accounts have a normal debit balance. b. The normal balance of all accounts will have either a positive or negative balance. c. Accounts that have a normal debit balance will only have debit entries, never credit

entries. d. The normal balance is the side of the account that increases the account .

67.

June 26 Cash 450

Unearned Fees 450

????????????

a. Received cash for services performed b. Received cash for services to be performed in the future. c. Paid cash in advance for services to be done. d. Paid cash for services to be performed.

68.

June 26 Equipment 14,000

Cash 4,000 Note Payable 10,000

????????????

Which is the best explanation for this journal entry? a. Purchased equipment, paid cash of $4,000, with the remainder to be paid in payments b. Purchased equipment, paid cash of $4,000, with the remainder to be received in the

future. c. Purchased equipment, paid cash for the entire amount d. Purchased equipment on credit.

69. The process of rewriting the information from the journal into the ledger is called a. sliding b. transposing c. journalizing

d. posting

70. The accounts in the ledger of Mickeys Park Co. are listed in alphabetical order. All accounts have normal balances. Accounts Payable 500 Fees Earned 2,000 Accounts Receivable 800 Insurance Expense 300 Investment 1,000 Land 2,000 Cash 1,600 Wages Expense 400 Withdrawals 200 Owner’s Equity 1,800 The total of all the assets is: a. 4,400 b. 5,300 c. 5,200 d. 4,700 e. 5,700

71. The accounts in the ledger of Mickeys Park Co. are listed in alphabetical order. All accounts have normal balances. Accounts Payable 500 Fees Earned 2,000 Accounts Receivable 800 Insurance Expense 300 Investment 1,000 Land 2,000 Cash 1,600 Wages Expense 400 Withdrawals 200 Owner’s Equity 1,800 Prepare a trial balance. The total of the debits is a. $5,300 b. $10,600 c. $4,100 d. $10,400 e. $4,700

72. An overpayment error was discovered in computing and paying the wages of a Bartson Repair Shop employee. When Bartson receives cash from the employee for the amount of the overpayment, which of the following entries will Bartson make? a. Cash, debit; Wages Expense, credit b. Wages Payable, debit; Wages Expense, credit c. Wages Expense, debit, Cash, credit d. Cash, debit; Wages Payable, credit

73. Which of the following errors, each considered individually, would cause the trial balance totals to be unequal? a. a transaction was not posted b. a payment of $96 for insurance was posted as a debit of $46 to Prepaid Insurance and a

credit of $46 to Cash c. a payment of $311 to a creditor was posted as a debit of $3,111 to Accounts Payable and

a debit of $311 to Accounts Receivable d. cash received from customers on account was posted as a debit of $140 to Cash and a

credit of $140 to Accounts Payable

74. Supplies purchased on account were incorrectly recorded as Office Equipment. The correcting entry would be a. Supplies, debit; Office Equipment, credit. b. Accounts Receivable, debit; Supplies, credit.

c. Office Equipment, debit; Supplies Expense, credit. d. Supplies, debit; Accounts Payable, credit.

75. The trial balance is out of balance and the accountant suspects that a transposition or slide error has occurred. What will the accountant do to find the error? a. Determine the amount of the error and look for that amount on the trial balance. b. Determine the amount of the error and divide by two, then look for that amount on the

trial balance. c. Determine the amount of the error and refer to the journal entries for that amount d. Determine the amount of the error and divide by nine. If the result is evenly divided, then

this type of error is likely.

76. The matching concept a. addresses the relationship between the journal and the balance sheet b. determines whether the normal balance of an account is a debit or credit c. requires that the dollar amount of debits equal the dollar amount of credits on a trial

balance d. determines that expenses related to revenue be reported at the same time the revenue

is reported

77. Using accrual accounting, revenue is recorded and reported only a. when cash is received without regard to when the services are rendered b. when the services are rendered without regard to when cash is received c. when cash is received at the time services are rendered d. if cash is received after the services are rendered

78. Using accrual accounting, expenses are recorded and reported only a. when they are incurred, whether or not cash is paid b. when they are incurred and paid at the same time c. if they are paid before they are incurred d. if they are paid after they are incurred

79. One of the accounting concepts upon which deferrals and accruals are based is a. matching b. cost c. price-level adjustment d. conservatism

80. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry? a. increases the balance of a contra asset account b. increases the balance of an asset account c. decreases the balance of an owner's equity account d. increases the balance of an expense account

81. The primary difference between deferred and accrued expenses is that deferred expenses have a. been incurred and accrued expenses have not b. not been incurred and accrued expenses have been incurred c. been recorded and accrued expenses have not been incurred d. not been recorded and accrued expenses have been incurred

82. Prior to the adjusting process, accrued expenses have a. not yet been incurred, paid, or recorded b. been incurred, not paid, but have been recorded

c. been incurred, not paid, and not recorded d. been paid but have not yet been incurred

83. Prior to the adjusting process, accrued revenue has a. been earned and cash received b. been earned and not recorded as revenue c. not been earned but recorded as revenue d. not been recorded as revenue but cash has been received

84. Adjusting entries are a. the same as correcting entries b. needed to bring accounts up to date and match revenue and expense c. optional under generally accepted accounting principles d. rarely needed in large companies

85. Adjusting entries affect at least one a. income statement account and one balance sheet account b. revenue and the drawing account c. asset and one owner's equity account d. revenue and one capital account

86. The general term employed to indicate an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is a. capital b. deferral c. accrual d. inventory

87. Generally accepted accounting principles requires that companies use the ____ of accounting. a. cash basis b. deferral basis c. accrual basis d. account basis

88. Which of the following supports the accrual basis of accounting? a. revenue recognition concept b. cash concept c. matching concept d. revenue recognition and matching concepts

89. Prepaid expenses are eventually expected to a. become expenses when their future economic value expires. b. become revenues when services are performed. c. become expenses in the period when they are paid. d. become revenues when the liability is no longer owed.

90. Which of the following is considered to be unearned revenue? a. Concert tickets sold for tonight’s performance. b. Concert tickets sold yesterday on credit. c. Concert tickets that were not sold for the current performance. d. Concert tickets sold for next month’s performance.

91. Which of the following is an example of accrued revenue? a. Swimming pool cleaning that has been for three months in advance. b. Swimming pool cleaning that has been provided but has not been bil led or paid.

c. An agreement has been signed for swimming pool cleaning for the next three months. d. Swimming pool cleaning that has been provided and paid on the same day.

92. Which account would normally not require an adjusting entry? a. Wages Expense b. Accounts Receivable c. Accumulated Depreciation d. Smith, Capital

93. The balance in the prepaid rent account before adjustment at the end of the year is $15,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is a. debit Rent Expense, $5,000; credit Prepaid Rent, $5,000 b. debit Prepaid Rent, $10,000; credit Rent Expense, $5,000 c. debit Rent Expense, $10,000; credit Prepaid Rent, $5,000 d. debit Prepaid Rent, $5,000; credit Rent Expense, $5,000

94. The balance in the office supplies account on June 1 was $5,200, supplies purchased during June were $2,500, and the supplies on hand at June 30 were $2,000. The amount to be used for the appropriate adjusting entry is a. $4,500 b. $2,500 c. $9,700 d. $5,700

95. What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $15,500, and unexpired amounts per analysis of policies, $4,500? a. debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500 b. debit Insurance Expense, $15,500; credit Prepaid Insurance, $15,500 c. debit Prepaid Insurance, $11,500; credit Insurance Expense, $11,500 d. debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000

96. A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is a. debit Salaries Payable, $16,000; credit Cash, $16,000 b. debit Salary Expense, $16,000; credit Drawing, $16,000 c. debit Salary Expense, $16,000; credit Salaries Payable, $16,000 d. debit Drawing, $16,000; credit Cash, $16,000

97. The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed a. historical cost b. contra asset c. book value d. market value

98. As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called a. equipment allocation b. depreciation c. accumulation d. matching

99. If the prepaid rent account before adjustment at the end of the month has a debit balance of $1,600, representing a payment made on the first day of the month, and if the monthly rent was $800, the amount of prepaid rent that would appear on the balance sheet at the end of the month, after adjustment, is

a. $800 b. $400 c. $2,400 d. $1,600

100. Depreciation Expense and Accumulated Depreciation are classified, respectively, as a. expense, contra asset b. asset, contra liability c. revenue, asset d. contra asset, expense

101. Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies a. that are in the ending balance b. purchased c. used d. either used or remaining

102. If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n) a. deferral b. accrual c. drawing d. revenue

103. Which of the following is an example of a prepaid expense? a. Supplies b. Accounts Receivable c. Unearned Subscriptions d. Unearned Fees

104. The unexpired insurance at the end of the fiscal period represents a. an accrued asset b. an accrued liability c. an accrued expense d. a deferred expense

105. Accrued revenues would appear on the balance sheet as a. assets b. liabilities c. capital d. prepaid expenses

106. Accrued expenses are ordinarily reported on the balance sheet as a. assets b. liabilities c. fixed assets d. prepaid expenses

107. The adjusting entry for rent earned that is currently recorded in the unearned rent account is a. Unearned Rent, debit; Rent Revenue, credit b. Rent Revenue, debit; Unearned Rent, credit c. Unearned Rent, debit; Prepaid Rent, credit d. Rent Expense, debit; Unearned Rent, credit

108. Which of the following pairs of accounts could not appear in the same adjusting entry?

a. Service Revenue and Unearned Revenue b. Interest Income and Interest Expense c. Rent Expense and Prepaid Rent d. Salaries Payable and Salaries Expense

109. The following adjusting journal entry was found on page 4 of the journal. Select the best explanation for the entry.

Supplies Expense 360

Supplies 360 ????????????????

a. Adjust supplies inventory to actual b. Record purchase of supplies c. Adjust supplies expense d. Record sale of supplies

110. The following adjusting journal entry was found on page 4 of the journal. Select the best explanation for the entry.

Wages Expense 2,555

Wages Payable 2,555

????????????????

a. Record the payment of wages b. Record wages to be paid this month c. Record wages paid in advance d. Record wages expense incurred and to be paid next month

111. What affect will the following adjusting journal entry have on the accounting records?

Depreciation Expense 1,500

Accumulated Depreciation 1,500

a. Increase net income b. Increase revenues c. Decrease expenses d. Decrease net book value

112. How will the following adjusting journal entry affect the accounting equation?.

Unearned Subscriptions 12,000

Subscriptions earned 12,000

a. Increase assets, increase revenues b. Increase liabilities, increase revenues c. Decrease liabilities, increase revenues d. Decrease liabilities, decrease revenues

113. The net book value of a fixed asset is determined by a. Original cost less accumulated depreciation

b. Original cost less depreciation expense c. Original cost less accumulated depreciation plus depreciation expense d. Original cost plus accumulated depreciation

114. The net income reported on the income statement is $90,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,700 and accrued salaries of $1,300. Net income, as corrected, is a. $87,300 b. $90,000 c. $88,700 d. $86,000

115. At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true? a. Total assets will be understated at the end of the current year. b. The balance sheet and income statement will be misstated but the statement of owner's

equity will be correct for the current year. c. Net income will be overstated for the current year. d. Total liabilities and total assets will be understated.

116. At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true? a. Salary Expense for the year was understated. b. The total of the liabilities at the end of the year was overstated. c. Net income for the year was understated. d. Owner's equity at the end of the year was understated.

117. Which of the accounts below would appear on an adjusted trial balance but probably would not appear on the trial balance? a. Fees Earned b. Accounts Receivable c. Unearned Fees d. Depreciation Expense

118. During the end-of-period processing which of the following best describes the logical order of this process a. Preparation of adjustments, adjusted trial balance, financial statements b. Preparation of Income Statement, adjusted trial balance, Balance Sheet c. Preparation of adjusted trial balance, cross-referencing, journalizing d. Preparation of adjustments, adjusted trial balance, posting

119. Notes Receivable due in 345 days appear on the a. balance sheet in the current assets section b. balance sheet in the fixed assets section c. balance sheet in the current liabilities section d. income statement as an expense

120. Unearned Fees appear on the a. balance sheet in the current assets section b. balance sheet as a current liability c. balance sheet in the owner's equity section d. income statement as revenue

121. Which one of the fixed asset accounts listed below will not have a related contra asset account? a. Office Equipment

b. Land c. Delivery Equipment d. Building

122. Round-tripping is when a. a selling company sells to a customer company with huge discounts. b. a selling company pretends to sell to a fictitious company with the intend of inflating

revenues c. a selling company lends money to a customer company to increase assets. d. a selling company lends money to a customer company to be used to purchase goods

from the selling company.

123. The income statement should be prepared a. before the statement of owner’s equity and balance sheet b. after the statement of owner’s equity and before the balance sheet c. after the statement of owner’s equity and balance sheet d. after the balance sheet and before the statement of owner’s equity

124. The Statement of Owner’s Equity begins with the beginning balance followed by a. plus Net Income (loss) less withdrawals b. plus Net Income (loss) plus investments c. plus investments less withdrawals d. plus investments plus Net Income (loss) less withdrawals

125. The Income Statement will include the following accounts a. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous

Expense listed last b. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous

Expense listed last c. Revenues less Expenses (ordered in alphabetical order) d. Revenues less Expenses (order is not important)

126. Balance sheet accounts a. represent amounts accumulated during a specific period of time b. are called real accounts c. have zero balances after the closing entries have been posted d. are equal to assets and liabilities

127. Which is the following that is not true about closing entries? a. There are four closing entries that update the owner’s equity account. b. After the second closing entry, the income summary account is equal to the net income

or (loss) for the period. c. All real accounts are closed at the end of the period. d. By closing nominal accounts at the end of the period to zero, it is possible to isolate next

period’s information correctly.

128. After posting the second closing entry to the income summary account, the balance will be equal to a. zero. b. owner’s equity. c. revenues for the period d. the net income or (loss) for the period.

129. Which of the following account groups are all considered nominal accounts? a. Cash, Fees Earned, Unearned Revenues

b. Prepaid Expenses, Unearned Revenues, Fees Earned c. Capital Account, Drawing Account, Income Summary d. Drawing Account, Fees Earned, Rent Expense

130. Which of the following accounts will be closed to the Capital account at the end of the fiscal year? a. Rent Expense b. Fees Earned c. Income Summary d. Depreciation Expense

131. Which of the following accounts ordinarily appears in the post-closing trial balance? a. Bill Smith, Drawing b. Supplies Expense c. Fees Earned d. Unearned Rent

132. The post-closing trial balance differs from the adjusted trial balance in that it a. does not take into account closing entries b. does not take into account adjusting entries c. does not include balance sheet accounts d. does not include income statement accounts

133. A summary of selected ledger accounts appear below for Ted's Auto Services for the 2007 calendar year end.

Ted, Capital

12/31 7,000 1/1 5,000 12/31 17,000

Ted, Drawing

6/30 2,000 12/31 7,000 11/30 5,000

Income Summary 12/31 15,000 12/31 32,000 12/31 17,000 Net income for the period is a. $17,000 b. $22,000 c. $7,000 d. $15,000

134. The accounting cycle requires three trial balances be done. In what order should they be prepared? a. Post-closing, unadjusted, adjusted b. Unadjusted, post-closing, adjusted c. Unadjusted, adjusted, post-closing d. Post-closing, adjusted, unadjusted

135. The natural business year a. is a fiscal year that ends when business activities are at its lowest point. b. is a calendar year that ends when business activities are at its lowest point. c. is a fiscal year that ends when business activities are at its highest point.

d. is a calendar year that ends when business activities are at its highest point.

136. When a work sheet is complete, the adjustment columns should have a. total credits greater than total debits if a net income was earned b. total debits grater than total credits if a net loss was incurred c. total debits greater than total credits if a net income was earned d. total debits equal total credits

137. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet a. is the amount of net income or loss b. indicates there is an error on the work sheet c. is not unusual when preparing the work sheet d. is the net difference between revenue, expenses, and drawing

138. Which of the statements below indicates that a company earned a net income for the period? a. The sum of the debits exceeds the sum of the credits in the Balance Sheet columns on

the work sheet. b. The sum of the credits exceeds the sum of the debits in the Income Statement columns

on the work sheet. c. The sum of the debits exceeds the sum of the credits in the Income Statement columns

on the work sheet. d. Cash inflows exceeded cash outflows.

139. The work sheet at the end of September has $4,000 in the Balance Sheet credit column for Accumulated Depreciation. The work sheet at the end of October has $4,750 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of October? a. amount can not be determined b. $4,750 c. $4,000 d. $750

140. On October 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the work sheet would a. increase an expense account b. decrease a liability account c. increase an asset account d. decrease an expense account

REVIEWER ACCTG 1 ANSWER SECTION

MULTIPLE CHOICE

1. D

2. A

3. B

4. D

5. D

6. C

7. C

8. D

9. C

10. D

11. B

12. A

13. A

14. B

15. D

16. B

17. C

18. A

19. C

20. A

21. D

22. A

23. A

24. B

25. A

26. C

27. C

28. B

29. C

30. A

31. C

32. A

33. C

34. D

35. D

36. D

37. B

38. B

39. B

40. C

41. B

42. C

43. B

44. D

45. A

46. C

47. B

48. D

49. A

50. D

51. B

52. C

53. C

54. D

55. D

56. A

57. A

58. A

59. B

60. D

61. B

62. A

63. B

64. A

65. B

66. D

67. B

68. A

69. D

70. A

71. A

72. A

73. C

74. A

75. D

76. D

77. B

78. A

79. A

80. D

81. B

82. C

83. B

84. B

85. A

86. C

87. C

88. D

89. A

90. D

91. B

92. D

93. A

94. D

95. D

96. C

97. C

98. B

99. A

100. A

101. C

102. A

103. A

104. D

105. A

106. B

107. A

108. B

109. A

110. D

111. D

112. C

113. A

114. D

115. C

116. A

117. D

118. A

119. A

120. B

121. B

122. D

123. A

124. D

125. A

126. B

127. C

128. D

129. D

130. C

131. D

132. D

133. A

134. C

135. A

136. D

137. B

138. B

139. D

140. A