WEEK 3 |

Vocabulary List 3—

Audit

Bank collection

Bank reconciliation

Bank statement

Budget

Check

Controller

Conservatism

Consistency principle

Cost of goods sold

Cost of sales

Creditor

Debtor

Deposit in transit

Disclosure principle

Electric funds transfer (EFT)

FIFO method

Gross margin

Gross profit

Interest

Internal control

Inventory profit

LIFO method

Maturity

Outstanding check

Petty cash

Periodic inventory system

Perpetual inventory system

Principal

Receivable

Term

Trading investments

Quiz 3—

Multiple-Choice

1. Lynn Lipincott invested land valued at $5,000 in her business. This transaction would be recorded by:

a. Cash 5,000 Capital Stock 5,000

b. Land 5,000 Capital Stock 5,000

c. Land 5,000 Service Revenue 5,000

d. Capital Stock 5,000 Land 5,000

2. The trial balance:

a. Is a formal financial statement.b. Is used to prove that there are no errors in the journal or ledger.c. Provides a listing of every account in the chart of accounts. d. Provides a listing of the balance of each account in active use.

3. Which of the following errors will be disclosed in the preparation of a trial balance?

a. Recording transactions in the wrong account.b. Duplication of a transaction in the accounting records.c. Posting only the debit portion of a particular journal entry. d. Recording the wrong amount for a transaction to both the account debited and the account credited.

4. The basic sequence in the accounting process can best be described as:

a. Transaction, journal entry, source document, ledger account, trial balance.b. Source document, transaction, ledger account, journal entry, trial balance.c. Transaction, source document, journal entry, trial balance, ledger account. d. Transaction, source document, journal entry, ledger account, trial balance.

5. For purposes of measuring business income, the life of a business is:

a. divided into specific points in time.b. divided into irregular cycles.c. divided into discrete accounting periods.

d. considered to be a continuous cycle.

6. Adjusting entries at the end of an accounting period would not be required for which of the following

a. Multiperiod costs that must be split among two or more accounting periods.b. Multiperiod revenues that must be split among two or more accounting periods.c. Expenses that have been incurred in a given period but not as yet recorded in the accounts. d. Revenue that has been earned and recorded in the accounting records.

7. Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Which of the following journal entries would Blankenship ordinarily record on the Friday payday?

a. Salary Expense 10,000 Salary Payable 10,000

b. Salary Expense 10,000 Cash 10,000

c. Salary Payable 10,000 Cash 10,000

d. Salary Payable 10,000 Salary Expense 10,000

8. Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would be recorded (on Wednesday) if the end of the accounting period occurred on a Wednesday?

a. Salary Expense 6,000 Salary Payable 6,000

b. Salary Expense 6,000 Cash 6,000

c. Salary Payable 6,000 Cash 6,000

d. Salary Payable 6,000 Salary Expense 6,000

9. Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Blankenship's year-end occurred on Wednesday, at which time a correct adjusting entry was recorded. On the following Friday, which of the following payroll journal entries should be recorded?

a. Salary Expense 10,000 Cash 10,000

b. Salary Expense 4,000 Salary Payable 6,000 Cash 10,000

c. Salary Expense 6,000 Salary Payable 4,000 Cash 10,000

d. Salary Payable 10,000 Cash 10,000

10. The appropriate journal entry to record equipment depreciation expense would consist of a debit to Depreciation Expense and a credit to which of the following accounts?

a. Equipmentb. Accumulated Depreciation: Equipmentc. Retained Earningsd. Cash

*Quiz 3 Answers—

Multiple-Choice

1. b

2. d

3. c

4. d

5. c

6. d

7. b

8. a

9. b

10. b