Question 1: Which account below should be debited to record the purchase of merchandise for resale using cash?
Cash
Accounts Receivable
Inventory
Accounts Payable
Question 2: Which account below should be credited to record the purchase of merchandise for resale on account?
Cash
Accounts Receivable
Inventory
Accounts Payable
Question 3: Debits always decrase accounts and credits always increase accounts.
True
False
Question 4: Paying cash always results in a credit to the cash account.
True
False
Question 5: Which account below should be debited to record receiving a payment on an account receivable?
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Bad Debt Expense (Ret. Earn)
Question 6: Which of the following reflects the effects of paying an outstanding account payable?
Assets and Retained Earnings decrease
Assets and Liabilities decrease
Liabilities decrease and Retained Earnings increases
Assets and Retained Earnings increase
Question 7: Dant Corporation purchased equipment on credit for $180,000. The credit or right-hand entry is to Notes Payable for $180,000. The left-hand or debit entry is to:
Inventory for $180,000
Property, Plant, and Equipment for $180,000
Depreciation Expense (Ret. Earn) for $180,000
Equipment Expense (Ret. Earn) for $180,000
Question 8: Indicate which of the following accounts is increased by a credit:
Cash
Sales Revenue
Common Stock
Accounts Payable
Question 9: Indicate which of the following accounts is increased by a credit:
Accounts Payable
Property, Plant and Equipment
Retained Earnings
Cost of Goods Sold
Question 10: Indicate which of the following accounts is increased by a credit:
Long-Term Debt
Common Stock
Inventory
Income Tax Expense
Question 11: Indicate which of the following accounts is increased by a debit:
Long-Term Debt
Common Stock
Inventory
Income Tax Expense
Question 12: Indicate which of the following accounts is increased by a debit:
Selling, General and Administrative Expense
Dividends Payable
Accumulated Depreciation
Cash
Question 13: Indicate which of the following accounts is increased by a debit:
Accounts Receivable
Accrued Expenses
Short-term Investments
Interest Expense
Question 14: Cromartie Corporation purchases a two-year insurance policy on July 1, 2008. At the time, they recorded the transaction as a debit to Insurance Expense and a credit to Cash for $6,000. What adjusting entry should they make on December 31, 2008?
Debit Insurance Expense (Ret. Earn) and credit Prepaid Insurance for $1,500
Debit Prepaid Insurance and credit Insurance Expense (Ret. Earn) for $4,500
Debit Prepaid Insurance and credit Cash for $4,500
No adjustment is necessary
Question 15: Total Debits do not always have to equal total credits. There are a handful of exceptions.
True
False
Question 16: Pfister Corporation prepaid a full year's rents on their warehouse for the period from September 1, 2017 to August 31, 2018. At that time, they debited prepaid rent and credited cash for $24,000. Determine the correct balance in prepaid rent on December 31, 2017. Enter your answer with no commas, dollar signs, decimals, etc.
Question 17: Pfister Corporation prepaid a full year's rents on their warehouse for the period from September 1, 2017 to August 31, 2018. At that time, they debited prepaid rent and credited cash for $24,000. Determine the correct of rent expense to be included in income for the year ending on December 31, 2017. Enter your answer with no commas, dollar signs, decimals, etc.
Question 18: Huffaker Corporation paid for a new plant by signing a 10-year note payable. This transaction has what effect on working capital?
Working capital increases
Working capital decreases
Working capital does not change
The effect cannot be determined
Question 19: Harris Corporation collects an outstanding account. This transaction has what effect on working capital?
Working capital increases
Working capital decreases
Working capital does not change
The effect cannot be determined
Question 20: Huffaker Corporation paid for a new plant with cash. This transaction has what effect on working capital?
Working capital increases
Working capital decreases
Working capital does not change
The effect cannot be determined
Question 21: Poseidon Corporation issues 100 shares of $1 par value common stock for $10 per share. This transaction will include a (an)
debit to cash for $900.
credit to equity accounts for $1,000.
debit to equity accounts for $1,000.
credit to investment in securities for $1,000.
Question 22: Warner Corporation sold $80,000 of merchandise on credit. The merchandise originally cost $55,000. Warner uses the perpetual method of inventory and records the cost of all sales at the time of the sale. Select ALL debits and credits that would be made to reflect this transaction.
Debit Revenue (Ret. Earn) for $80,000
Debit Accounts Receivable $80,000
Debit Cost of Goods Sold (Ret. Earn) for $80,000
Debit Cost of Goods (Ret. Earn) sold for $55,000
Credit Revenue (Ret. Earn) for $80,000
Credit Inventory for $55,000
Credit Proft (Ret. Earn) for $25,000
Question 23: James Corporation sold $80,000 of merchandise for cash. The merchandise originally cost $55,000. Warner uses the perpetual method of inventory and records the cost of all sales at the time of the sale. Select ALL debits and credits that would be made to reflect this transaction.
Debit Revenue (Ret. Earn) for $80,000
Debit Cash $80,000
Debit Cost of Goods Sold (Ret. Earn) for $80,000
Debit Cost of Goods Sold (Ret. Earn) for $55,000
Credit Revenue (Ret. Earn) for $80,000
Credit Inventory for $55,000
Credit Proft (Ret. Earn) for $25,000
Question 24: Alphamax Corporation purchases office supplies for company use on credit. The total of the purchase was $150. Which of the following journal entries could be used to record the transaction?
Dr: Inventory $150
Cr: Accounts Payable $150
Dr: Accounts Payable $150
Cr: Office Supplies $150
Dr: Office Supplies $150
Cr: Accounts Payable $150
Dr: Office Supplies $150
Cr: Cash $150
Question 25: Does the journal entry to record payment of wages to employees include a debit or a credit to wage expense?
Debit
Credit
Cannot be determined
Question 26: Does the journal entry to record payment of wages to employees include a debit or a credit to cash?
Debit
Credit
Cannot be determined
Question 27: Does the journal entry to record the purchase of equipment for cash include a debit or a credit to the Property Plant and Equipment account?
Debit
Credit
Cannot be determined
Question 28: Winston Corporation receives a $200 payment from a customer for a prior sale on account. The sale was originally recorded as an increase to both Accounts Receivable and Sales Revenue.
The bookkeeper enters the receipt of payment as follows:
Dr: Cash $200
Cr: Sales Revenue $200
True or false: The bookkeeper entered the receipt of payment correctly.
True
False
Question 29: Winston Corporation receives a $200 payment from a customer for a prior sale on account.
True or False: Receipt of payment increases total assets by the amount of cash received.
True
False
Question 30: On January 1, 2017, Winston Corporation purchased an industrial drill press for $80,000 cash. The expected life of the drill press is 4 years. Depreciation is calculated using the straight-line method.
Which of the following journal entires could be used to record depreciation for 2020?
Dr: Depreciation Expense $20,000
Cr: Accumulated Depreciation $20,000
Dr: Accumulated Depreciation $20,000
Cr: Property, Plant and Equipment $20,000
Dr: Accumulated Depreciation $20,000
Cr: Depreciation Expense $20,000
Dr: Depreciation Expense $20,000
Cr: Property, Plant and Equipment $20,000
Question 31: On July 1, 2017, Winston Corporation purchased a lathe for $210,000 cash. The expected life of the lathe is 7 years. Depreciation is calculated using the straight-line method.
Which of the following journal entires could be used to record depreciation for 2017?
(Hint: don't forget it was only owned for half of the year)
Dr: Depreciation Expense $30,000
Cr: Accumulated Depreciation $30,000
Dr: Depreciation Expense $15,000
Cr: Accumulated Depreciation $15,000
Dr: Accumulated Depreciation $15,000
Cr: Depreciation Expense $15,000
Dr: Depreciation Expense $70,000
Cr: Property, Plant and Equipment $70,000
Question 32: Franks Corporation receives the bill for December 2017 electricity usage on January 8, 2018.
True or False: The expense should be recorded in 2018.
True
False
Question 33: Which of the following is a source of cash?
Depreciation
Sale of inventory
Payment of debt
Payment of dividends
Question 34: A building was originally purchased in 1960 for $150,000. The accumulated depreciation on the building is 145,000. In 2017, an appraiser estimated the value of the building to be $6.8 million dollars.
Which of the following is the book value of the building?
$150,000 purchase price
$6.8 million value from appraiser
$5,000 net of purchase price and depreciation
Cannot be determined without a more recent appraisal
Question 35: A building was originally purchased in 1952 for $150,000. The accumulated depreciation on the building is 143,000. In 2010, an appraiser estimated the value of the firm to be $6.8 million dollars.
Which of the following is the Historical Cost of the building?
$150,000 purchase price
$6.8 million value from appraiser
$7,000 net of purchase price and depreciation
Cannot be determined without a more recent appraisal