Question 1. Which of the following does not affect retained earnings?
a. Investments by stockholders
b. Declaration and payment of dividends
c. Earnings of revenues
d. Incurring of expenses
Question 2. A company recorded office supplies in an asset account when the supplies were purchased. Failure to take inventory and make an adjusting entry will result in an
a. Understatement of assets
b. Understatement of stockholders' equity
c. Overstatement of stockholders' equity
d. Understatement of liabilities
Question 3. Which of the following transactions will not result in an increase in revenues?
a. Sale of goods on credit
b. Accumulation of interest in bank account
c. Sale of services for cash
d. Sale of stock to investors for cash
Question 4. The payment of a liability
a. Decreases assets and stockholders' equity
b. Increases assets and decreases liabilities
c. Decreases assets and increases liabilities
d. Decreases assets and liabilities
Question 5. An important purpose of closing entries is to
a. Transfer net income or loss to Retained Earnings
b. Set permanent account balances to zero to begin the next period
c. Update the nominal accounts at year end
d. Help achieve the goals of the matching principle
Question 6. A company that receives money in advance of performing a service
a. Debits Cash and credits Prepaid Fees
b. Debits Unearned Fees and credits Accounts Payable
c. Debits Cash and credits Unearned Fees
d. Debits Cash and credits Accounts Receivable.
Question 7. Which of the following accounts probably would need to be adjusted at year end?
a. Supplies
b. Land
c. Dividends
d. Notes payable
Question 8. Which of the following situations involves a deferral?
a. Recording unrecorded wages
b. Recording depreciation
c. Recording unrecorded revenue
d. Recording accrued interest
Question 9. After all closing entries have been posted, which of the following accounts is most likely to have a nonzero balance?
a. Income summary
b. Service revenue
c. Wages payable
d. Interest expense
Question 10. A merchandiser will earn an operating income of exactly $0 when
a. Net sales equals cost of goods sold
b. Cost of goods sold equals gross margin
c. Operating expenses equal net sales
d. Gross margin equals operating expenses
Question 11. Assuming that net cost of purchases was $180,000 during the year and that ending merchandise inventory was $4, 000 less than the beginning merchandise inventory of $50,000, how much was cost of goods sold?
a. $226,000
b. $134,000
c. $184,000
d. $234,000
Question 12. The cost of a long-term asset is expensed
a. When it is paid for
b. As the asset benefits the company
c. In the period in which it is acquired
d. In the period in which it is sold.
Question 13. Which of the following is a tax borne by the employer but not the employee?
a. Social security tax
b. FUTA tax
c. Medicare tax
d. State income tax
Use the following inventory information for the month of June to answer the following question
June 1 Beginning Inventory: 10 units @$30
5 Purchases 60 units @$28
14 Sales 40 units
21 Purchases 30 units @$29
30 Sales 28 units
Question 14. Assuming that a periodic inventory system is used, what is cost of goods sold on a LIFO basis?
a. $916
b. $926
c. $1,924
d. $1,934
Question 15. Failure to record a liability probably will
a. Result in an overstated net income
b. Result in overstated total liabilities and owners' equity
c. Result in reporting a net loss for the period
d. Result in overstated total assets
Question 16. Accounts payable has debit postings of $17,000, credit postings of $14,000, and a normal ending balance of $6,000, what was its beginning balance?
a. $9,000 Cr.
b. $3,000 Cr.
c. $9,000 Dr.
d. $3,000 Dr.
Use the following information to answer the following question
Jasper Realty Corporation had the following balance sheet accounts and balances:
Accounts Payable $6,000 Equipment $7,000
Accounts Receivable 1,000 Common Stock
Building Land 7,000
Cash 3,000 Retained Earnings 2,000
Question 17. If the balance of the Common Stock account were $19,000, what would be the balance of the Building Account?
a. $25,000
b. $4,000
c. $9,000
d. $21,000
Question 18. Equipment might be depreciated over fifteen years because
a. It will be paid for in fifteen years
b. It will help to generate revenue for the company over fifteen years
c. Income tax provisions require depreciation over fifteen years
d. It will lose most of its market value in fifteen years