Assignment
1. Internal users include lenders, shareholders, brokers and managers.
True
False
2. The adjusted trial balance contains information pertaining to:
a. Asset accounts only.
b. Balance sheet accounts only.
c. Income statement accounts only.
d. All general ledger accounts.
e. Revenue accounts only.
3. For good internal control over cash, all payments should be made from the petty cash, except for very large payments.
True
False
4. An error is indicated if the following account has a balance appearing on the post-closing trial balance:
a. Office Equipment.
b. Accumulated Depreciation-Office Equipment.
c. Depreciation Expense-Office Equipment.
d. Ted Nash, Capital.
e. Salaries Payable.
5. An income statement reports the revenues earned less expenses incurred by a business over a period of time.
True
False
6. Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:
a. Intangible expenses.
b. Prepaid expenses.
c. Unearned expenses.
d. Net expenses.
e. Accrued expenses.
7. Mattel had net sales of $4,235 million and ending accounts receivable of $775 million. Its days' sales uncollected equals:
a. 298 days.
b. 66.8 days.
c. 19.4 days.
d. 81.8 days.
e. 65.2 days.
8. The number of days' sales uncollected is calculated by:
a. Dividing accounts receivable by net sales.
b. Dividing accounts receivable by net sales and multiplying by 365.
c. Dividing net sales by accounts receivable.
d. Dividing net sales by accounts receivable and multiplying by 365.
e. Multiplying net sales by accounts receivable and dividing by 365.
9. A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Tricia DeBarre, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.
Tricia De Bane, Capital $ 7,000
Tricia De Bare, Withdrawals 9,600
Revenue 29.000
Rent expense 3.600
Salaries expense 7,200
Insurance expense 920
Depr. Expense-equipment 500
Accum deer.-equipment 1,500
a. $16,780 debit.
b. $ 7,180 credit.
c. $16,780 credit.
d. $18,280 credit.
e. $23,780 credit.
10. The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:
a. Statement of financial position.
b. Statement of cash flows.
c. Balance sheet.
d. Income statement.
e. Statement of owner's equity.
11. A contra account is an account linked with another account; it is added to that account to show the proper amount for the item recorded in the associated account.
True
False
12. If a check correctly written and paid by the bank for $794 is incorrectly recorded in the company's books for $749, how should this error be treated on the bank reconciliation?
a. Subtract $45 from the bank's balance.
b. Add $45 to the bank's balance.
c. Subtract $45 from the book balance.
d. Add $45 to the book balance.
e. Subtract $45 from the bank's balance and add $45 to the book's balance.
13. The record in which transactions are first recorded is the:
a. Account balance.
b. Ledger.
c. Journal.
d. Trial balance.
e. Cash account.
14. A company acquires equipment for $75,000 cash. This represents a(n)
a. Operating activity.
b. Investing activity.
c. Financing activity.
d. Revenue activity.
e. Expense activity.
15. Revenues, expenses, and withdrawals accounts, which are closed at the end of each accounting period are:
a. Real accounts.
b. Temporary accounts.
c. Closing accounts.
d. Permanent accounts.
e. Balance sheet accounts.
16. Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.
True
False
17. In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.
True
False
18. Which of the following statements is true?
a. If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions.
b. The trial balance is a book of original entry.
c. Another name for the trial balance is the chart of accounts.
d. The trial balance is a list of all accounts from the ledger with their balances at a point in time.
e. The trial balance is another name for the balance sheet as long as debits balance with credits.
19. All necessary numbers to prepare the balance sheet can be found in the balance sheet columns of the work sheet including ending owner's capital.
True
False
20. An account balance is:
a. The total of the credit side of the account.
b. The total of the debit side of the account.
c. The difference between the total debits and total credits for an account including the beginning balance.
d. Assets = liabilities + equity.
e. Always a credit.
21. A company's post-closing trial balance has a debit total of $40,350 and a credit total of $40,650. Accordingly, the company should review for errors in the closing process.
True
False
22. An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded and posted.
True
False
23. The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion is the:
a. Business entity principle.
b. Monetary unit principle.
c. Going-concern principle.
d. Cost principle.
e. Objectivity principle.
24. Bookkeeping is the same as accounting.
True
False
25. A company records purchases using the net method. On February 1, they purchased merchandise inventory on account for $8,300 with terms of 1/10, n/30. The February 1 journal entry to record this transaction would include a:
a. Debit to Merchandise Inventory of $8,300.
b. Debit to Merchandise Inventory of $8,217.
c. Debit to Merchandise Inventory of $83.
d. Credit to Merchandise Inventory of $83.
e. Credit to Accounts Payable of $8,300.
26. Profit margin is defined as:
a. Revenues divided by net sales.
b. Net sales divided by assets.
c. Net income divided by net sales.
d. Net income divided by assets.
e. Net sales divided by net income.
27. A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:
a. Recorded as a debit to an unearned revenue account.
b. Recorded as a debit to a prepaid expense account.
c. Recorded as a credit to an unearned revenue account.
d. Recorded as a credit to a prepaid expense account.
e. Not recorded in the accounting records until the earnings process is complete.
28. The business entity principle means that a business is accounted for separately from other business entities, including its owner or owners.
True
False
29. Expenses decrease equity and are the costs of assets or services used to earn revenues.
True
False
30. Accounting records are also referred to as the books.
True
False
31. The following items appeared on a company's December 31 work sheet for the current period. Based on the following information, what is net income for the current period?
|
|
Unadjusted
Trial Balance
|
Adjustments
|
|
|
Debit
|
Credit
|
Debit
|
Credit
|
|
Cash
|
975
|
|
|
|
|
Prepaid insurance
|
3,600
|
|
|
150
|
|
Supplies
|
180
|
|
|
70
|
|
Equipment
|
10,320
|
|
|
|
|
Accounts payable
|
|
1,140
|
|
|
|
Unearned fees
|
|
4,500
|
375
|
|
|
Owner, Capital
|
|
9,180
|
|
|
|
Owner, Withdrawals
|
1,650
|
|
|
|
|
Fees earned
|
|
5,850
|
|
375
|
|
|
|
|
|
300
|
|
Rent expense
|
1,500
|
|
|
|
|
Salaries expense
|
2,100
|
|
315
|
|
|
Utilities expense
|
|
|
|
|
|
Insurance expense
|
|
|
150
|
|
|
Supplies expense
|
|
|
70
|
|
|
Depreciation expense-equipment
|
|
|
190
|
|
|
Accumulated depreciation-equipment
|
|
|
|
190
|
|
Salaries payable
|
|
|
|
315
|
|
Accounts receivable
|
|
|
300
|
|
|
Totals
|
20,670
|
20,670
|
1,400
|
141
|
a. $1,400.
b. $1,855.
c. $1,905.
d. $2,060.
e. $4,670.
32. A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:
a. Understate net income by $28,000.
b. Overstate net income by $28,000.
c. Have no effect on net income.
d. Overstate assets by $28,000.
e. Understate assets by $28,000.
33. The three major types of business activities are operating, financing, and investing.
True
False
34. The steps to reconcile the balance of the bank statement to the adjusted balance include adding outstanding checks, deposits, and bank service charges.
True
False
35. Adjusting entries result in a better matching of revenues and expenses for the period.
True
False
36. Adjusting entries result in a better matching of revenues and expenses for the period.
True
False
37. When expenses exceed revenues, there is a net loss and the Income Summary account would have a credit balance.
True
False
38. How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed?
a. +$10,000 accounts receivable, -$10,000 accounts payable.
b. +$10,000 accounts receivable, +$10,000 accounts payable.
c. +$10,000 accounts receivable, +$10,000 cash.
d. +$10,000 accounts receivable, +$10,000 revenue.
e. +$10,000 accounts receivable, -$10,000 revenue.