Question 1

A $130 credit to Supplies was credited to Fees Earned by mistake.By what amounts are the accounts under- or overstated as a result of this error?

Accepted Answer

A)  Supplies,understated $130; Fees Earned,overstated $130.
B)  Supplies,understated $260; Fees Earned,overstated $130.
C)  Supplies,overstated $130; Fees Earned,overstated $130.
D)  Supplies,overstated $130; Fees Earned,understated $130.
E)  Supplies,overstated $260; Fees Earned,understated $130.F) A) and D)
G) A) and E)

Question 2

A trial balance is not a financial statement; it is a mechanism for checking equality of debits and credits in the ledger.

Accepted Answer

A) True 
 B)False

Question 3

A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000.Which of the following would be an incorrect way to complete the recording of this transaction:

Accepted Answer

A)  Credit another asset account for $1,500.
B)  Credit another liability account for $1,500.
C)  Credit a revenue account for $1,500.
D)  Credit the common stock account for $1,500.
E)  Debit another asset account for $1,500.F) None of the above
G) A) and D)

Question 4

While companies can use various journals,every company uses a general journal.

Accepted Answer

A) True 
 B)False

Question 5

On a trial balance,if the Debit and Credit column totals are equal,then:

Accepted Answer

A)  All transactions have been recorded correctly.
B)  All entries from the journal have been posted to the ledger correctly.
C)  All ledger account balances are correct.
D)  Equal debits and credits have been recorded for transactions.
E)  The balance sheet would be correct.F) A) and B)
G) A) and E)

Question 6

Paul's Landscaping paid $500 on account for supplies purchased in the prior month.Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Accepted Answer

A)  Debit Office supplies expense,$500; credit Cash,$500.
B)  Debit Cash,$500; credit Office supplies,$500.
C)  Debit Office supplies,$500; credit Cash,$500.
D)  Debit Office supplies,$500; credit Accounts payable,$500.
E)  Debit Accounts payable,$500; credit Cash,$500.F) None of the above
G) C) and E)

Question 7

Identify the account below that is classified as an asset in a company's chart of accounts:

Accepted Answer

A)  Accounts Receivable
B)  Accounts Payable
C)  Common Stock
D)  Unearned Revenue
E)  Service RevenueF) A) and D)
G) C) and D)

Question 8

The accounting process begins with:

Accepted Answer

A)  Analysis of business transactions and source documents.
B)  Preparing financial statements and other reports.
C)  Summarizing the recorded effect of business transactions.
D)  Presentation of financial information to decision-makers.
E)  Preparation of the trial balance.F) B) and C)
G) None of the above

Question 9

Dividends are not reported on a business's income statement.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is NOT an asset account:

Accepted Answer

A)  Cash
B)  Land
C)  Services Revenue
D)  Buildings
E)  EquipmentF) A) and E)
G) A) and D)

Question 11

On April 30,Victor Services had an Accounts Receivable balance of $18,000.During the month of May,total credits to Accounts Receivable were $52,000 from customer payments.The May 31 Accounts Receivable balance was $13,000.What was the amount of credit sales during May?

Accepted Answer

A)  $5,000.
B)  $47,000.
C)  $52,000.
D)  $57,000.
E)  $32,000.F) D) and E)
G) B) and E)

Question 12

Given the following errors,identify the one by itself that will cause the trial balance to be out of balance.

Accepted Answer

A)  A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.
B)  A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.
C)  A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash.
D)  A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.
E)  An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash.F) A) and E)
G) A) and B)

Question 13

Unearned revenues refer to a(n) :

Accepted Answer

A)  Asset that will be used over time.
B)  Expense incurred because a customer has paid in advance.
C)  Liability that is settled in the future when a company delivers its products or services.
D)  Increase in revenues as a result of delivering products or services to a customer.
E)  Decrease in an asset.F) A) and C)
G) C) and D)

Question 14

A double-entry accounting system is an accounting system:

Accepted Answer

A)  That records each transaction twice.
B)  That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C)  In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D)  That may only be used if T-accounts are used.
E)  That insures that errors never occur.F) C) and D)
G) D) and E)

Question 15

Kim's Auto Services paid $300 cash to employees for work performed in the current period.Which of the following general journal entries will Kim's Auto Services make to record this transaction?

Accepted Answer

A)     Salaries Expense 300 Accounts Payable 300\begin{array}{|l|r|r|}\hline 	ext { Salaries Expense } & 300 & \\hline 	ext { Accounts Payable } & & 300 \\hline\end{array} Salaries Expense  Accounts Payable ​300​300​​ 
B)     Cash 300 Salaries Expense 300\begin{array}{|l|r|r|}\hline 	ext { Cash } & 300 & \\hline 	ext { Salaries Expense } & & 300 \\hline\end{array} Cash  Salaries Expense ​300​300​​ 
C)     Salaries Expense 300 Dividends 300\begin{array}{|l|r|r|}\hline 	ext { Salaries Expense } & 300 & \\hline 	ext { Dividends } & & 300 \\hline\end{array} Salaries Expense  Dividends ​300​300​​ 
D)     Salaries Payable 300 Salaries Expense 300\begin{array}{|l|r|r|}\hline 	ext { Salaries Payable } & 300 & \\hline 	ext { Salaries Expense } & & 300 \\hline\end{array} Salaries Payable  Salaries Expense ​300​300​​ 
E)     Salaries Expense 300 Cash 300\begin{array}{|l|r|r|}\hline 	ext { Salaries Expense } & 300 & \\hline 	ext { Cash } & & 300 \\hline\end{array} Salaries Expense  Cash ​300​300​​F) C) and E)
G) B) and E)

Question 16

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided.Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

Accepted Answer

A)     Cash 1,500 Accounts Receivable 1,500\begin{array}{|l|r|r|}\hline 	ext { Cash } & 1,500 & \\hline 	ext { Accounts Receivable } & & 1,500 \\hline\end{array} Cash  Accounts Receivable ​1,500​1,500​​ 
B)     Cash 1,500 Unearned Design Revenue 1,500\begin{array}{|l|r|r|}\hline 	ext { Cash } & 1,500 & \\hline 	ext { Unearned Design Revenue } & & 1,500 \\hline\end{array} Cash  Unearned Design Revenue ​1,500​1,500​​ 
C)     Accounts Receivable 1,500 Unearned Design Revenue 1,500\begin{array}{|l|r|r|}\hline 	ext { Accounts Receivable } & 1,500 & \\hline 	ext { Unearned Design Revenue } & & 1,500 \\hline\end{array} Accounts Receivable  Unearned Design Revenue ​1,500​1,500​​ 
D)     Cash 1,500 Design Revenue 1,500\begin{array}{|l|r|r|}\hline 	ext { Cash } & 1,500 & \\hline 	ext { Design Revenue } & & 1,500 \\hline\end{array} Cash  Design Revenue ​1,500​1,500​​ 
E)     Accounts Receivable 1,500 Cash 1,500\begin{array}{|l|r|r|}\hline 	ext { Accounts Receivable } & 1,500 & \\hline 	ext { Cash } & & 1,500 \\hline\end{array} Accounts Receivable  Cash ​1,500​1,500​​F) D) and E)
G) A) and C)

Question 17

An income statement is also called an earnings statement,a statement of operations or a profit and loss statement.

Accepted Answer

A) True 
 B)False

Question 18

At year-end,a trial balance showed total credits exceeding total debits by $4,950.This difference could have been caused by:

Accepted Answer

A)  An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash.
B)  A net income of $4,950.
C)  The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950.
D)  The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550.
E)  An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable.F) B) and E)
G) All of the above

Question 19

You decrease the Accounts Payable account on the ________ side of its account.

Accepted Answer

The answer of You decrease the Accounts Payable account on...

Question 20

The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit.What effect would this error have on the trial balance?

Accepted Answer

A)  The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700.
B)  The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700.
C)  The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.
D)  The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400.
E)  The total of the Debit column of the trial balance will equal the total of the Credit column.F) A) and B)
G) B) and C)

Exam 2: Financial Statements and the Accounting System

Paul's Landscaping paid $500 on account for supplies purchased in the prior month.Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Correct AnswerverifiedShow Answer

A $130 credit to Supplies was credited to Fees Earned by mistake.By what amounts are the accounts under- or overstated as a result of this error?

Correct AnswerverifiedShow Answer

On a trial balance,if the Debit and Credit column totals are equal,then:

Correct AnswerverifiedShow Answer

A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000.Which of the following would be an incorrect way to complete the recording of this transaction:

Correct AnswerverifiedShow Answer

You decrease the Accounts Payable account on the ________ side of its account.

Correct AnswerverifiedShow Answer

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided.Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

Correct AnswerverifiedShow Answer

While companies can use various journals,every company uses a general journal.

Correct AnswerverifiedShow Answer

At year-end,a trial balance showed total credits exceeding total debits by $4,950.This difference could have been caused by:

Correct AnswerverifiedShow Answer

Identify the account below that is classified as an asset in a company's chart of accounts:

Correct AnswerverifiedShow Answer

The accounting process begins with:

Correct AnswerverifiedShow Answer

A trial balance is not a financial statement; it is a mechanism for checking equality of debits and credits in the ledger.

Correct AnswerverifiedShow Answer

The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit.What effect would this error have on the trial balance?

Correct AnswerverifiedShow Answer

Which of the following is NOT an asset account:

Correct AnswerverifiedShow Answer

Given the following errors,identify the one by itself that will cause the trial balance to be out of balance.

Correct AnswerverifiedShow Answer

Dividends are not reported on a business's income statement.

Correct AnswerverifiedShow Answer

Kim's Auto Services paid $300 cash to employees for work performed in the current period.Which of the following general journal entries will Kim's Auto Services make to record this transaction?

Correct AnswerverifiedShow Answer

Unearned revenues refer to a(n) :

Correct AnswerverifiedShow Answer

An income statement is also called an earnings statement,a statement of operations or a profit and loss statement.

Correct AnswerverifiedShow Answer

On April 30,Victor Services had an Accounts Receivable balance of $18,000.During the month of May,total credits to Accounts Receivable were $52,000 from customer payments.The May 31 Accounts Receivable balance was $13,000.What was the amount of credit sales during May?

Correct AnswerverifiedShow Answer

A double-entry accounting system is an accounting system:

Correct AnswerverifiedShow Answer

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