The purpose of closing entries is to transfer:

A) Accounts Receivable to Retained Earnings when an account is fully paid.

B) Balances in temporary accounts to a permanent account.

C) Inventory to Cost of Goods Sold when merchandise is sold.

D) Assets and liabilities when operations are discontinued.

Answer: B

Permanent accounts would not include:

A) Interest Expense.

B) Salaries Payable.

C) Prepaid Rent.

D) Deferred Revenues.

Answer: A

Permanent accounts would not include:

A) Accounts Payable.

B) Office Supplies.

C) Utilities Expense.

D) Common Stock.

Answer: C

Which of the following describes the purpose(s) of closing entries?

A) Adjust the balances of asset and liability accounts for unrecorded activity during the period.

B) Transfer the balances of temporary accounts to common stock.

C) Reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.

D) Transfer the balances of temporary accounts to common stock; reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.

Answer: C

The closing process includes which of the following?

A) Closing the balance of the retained earnings account to zero.

B) Closing the balance of only the dividends account to zero.

C) Closing the balances of only revenue and expense accounts to zero.

D) Closing the balances of revenue, expense and dividend accounts to zero.

Answer: D

The primary purpose of closing entries is to:

A) Prove the equality of the debit and credit entries in the general journal.

B) Ensure that all assets and liabilities are recognized in the appropriate period.

C) Update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions.

D) Assure that adjusting entries balance.

Answer: C

When a company owes employee salaries at the end of the period but fails to make an adjusting entry for that amount owed, which of the following is true?

A) Net income in the income statement is overstated.

B) Retained earnings in the statement of stockholders' equity is overstated.

C) Total stockholders' equity in the balance sheet is overstated.

D) All of the other answers are correct.

Answer: D

Current assets in a classified balance sheet are typically listed in order of:

A) Operational functionality.

B) Lowest to highest amount.

C) Importance to the company's profitability.

D) Liquidity.

Answer: D

The liquidity of an asset in a classified balance sheet refers to:

A) The dollar magnitude of the asset.

B) How quickly the asset will be converted to cash.

C) The length of time for which the company has owned the asset.

D) The likelihood that the asset will help to increase the company's profitability.

Answer: B

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect total assets for the current period?

A) Total assets will be too low.

B) Total assets will be correct.

C) Total assets will be too high.

D) Not possible to determine.

Answer: B

If a company incorrectly records Service Revenue too high, which of the following is true?

A) Net income in the income statement is overstated.

B) Retained earnings in the statement of stockholders' equity is overstated.

C) Total stockholders' equity in the balance sheet is overstated.

D) All of the other answers are correct.

Answer: D

Providing services to customers on account would affect the balances reported in which financial statement(s)?

A) Income statement.

B) Statement of stockholders' equity.

C) Balance sheet.

D) All of the financial statements in the other answers would be affected.

Answer: D

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is the amount of Trumpeter's total stockholders' equity?

A) $5,000.

B) $78,500.

C) $68,500.

D) $83,500.

Answer: B

The following table contains financial information for Trumpeter Inc. before closing entries:

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is the amount of Trumpeter's total liabilities?

A) $5,000.

B) $78,500.

C) $68,500.

D) $83,500.

Answer: A

The following table contains financial information for Trumpter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is the amount of Trumpter's total assets?

A) $81,500.

B) $82,500.

C) $68,500.

D) $83,500.

Answer: D

The following financial information is from Bronco Company. All debt is due within one year unless stated otherwise.

The following financial information is from Bronco Company. All debt is due within one year unless stated otherwise.

Retained Earnings $ 52,000

Supplies 37,000

Equipment 72,000

Accounts Receivable 8,600

Deferred Revenue 6,000

Accounts Payable 15,000

Common Stock 25,000

Notes Payable (due in 18 months) 35,000

Interest Payable 7,000

Cash 22,400

What is the amount of current liabilities?

A) $63,000.

B) $28,000.

C) $45,600.

D) $22,000.

Answer: B

The Deferred Revenue account is shown in which statement?

A) Income statement.

B) Statement of cash flows.

C) Balance sheet.

D) Statement of stockholders' equity.

Answer: C

Which of the following are reported as stockholders' equity in a classified balance sheet?

A) Debits and Credits.

B) Revenues and Expenses.

C) Common Stock and Retained Earnings.

D) Assets and Liabilities.

Answer: C

Which of the following current liabilities does not involve the future payment of cash?

A) Interest Payable.

B) Deferred Revenue.

C) Accounts Payable.

D) Salaries Payable.

Answer: B

An advantage of a classified balance sheet is that it is easy to see:

A) If the company is likely to be profitable in future periods.

B) If the company is profitable in the current period.

C) If current assets are large enough to pay current liabilities.

D) If dividends have been paid to stockholders.

Answer: C

Long-term productive assets used in the normal course of business are typically classified as:

A) Current assets.

B) Investments.

C) Intangible assets.

D) Property, plant, and equipment.

Answer: D

Patents, copyrights, franchises, and trademarks are examples of:

A) Current assets.

B) Investments.

C) Intangible assets.

D) Property, plant, and equipment.

Answer: C

A current liability is defined as:

A) An amount borrowed less than one year ago.

B) An amount due to an employee.

C) An amount due within one year.

D) A small amount due.

Answer: C

Resources owned by the company that will provide a benefit for more than one year are called:

A) Current assets.

B) Current liabilities.

C) Long-term assets.

D) Revenues.

Answer: C

With respect to current assets, liquidity refers to:

A) How quickly the asset can be converted to cash.

B) The magnitude of the asset's account balance.

C) Whether cash was paid for the asset at the time of acquisition.

D) The accuracy of the balance being reported.

Answer: A

Current assets include:

A) Assets that must be paid for within 12 months.

B) Assets that will be used up or converted to cash within 12 months.

C) Assets that will be used for many years.

D) Any assets that were purchased for cash.

Answer: B

Consider the following items:

Land

Accounts Receivable

Notes Payable (due in three years)

Accounts Payable

Retained Earnings

Prepaid Rent

Deferred Revenue

Buildings

Notes Payable (due in six months)

Equipment

How many of the items listed above are generally long-term assets?

A) Two.

B) Three.

C) Four.

D) Five.

Answer: B

The following financial information is from Shovels Construction Company:

The following financial information is from Shovels Construction Company:

Accounts Payable $ 15,000

Buildings 80,000

Cash 10,500

Accounts Receivable 9,500

Sales Tax Payable 4,500

Retained Earnings 47,500

Supplies 40,000

Notes Payable (due in 18 months) 35,000

Interest Payable 3,000

Common Stock 35,000

What is the amount of current assets, assuming the accounts above reflect normal activity?

A) $20,000.

B) $60,000.

C) $140,000.

D) $175,000.

Answer: B

In the statement of stockholders' equity, the balance of Retained Earnings increased by $32,000. The company declared a dividend of $10,000 during the year. What was the net income for the year?

A) $10,000.

B) $32,000.

C) $42,000.

D) $22,000.

Answer: C

A classified balance sheet ________.

A) Shows only current assets and current liabilities

B) Shows changes in assets, liabilities, revenues and expenses

C) Contains confidential information

D) Shows subtotals for current assets and current liabilities

Answer: D

Which financial statement provides information for a point in time only?

A) Statement of cash flows.

B) Income statement.

C) Statement of stockholders' equity.

D) Balance sheet.

Answer: D

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $60,000. During the period, the company reports a net loss of $10,000 and net cash outflows of $15,000

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $60,000. During the period, the company reports a net loss of $10,000 and net cash outflows of $15,000. The ending balance in the Retained Earnings account is:

A) $60,000.

B) $35,000.

C) $50,000.

D) $45,000.

Answer: C

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $25,000. During the period, the company reports a net income of $10,000 and a dividend of $4,000. The ending balance in the Retained Earnings account is:

A) $10,000.

B) $35,000.

C) $39,000.

D) $31,000.

Answer: D

The statement of stockholders' equity includes:

A) Net income from the income statement.

B) The amount of stock issued in the current period.

C) Dividends declared to stockholders in the current period.

D) All of the other answers are correct.

Answer: D

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect net income for the current period?

A) Net income will be too low.

B) Net income will be correct.

C) Net income will be too high.

D) Not possible to determine.

Answer: C

If a company incorrectly records a payment as an expense instead of an asset, how will this error affect net income in the current period?

A) Net income will be too low.

B) Net income will be correct.

C) Net income will be too high.

D) Not possible to determine.

Answer: A

The statement of stockholders' equity includes which of the following for the period?

A) Details of a company's profitability that represents stockholders' claims.

B) Changes in stockholders' equity accounts.

C) Inflows and outflows of cash that benefit stockholders.

D) Current assets available to pay current liabilities to reduce risk to stockholders.

Answer: B

The following table contains financial information for Trumpeter Inc. before closing entries:

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is Trumpeter's net income?

A) $3,500.

B) $2,500.

C) $5,000.

D) $5,500.

Answer: D

Which of the following best describes the information reported in the income statement?

A) The portion of profits paid in cash to stockholders.

B) The current resources available to pay current obligations.

C) The amount recognized from providing goods and services to customers compared to the cost of doing so.

D) The extent to which cash inflows exceed cash outflows.

Answer: C

Which of the following is true about an income statement?

A) It reports activity for a period of time.

B) It does not include dividends paid.

C) It reports revenues and expenses.

D) All of the other answers are true.

Answer: D

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below.

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below.

Cash $ 12,000

Retained Earnings 31,000

Prepaid Rent 2,000

Salaries Expense 15,000

Equipment 68,000

Service Revenue 40,000

Miscellaneous Expense 10,000

Supplies 4,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 38,000

What is the total amount of credits?

A) $111,000.

B) $81,000.

C) $114,000.

D) $86,000.

Answer: C

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below.

A company's accountant is trying to prepare an adjusted trial balance from the list of accounts below.

Cash $ 12,000

Retained Earnings 31,000

Prepaid Rent 2,000

Salaries Expense 15,000

Equipment 68,000

Service Revenue 40,000

Miscellaneous Expense 10,000

Supplies 4,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 38,000

What is the total amount of debits?

A) $114,000.

B) $86,000.

C) $81,000.

D) $11,000.

Answer: A

Which of the following trial balances shows account balances that incorporate current year deferrals and accruals?

A) Adjusted trial balance.

B) Final trial balance.

C) Unadjusted trial balance.

D) Cash-basis trial balance.

Answer: A

The adjusted trial balance should be prepared ________ the financial statements are prepared in order to prove the ________ of the debits and credits.

A) after; equality

B) before; accuracy

C) before; equality

D) after; accuracy

Answer: C

Consider the adjustment process at the end of the accounting period.

1. Record the adjusting entries in the journal.

2. Prepare an adjusted trial balance to check the equality of the debits and credits.

3. Determine the accounts requiring adjustment, using the unadjusted trial balance.

4. Post the adjusting entries to the general ledger.

Place the actions above in the proper order.

A) 1, 4, 3, 2.

B) 1, 2, 4, 3.

C) 3, 4, 2, 1.

D) 3, 1, 4, 2.

Answer: D

An adjusted trial balance:

A) Is a list of all accounts and their balances after adjusting entries.

B) Is a list of all accounts and their balances before adjusting entries.

C) Is a list of all accounts and their balances after closing entries.

D) Is a trial balance adjusted for cash-basis accounting.

Answer: A

A list of all accounts and their balances after updating account balances for adjusting entries is referred to as:

A) A trial balance.

B) An adjusted trial balance.

C) A post-closing trial balance.

D) An accounting trial balance.

Answer: B

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period.

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period. On April 1, 2021, total sales of one-year subscriptions are $12,000. What is the adjusted balance of Deferred Revenue on December 31, 2021?

A) $9,000.

B) $3,000.

C) $0.

D) $12,000.

Answer: B

Eve's Apples opened for business on January 1, 2021, and paid for two insurance policies effective that date. The liability policy was $36,000 for 18 months

Eve's Apples opened for business on January 1, 2021, and paid for two insurance policies effective that date. The liability policy was $36,000 for 18 months, and the crop damage policy was $12,000 for a two-year term. What was the balance in Eve's Prepaid Insurance account as of December 31, 2021?

A) $9,000.

B) $18,000.

C) $30,000.

D) $48,000.

Answer: B

On November 1, $4,800 of rent on equipment for the next six months was paid and charged to Prepaid Rent. At the end of the year, the financial statements would report:

A) Rent Expense, $4,800; Prepaid Rent $0.

B) Rent Expense, $1,600; Prepaid Rent $3,200.

C) Rent Expense, $1,600; Prepaid Rent $4,800.

D) Rent Expense, $3,200; Prepaid Rent $1,600.

Answer: B

Prior to adjusting entries, Salaries Expense had a balance of $22,300. The following year-end adjusting

Prior to adjusting entries, Salaries Expense had a balance of $22,300. The following year-end adjusting entry was made by the company:

Salaries Expense 4,400

Salaries Payable 4,400

What balance would be shown for Salaries Expense in the adjusted trial balance?

A) $4,400.

B) $17,900.

C) $22,300.

D) $26,700.

Answer: D

Prior to adjusting entries, Prepaid Rent had a balance of $8,300. The following year-end adjusting entry was made by the company:

Prior to adjusting entries, Prepaid Rent had a balance of $8,300. The following year-end adjusting entry was made by the company:

Rent Expense 6,800

Prepaid Rent 6,800

What balance would be shown for Prepaid Rent in the adjusted trial balance?

A) $1,500.

B) $6,800.

C) $8,300.

D) $15,100.

Answer: A

A company provides maintenance services to customers. The company's policy is to provide services and then bill customers on the 10th of the following month

A company provides maintenance services to customers. The company's policy is to provide services and then bill customers on the 10th of the following month. In December 2021, the company provided services of $14,000 and plans to bill customers on January 10, 2022. What adjusting entry, if any, will the company record on December 31, 2021?

A) Debit Accounts Receivable and credit Deferred Revenue for $14,000.

B) Debit Accounts Receivable and credit Service Revenue for $14,000.

C) Debit Service Revenue and credit Accounts Receivable for $14,000.

D) No adjusting entry is necessary at the end of the year.

Answer: B

On November 1, 2021, a company signs a one-year contract to provide services. The agreement specifies payments of $4,500 to be received every three months for a total of $18,000 over the entire year ($1,500 per month). No entry is made on November 1, 2021, at the time the contract is signed. What adjusting entry does the company need to record at the end of the year?

A) Debit Accounts Receivable and credit Service Revenue for $15,000.

B) Debit Service Revenue and credit Accounts Receivable for $12,000.

C) Debit Accounts Receivable and credit Service Revenue for $3,000.

D) Debit Accounts Receivable and credit Service Revenue for $18,000.

Answer: C

On October 1, 2021, a company purchases equipment for $72,000. The equipment is expected to be used for the next four years (48 months)

On October 1, 2021, a company purchases equipment for $72,000. The equipment is expected to be used for the next four years (48 months). What adjusting entry should the company record on December 31, 2022?

A) Debit Depreciation Expense and credit Accumulated Depreciation for $13,500.

B) Debit Depreciation Expense and credit Accumulated Depreciation for $18,000.

C) Debit Depreciation Expense and credit Accumulated Depreciation for $22,500.

D) Debit Depreciation Expense and credit Accumulated Depreciation for $4,500.

Answer: B

On October 1, 2021, a company purchases equipment for $72,000. The equipment is expected to be used for the next four years (48 months). What adjusting entry should the company record on December 31, 2021?

A) Debit Depreciation Expense and credit Cash for $72,000.

B) Debit Depreciation Expense and credit Accumulated Depreciation for $72,000.

C) Debit Equipment and credit Depreciation Expense for $4,500.

D) Debit Depreciation Expense and credit Accumulated Depreciation for $4,500.

Answer: D

At the beginning of December, Global Corporation had $2,000 in supplies on hand. During the month, supplies purchased amounted to $3,000,

At the beginning of December, Global Corporation had $2,000 in supplies on hand. During the month, supplies purchased amounted to $3,000, but by the end of the month the supplies balance was only $800. What is the appropriate month-end adjusting entry?

A) Debit Cash $4,200, credit Supplies $4,200.

B) Debit Supplies $4,200, credit Supplies Expense $4,200.

C) Debit Supplies Expense $4,200, credit Supplies $4,200.

D) Debit Cash $800, credit Supplies $800.

Answer: C

During the year, Cheng Company paid salaries of $24,000. In addition, $8,000 in salaries has accrued by the end of the year but has not been paid. The year-end adjusting entry would include which one of the following?

A) Debit to Salaries Expense for $32,000.

B) Credit to Salaries Expense of $8,000.

C) Debit to Salaries Payable for $24,000.

D) Credit to Salaries Payable for $8,000.

Answer: D

On September 1, 2021, Gold Gaming sold 400 one-year subscriptions to its online gaming website for $90 each. The total amount received was credited to Deferred Revenue

On September 1, 2021, Gold Gaming sold 400 one-year subscriptions to its online gaming website for $90 each. The total amount received was credited to Deferred Revenue. What would be the required adjusting entry at December 31, 2021?

A) Debit Deferred Revenue and credit Service Revenue for $36,000.

B) Debit Service Revenue and credit Deferred Revenue for $24,000.

C) Debit Deferred Revenue and credit Service Revenue for $24,000.

D) Debit Deferred Revenue and credit Service Revenue for $12,000.

Answer: D

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period. On April 1, 2021

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period. On April 1, 2021, total sales of one-year subscriptions are $12,000. What adjusting entry does PrimeFlix need to record on December 31, 2021?

A) Debit Deferred Revenue and credit Service Revenue for $9,000.

B) Debit Deferred Revenue and credit Service Revenue for $12,000.

C) Debit Service Revenue and credit Deferred Revenue for $9,000.

D) Debit Service Revenue and credit Deferred Revenue for $12,000.

Answer: A

A company has a policy of paying salaries for contract labor on the 15th of the month following the labor services received. In December 2021, the company recorded $15,000 paid in salaries for labor services received in November 2021. In addition, labor services received in December 2021 were $12,000 and will be paid by the company on January 15, 2022. What adjusting entry will the company record on December 31, 2021?

A) Debit Salaries Expense and credit Salaries Payable for $27,000.

B) Debit Salaries Expense and credit Cash for $15,000.

C) Debit Salaries Expense and credit Salaries Payable for $12,000.

D) Debit Salaries Expense and credit Salaries Payable for $3,000.

Answer: C

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $32,000 (or $3,200 per weekday)

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $32,000 (or $3,200 per weekday). The current pay period ends on Friday, January 3. Neat Clothes is now preparing financial statements for the year ended December 31. What is the adjusting entry to record accrued salaries at the end of the year?

A) Debit Salaries Payable and credit Salaries Expense for $22,400.

B) Debit Salaries Expense and credit Salaries Payable for $6,400.

C) Debit Salaries Expense and credit Salaries Payable for $9,600.

D) Debit Salaries Expense and credit Salaries Payable for $22,400.

Answer: D

A company owes employee salaries of $16,000 at the end of the year. These salaries will be paid in the following year. What adjusting entry, if any, does the company need to record at the end of the year?

A) Debit Salaries Expense and credit Cash for $16,000.

B) Debit Salaries Expense and credit Salaries Payable for $16,000.

C) Debit Salaries Payable and credit Salaries Expense for $16,000.

D) No adjusting entry is necessary at the end of the year.

Answer: B

A company receives a utility bill each month for services received. The company's policy is to pay the utility bill within 30 days of receipt. On December 31, 2021, the company receives a utility bill of $4,200 for the month of December and plans to pay the bill by January 30, 2022. What adjusting entry, if any, will the company record on December 31, 2021?

A) Debit Utilities Expense and credit Cash for $4,200.

B) Debit Utilities Expense and credit Utilities Payable for $4,200.

C) Debit Utilities Payable and credit Utilities Expense for $4,200.

D) No adjusting entry is necessary at the end of the year.

Answer: B

A company purchased $270,000 in supplies during the year. The supplies account increased by $10,000 during the year to an ending balance of $66,000

A company purchased $270,000 in supplies during the year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. For what amount was the adjusting entry to supplies expense?

A) $300,000.

B) $280,000.

C) $260,000.

D) $240,000.

Answer: C

At the beginning of the year, a company had a balance in its prepaid insurance account of $48,400. During the year, $86,000 was paid for insurance. At the end of the year, after adjusting entries were recorded, the balance in the prepaid insurance account was $42,000. Insurance expense for the year would be:

A) $92,400.

B) $86,000.

C) $134,400.

D) $6,400.

Answer: A

Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance

Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries?

A) Debit Insurance Expense and credit Prepaid Insurance for $1,750.

B) Debit Prepaid Insurance and credit Insurance Expense for $1,750.

C) Debit Insurance Expense and credit Accounts Payable for $4,200.

D) Debit Insurance Expense and credit Prepaid Insurance for $2,450.

Answer: A

Which of the following would not typically be used as an adjusting entry?

A) Debit Rent Expense and credit Prepaid Rent.

B) Debit Cash and credit Deferred Revenue.

C) Debit Interest Expense and credit Interest Payable.

D) Debit Deferred Revenue and credit Service Revenue.

Answer: B

When a company makes an end-of-period adjusting entry, which includes a debit to Supplies Expense, the usual credit entry is made to:

A) Accounts Payable.

B) Supplies.

C) Cash.

D) Retained Earnings.

Answer: B

When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent, the debit is usually made to:

A) Cash.

B) Rent Expense.

C) Rent Payable.

D) Rent Receivable.

Answer: B

Which of the following is a possible adjusting entry?

A) Debit Cash, credit Accounts Payable.

B) Debit Service Revenue, credit Cash.

C) Debit Salaries Expense, credit Salaries Payable.

D) Debit Utilities Expense, credit Retained Earnings.

Answer: C

On May 1, 2021, Townsley borrowed $250,000 from Prime Bank by signing a three-year, 6% note payable. Interest is due each May 1

On May 1, 2021, Townsley borrowed $250,000 from Prime Bank by signing a three-year, 6% note payable. Interest is due each May 1. What adjusting entry, if any, should Prime Bank record on December 31, 2021?

A) Debit Interest Receivable and credit Interest Revenue for $5,000.

B) Debit Interest Receivable and credit Interest Revenue for $10,000.

C) Debit Interest Receivable and credit Interest Revenue for $15,000.

D) No adjusting entry is necessary.

Answer: B

On May 1, 2021, Townsley borrowed $250,000 from Prime Bank by signing a three-year, 6% note payable. Interest is due each May 1. What adjusting entry, if any, should Townsley record on December 31, 2021?

A) Debit Interest Expense and credit Interest Payable for $5,000.

B) Debit Interest Expense and credit Interest Payable for $10,000.

C) Debit Interest Expense and credit Interest Payable for $15,000.

D) No adjusting entry is necessary.

Answer: B

Allen Inc. took out a one-year, 8%, $100,000 loan on March 31, 2021. Interest is due upon maturity of the loan. What adjusting entry, if any, should Allen Inc. record on December 31, 2021?

A) Debit Interest Expense and credit Interest Payable for $6,000.

B) Debit Interest Expense and credit Interest Payable for $2,000.

C) No adjusting entry is necessary.

D) Debit Interest Expense and credit Interest Payable for $8,000.

Answer: A

On July 1, 2021, Charlie Co. paid $18,000 to Rent-An-Office for rent covering 18 months from July 2021 through December 2022

On July 1, 2021, Charlie Co. paid $18,000 to Rent-An-Office for rent covering 18 months from July 2021 through December 2022. What adjusting entry should Charlie Co. record on December 31, 2021?

A) Debit Rent Expense and credit Cash for $18,000.

B) Debit Rent Expense and credit Prepaid Rent for $18,000.

C) Debit Prepaid Rent and credit Rent Expense for $6,000.

D) Debit Rent Expense and credit Prepaid Rent for $6,000.

Answer: D

Adjusting entries:

A) Often include the Cash account.

B) Usually are recorded at the beginning of the accounting period.

C) Always involve at least one income statement account and one balance sheet account.

D) Adjust the balance of revenue and expense accounts to zero.

Answer: C

The adjusting entry required to record accrued expenses includes:

A) A credit to Cash.

B) A debit to an asset.

C) A credit to an asset.

D) A credit to liability.

Answer: D

The adjusting entry required when goods and services are provided to customer for amounts previously recorded as deferred revenues includes:

A) A debit to a liability.

B) A debit to an asset.

C) A credit to a liability.

D) A credit to an asset.

Answer: A

An example of an adjusting entry would not include:

A) Recording interest earned on bank account balances.

B) Recording the expiration of prepaid rent.

C) Recording unpaid salaries.

D) Recording the purchase of office supplies.

Answer: D

Providing goods or services to customers on account is an example of a(n):

A) Accrued expense.

B) Accrued revenue.

C) Prepaid expense.

D) Deferred revenue.

Answer: B

Receiving a utility bill for costs in the current period but delaying payment until the following period is an example of a(n):

A) Accrued expense.

B) Accrued revenue.

C) Prepaid expense.

D) Deferred revenue.

Answer: A

A gym offers one-year memberships for $99 and requires customers to pay the full amount of cash at the beginning of the membership period. For the gym, this is an example of a(n):

A) Accrued expense.

B) Accrued revenue.

C) Prepaid expense.

D) Deferred revenue.

Answer: D

Making rent payments in advance is an example of a(n):

A) Accrued revenue.

B) Accrued expense.

C) Deferred revenue.

D) Prepaid expense.

Answer: D

An accrued revenue represents:

A) Customers paying cash in advance of the good or service to be provided.

B) Revenue being recorded prior to cash collection from the customer.

C) Revenue being recorded at the same time the cash is collected from the customer.

D) Cash being collected from the customer prior to the revenue being recorded.

Answer: B

An accrued expense occurs when:

A) Cash payment (or an obligation to pay cash) occurs before the expense recognition.

B) An expense is recorded at the same time as the cash payment.

C) The expense is recognized before the payment of cash.

D) Cash is paid but an expense is never recorded.

Answer: C

Making insurance payments in advance is an example of:

A) A prepaid expense transaction.

B) A deferred revenue transaction.

C) An accrued expense transaction.

D) An accrued revenue transaction.

Answer: A

Prepayments occur when:

A) Cash payment (or an obligation to pay cash) occurs before the expense recognition.

B) Sales are delayed pending credit approval.

C) Customers are unable to pay the full amount due when goods are delivered.

D) Cash payment occurs after the expense is incurred and liability is recorded.

Answer: A

Deferred revenues refer to:

A) Customers paying cash in advance of the good or service to be provided.

B) Revenue being recorded prior to cash collection from the customer.

C) Revenue being recorded at the same time the cash is collected from the customer.

D) Cash being collected from the customer after the revenue is recorded.

Answer: A

Which of the following is true about adjusting entries?

A) Entries are necessary due to the conservatism principle.

B) Entries can be done at the beginning or end of the accounting period.

C) They zero the balance of all income statement accounts.

D) They are a necessary part of accrual-basis accounting.

Answer: D

Adjusting entries are primarily needed for:

A) Cash-basis accounting.

B) Accrual-basis accounting.

C) Current value accounting.

D) Manual accounting systems.

Answer: B

Which of the following regarding adjusting entries is correct?

A) Adjusting entries are recorded for all external transactions.

B) Adjusting entries are recorded to make sure all cash inflows and outflows are recorded in the current period.

C) Adjusting entries are needed because we use accrual-basis accounting.

D) After adjusting entries, all temporary accounts should have a balance of zero.

Answer: C

Consider the following events for Sophia Incorporated:

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under cash-basis accounting, what is the appropriate day to record the revenues related to the sand volleyball camp?

A) April 5.

B) April 12.

C) April 21.

D) April 23.

Answer: B

Which one of the following best describes the characteristics of adjusting entries?

A) Adjusting entries reduce the balance of revenue, expense, and dividend accounts to zero.

B) Adjusting entries update balances for the recognition of cash flows.

C) Adjusting entries update balances for the recognition of investments from and distributions to stockholders.

D) Adjusting entries update balances for the recognition of revenue and expenses.

Answer: D

Examples of adjusting entries could include all of the following except:

A) Recording interest earned on bank account balances.

B) Recording the expiration of prepaid insurance.

C) Recording unpaid taxes.

D) Recording the purchase of office supplies.

Answer: D

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under cash-basis accounting, what is the appropriate day to record the expenses related to the sand volleyball camp?

A) April 5.

B) April 12.

C) April 21.

D) April 23.

Answer: D

Consider the following events for Sophia Incorporated:

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under accrual-basis accounting, what is the appropriate day to record the expenses related to the sand volleyball camp?

A) April 5.

B) April 12.

C) April 21.

D) April 23.

Answer: C

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under accrual-basis accounting, what is the appropriate day to record the revenues from the sand volleyball camp?

A) April 5.

B) April 6.

C) April 12.

D) April 21.

Answer: D

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under accrual-basis accounting, what is the appropriate day to record the revenues from the sand volleyball camp?

A) April 5.

B) April 6.

C) April 12.

D) April 21.

Answer: D

Consider the following events for Betterment Incorporated:

Consider the following events for Betterment Incorporated:

January 1 Betterment purchases gasoline for $200 on account.

January 7 Betterment advertises lawn mowing services for $100 per lawn.

January 9 Betterment signs up 8 customers who pay a total of $800 cash.

January 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used.

January 13 Betterment pays for the gasoline purchased on January 1.

Under accrual-basis accounting, what is the appropriate day to record the expenses related to the gasoline?

A) January 1.

B) January 7.

C) January 12.

D) January 13.

Answer: C

Consider the following events for Betterment Incorporated:

Consider the following events for Betterment Incorporated:

January 1 Betterment purchases gasoline for $200 on account.

January 7 Betterment advertises lawn mowing services for $100 per lawn.

January 9 Betterment signs up 8 customers who pay a total of $800 cash.

January 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used.

January 13 Betterment pays for the gasoline purchased on January 1.

Under accrual-basis accounting, what is the appropriate day to record the revenues related to lawn services?

A) January 1.

B) January 7.

C) January 9.

D) January 12.

Answer: D

The following information pertains to Sooner Company:

The following information pertains to Sooner Company:

May 1 Customer ordered an installation service to be done by Sooner Company on May 15.

May 2 Customer paid cash for the installation job to be done on May 15.

May 8 The Sooner Company purchased installation supplies on account for the job.

May 15 The installation job was started and completed.

May 20 Amount owed for supplies purchased on May 8 is paid.

Assuming that Sooner Company uses accrual-basis accounting, when would the company record the expense related to the supplies?

A) May 2.

B) May 8.

C) May 15.

D) May 20.

Answer: C

The following information pertains to Sooner Company:

May 1 Customer ordered an installation service to be done by Sooner Company on May 15.

May 2 Customer paid cash for the installation job to be done on May 15.

May 8 The Sooner Company purchased installation supplies on account for the job.

May 15 The installation job was started and completed.

May 20 Amount owed for supplies purchased on May 8 is paid.

Assuming that Sooner Company uses cash-basis accounting, when would the company record the expense related to the supplies?

A) May 2.

B) May 8.

C) May 15.

D) May 20.

Answer: D

On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements

On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements for Rents-A-Lot under both cash-basis and accrual-basis accounting?

A) Cash-basis = $24,000; Accrual-basis = $24,000.

B) Cash-basis = $72,000; Accrual-basis = $12,000.

C) Cash-basis = $0; Accrual-basis = $24,000.

D) Cash-basis = $0; Accrual-basis = $12,000.

Answer: C

Which of the following statements are correct?

For accrual-basis accounting:

(1) record revenues when providing goods and services to customers.

(2) record expenses when cash is paid.

For cash-basis accounting:

(3) record revenue when cash is received.

(4) record expenses when benefit is received.

A) (1) and (4).

B) (2) and (3).

C) (1) and (3).

D) (2) and (4).

Answer: C

When the balance of the Deferred Revenue account decreases during an accounting period:

A) Accrual-basis revenues exceed cash collections from customers.

B) Accrual-basis expenses exceed cash collections from customers.

C) Accrual-basis revenues are less than cash collections from customers.

D) Accrual-basis net income is less than cash-basis net income.

Answer: A

Which transaction would not be recorded under cash-basis accounting?

A) Providing services to customers for cash.

B) Paying one year of rent in advance.

C) Paying salaries to employees.

D) Purchasing supplies on account.

Answer: D

When the amount of interest receivable decreases during an accounting period:

A) Accrual-basis revenues exceed cash collections from borrowers.

B) Accrual-basis net income exceeds cash-basis net income.

C) Accrual-basis revenues are less than cash collections from borrowers.

D) Accrual-basis expenses are less than cash payments to borrowers.

Answer: C

A company has the following transactions:

Pay employees' salaries for the current period.

Pay rent in advance.

Pay dividends to stockholders in the current period.

Receive (but do not pay) a utility bill.

Use supplies previously purchased.

How many of these transactions result in an expense being reported in the current period using accrual-basis accounting?

A) 1.

B) 2.

C) 3.

D) 4.

Answer: C

A company has the following transactions:

Pay employees' salaries for the current period.

Pay rent in advance.

Pay dividends to stockholders in the current period.

Receive (but do not pay) a utility bill.

Use supplies previously purchased.

How many of these transactions result in an expense being reported in the current period using cash-basis accounting?

A) 1.

B) 2.

C) 3.

D) 4.

Answer: B

A company has the following three events in December:

December 1 - Pay last month's rent (November), $500.

December 15 - Pay rent for the current month (December), $500.

December 31 - Pay rent for the following year, $6,000.

How much would be recorded as Rent Expense for the month of December using accrual-basis accounting?

A) $6,500.

B) $7,000.

C) $1,000.

D) $500.

Answer: D

The primary difference between accrual-basis and cash-basis accounting is:

A) The timing of when revenues and expenses are recorded.

B) Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting.

C) Accrual-basis accounting violates both the concepts of revenue recognition and expense recognition.

D) Adjusting entries are only a necessary part of cash-basis accounting.

Answer: A

The following events pertain to Bills Company:

The following events pertain to Bills Company:

December 28, 2021 Bills was contacted by a customer for possible accounting and tax services.

December 30, 2021 Bills signed a formal agreement with the customer to provide accounting and tax services in 2022.

January 4, 2022 The customer paid $1,000 in advance for the services to be provided by Bills Company.

January 11, 2022 Bills provided accounting and tax services to the customer.

Using accrual-basis accounting, on which date should Bills Company record revenue for the accounting and tax services?

A) December 30, 2021.

B) December 31, 2021.

C) January 4, 2022.

D) January 11, 2022.

Answer: D

Consider the following transactions:

The company uses supplies purchased in the previous period, $1,500.

The company pays cash for rent in advance, $6,000.

The company repays a loan to the bank, $10,000 (ignore any interest cost).

The amount of accrual-basis expense is ________ while the amount of cash-basis expense is ________.

A) $6,000; $11,500

B) $6,000; $16,000

C) $1,500; $16,000

D) $1,500; $6,000

Answer: D

The following events pertain to Bills Company:

December 28, 2021 Bills was contacted by a customer for possible accounting and tax services.

December 30, 2021 Bills signed a formal agreement with the customer to provide accounting and tax services in 2022.

January 4, 2022 The customer paid $1,000 in advance for the services to be provided by Bills Company.

January 11, 2022 Bills provided accounting and tax services to the customer.

Using cash-basis accounting, on which date should Bills Company record revenue for the accounting and tax services?

A) December 30, 2021.

B) December 31, 2021.

C) January 4, 2022.

D) January 11, 2022.

Answer: C

Pawn Shops Unlimited recorded the following four transactions during April. Which of these transactions would have the same income statement impact in April regardless

Pawn Shops Unlimited recorded the following four transactions during April. Which of these transactions would have the same income statement impact in April regardless of whether the company used accrual-basis or cash-basis accounting?

A) Purchased $500 of office supplies on account (supplies were used in May and paid for in May).

B) Paid $1,800 for a six-month insurance policy covering the period July 1—December 31.

C) Paid $700 for an advertisement that appeared in the May 17 edition of the Las Vegas Sun newspaper.

D) Received $300 from customers for services performed in March.

Ch3 answer: A

When a company provides services on account, which of the following would be recorded using cash-basis accounting?

A) Debit to Cash.

B) Debit to Service Revenue.

C) Credit to Deferred Revenue.

D) No entry would be recorded.

Answer: D

Pawn Shops Unlimited recorded the following four transactions during April. Which of these transactions would have the same income statement

Pawn Shops Unlimited recorded the following four transactions during April. Which of these transactions would have the same income statement impact in April regardless of whether the company used accrual-basis or cash-basis accounting?

A) Received $600 from customers for services to be provided in May.

B) Paid $1,800 for a six-month insurance policy covering the period July 1—December 31.

C) Paid $700 for an advertisement that appeared in the April 17 edition of the Las Vegas Sun newspaper.

D) Received $300 from customers for services performed in March.

Ch3 answer: C

A company paid $900 to workers during May. Of this amount, $600 was for work performed in April, while the other $300 was for work performed during May. What would the impact of this transaction be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual-basis net income?

A) (1) No effect, (2) No effect, (3) Decrease.

B) (1) Decrease, (2) Decrease, (3) No effect.

C) (1) Decrease, (2) Decrease, (3) Decrease.

D) (1) Decrease, (2) No effect, (3) No effect.

Ch3 answer: C

A company purchased $400 of office supplies on account during May. All the supplies were used in May, and the account was paid during June

A company purchased $400 of office supplies on account during May. All the supplies were used in May, and the account was paid during June. What would the impact of these transactions be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual-basis net income?

A) (1) No effect, (2) No effect, (3) Decrease.

B) (1) Decrease, (2) Decrease, (3) No effect.

C) (1) Decrease, (2) Decrease, (3) Decrease.

D) (1) Decrease, (2) No effect, (3) No effect.

Ch3 answer: A

A company provided $1,500 of services to customers during the month of May. The customers paid in June. What would the impact of these transactions be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual basis net income?

A) (1) No effect, (2) No effect, (3) Increase.

B) (1) No effect, (2) No effect, (3) No effect.

C) (1) Increase, (2) Increase, (3) Increase.

D) (1) Increase, (2) Increase, (3) No effect.

Ch3 answer: A

The following events pertain to Jasper Corporation:

The following events pertain to Jasper Corporation:

May 1 Jasper purchased office supplies of $3,000 on account.

May 5 The office supplies were shipped to Jasper.

May 8 Jasper used these office supplies for a one-time event.

May 9 Jasper paid $3,000 cash for the office supplies purchased on May 1.

Using cash-basis accounting, on which date should Jasper record supplies expense?

A) May 1.

B) May 5.

C) May 8.

D) May 9.

Ch3 answer: D

The accounting basis that records revenues when cash is received and expenses when cash is paid is referred to as:

A) Cash-basis.

B) Accrual-basis.

C) Realization-basis.

D) Reporting-basis.

Ch3 answer: A

In November, a company hires three temporary employees that are scheduled to work only the month of December. Those employees work during December

In November, a company hires three temporary employees that are scheduled to work only the month of December. Those employees work during December, and they are then paid their full salaries in January. In which month should the company record salaries expense?

A) November.

B) December.

C) January.

D) Evenly over the three months.

Ch3 answer: B

A company orders office supplies in June. Those supplies are received and used in July. The supplies are paid for in August. In which month should the company record supplies expense?

A) June.

B) July.

C) August.

D) Evenly over the three months.

Ch3 answer: B

A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense?

A) June.

B) July.

C) August.

D) Evenly over the three months.

Ch3 answer: C

A company received an order from a customer in June for services to be provided. Those services were provided in July, and the customer paid the full amount in August

A company received an order from a customer in June for services to be provided. Those services were provided in July, and the customer paid the full amount in August. According to the revenue recognition principle, in which month should the company record revenue?

A) June.

B) July.

C) August.

D) Evenly over the three months.

Ch3 answer: B

A customer purchased a drill press on November 14 on account from Sears. The drill press was delivered two weeks later. The customer paid for the drill press on December 5. When should Sears record the revenue for this transaction according to the revenue recognition principle?

A) November.

B) December.

C) Evenly in each of the two months.

D) One-third in November and two-thirds in December.

Ch3 answer: A

Air France collected cash on February 4 from the sale of a ticket to a customer on January 26. The flight took place on April 5. According to the revenue recognition principle,

Air France collected cash on February 4 from the sale of a ticket to a customer on January 26. The flight took place on April 5. According to the revenue recognition principle, in which month should Air France have recognized this revenue?

A) January.

B) February.

C) April.

D) Evenly in each of the three months.

Ch3 answer: C

Which of the following provides a description of the relation between revenues and expenses for financial reporting purposes?

A) Valuation consequences.

B) Equal dollar amounts.

C) Cause-and-effect.

D) Comparability of transactions.

Ch3 answer: C

The basic principle involved with expense recognition is:

A) All costs that are used to generate revenue are recorded in the period the revenue is recognized.

B) All transactions are recorded at the exchange price.

C) The business is separate from its owners.

D) The business will continue to operate indefinitely unless there is evidence to the contrary.

Ch3 answer: A

A company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period

A company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. This company is using:

A) Cash-basis accounting.

B) Accrual-basis accounting.

C) The recording principle.

D) The entity assumption.

Ch3 answer: B

Which accounting principle states that a company should "record revenues when they provide goods and services to customers?"

A) Valuation.

B) Revenue recognition.

C) Conservatism.

D) Materiality.

Ch3 answer: B

The accounting basis that records revenues when goods or services are provided to customers and expenses with related revenues is referred to as:

A) Cash-basis.

B) Profit-basis.

C) Accrual-basis.

D) Reporting-basis.

Ch3 answer: C

The revenue recognition principle states that:

A) Revenue should be recognized in the period the cash is received.

B) Revenue should be recognized in the period goods and services are provided.

C) Revenue should be recognized in the balance sheet.

D) Revenue is a component of common stock.

Ch3 answer: B

The accounting basis that helps to measure and report revenues and expenses in a way that clearly reflects the ability of a company to generate value for its owners is referred to as:

A) Cash-basis.

B) Accrual-basis.

C) Profit-basis.

D) Reporting-basis.

Ch3 answer: B

Finnish Motors has the following balance sheet accounts:

Land $ 150,000

Equipment 90,000

Salaries Payable 12,000

Notes Payable 99,000

Supplies 10,000

Cash 25,000

Common Stock 40,000

Retained Earnings 100,000

Accounts Payable ?

Prepaid Rent ?

If the company has total assets of $290,000, what is the balance of the company's Accounts Payable account?

A) $15,000.

B) $25,000.

C) $12,000.

D) $39,000.

Answer: D

Finnish Motors has the following balance sheet accounts:

Finnish Motors has the following balance sheet accounts:

Land $ 150,000

Equipment 90,000

Salaries Payable 12,000

Notes Payable 99,000

Supplies 10,000

Cash 25,000

Common Stock 40,000

Retained Earnings 100,000

Accounts Payable ?

Prepaid Rent ?

If the company has total liabilities and stockholders' equity of $290,000, what is the balance of the company's Prepaid Rent account?

A) $15,000.

B) $25,000.

C) $12,000.

D) $39,000.

Answer: A

Lithuanian Motors has the following balance sheet accounts:

Lithuanian Motors has the following balance sheet accounts:

Land $ 170,000

Equipment 66,000

Salaries Payable ?

Notes Payable 88,000

Supplies 14,000

Cash 26,000

Common Stock 100,000

Retained Earnings 40,000

Accounts Payable ?

Prepaid Rent 12,000

If the company has total assets of $288,000, what is the balance of the company's Salaries Payable account?

A) $15,000.

B) $25,000.

C) $12,000.

D) Cannot be determined given the information provided.

Answer: D

The Accounts Receivable account has a beginning balance of $10,000 and the company provides services of $50,000 on account during the month

The Accounts Receivable account has a beginning balance of $10,000 and the company provides services of $50,000 on account during the month. The ending balance was $12,000.
How much did the company receive from customers during the month?

A) $50,000.

B) $52,000.

C) $48,000.

D) $62,000.

Answer: C

A trial balance can best be explained as a list of:

A) The income statement accounts used to calculate net income.

B) Revenue, expense, and dividend accounts used to show the balances of the components of retained earnings.

C) The balance sheet accounts used to show the equality of the accounting equation.

D) All accounts and their balances at a particular date.

Answer: D

A trial balance represents the:

A) Source documents used to determine the effects of transactions on the company's accounts.

B) List of all accounts and their balances at a particular date to ensure that debits equal credits.

C) Chronological record of all transactions affecting the company.

D) Process of transferring debit and credit information from the journal to the accounts in the general ledger.

Answer: B

On March 3, Cobra Inc. purchased a desk for $450 on account. On March 22, Cobra purchased another desk for $500 also on account, and then on March 24, Cobra paid $400 on account

On March 3, Cobra Inc. purchased a desk for $450 on account. On March 22, Cobra purchased another desk for $500 also on account, and then on March 24, Cobra paid $400 on account. At the end of March, what amount should Cobra report for desks (assuming these two desks were the only desks they had)?

A) $50.

B) $450.

C) $500.

D) $950.

Answer: D

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January:

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January:

Issued 10,000 shares of common stock for $15,000 cash.

Purchased land for $12,000, signing a note payable for the full amount.

Purchased office equipment for $1,200 cash.

Received cash of $14,000 for services provided to customers during the month.

Purchased $300 of office supplies on account.

Paid employees $10,000 for their first month's salaries.

What was the balance of Gotebo's Cash account following these six transactions?

A) $29,800.

B) $19,300.

C) $17,800.

D) $22,400.

Answer: C

The Accounts Payable account has a beginning balance of $12,000 and the company purchased $50,000 of supplies on account during the month. The ending balance was $10,000.
How much did the company pay to creditors during the month?

A) $50,000.

B) $52,000.

C) $60,000.

D) $62,000.

Answer: B

The figure below is a depiction of a T-account.

The figure below is a depiction of a T-account.

Account

1,700 Beg.

1,200 800

3,300 End.

Which of the following statements is correct?

A) The account could be a liability account.

B) During the period, a journal entry was recorded that included a credit to the account for $800.

C) The amount reported to stockholders at the end of the period for this account is $3,300.

D) All of the other answers provide a correct statement.

Answer: D

Below is the company's Cash T-account.

Cash

Beg. 1,200

5,200 3,100

End. 3,300

The $3,100 amount could represent which of the following?

A) Purchase of supplies on account.

B) Ending balance of cash.

C) Payment for salaries.

D) Collection from customers.

Answer: C

Below is the company's Cash T-account.

Cash

Beg. 1,200

5,200 3,100

End. 3,300

The $5,200 amount could represent which of the following?

A) Purchase of supplies on account.

B) Ending balance of cash.

C) Payment for salaries.

D) Collection from customers.

Answer: D

A debit in a journal entry is always posted to the general ledger as a(n):

A) Increase.

B) Credit.

C) Decrease.

D) Debit.

Answer: D

Posting is the process of:

A) Analyzing the impact of the transaction on the accounting equation.

B) Obtaining information about external transactions from source documents.

C) Transferring the debit and credit information from the journal to individual accounts in the general ledger.

D) Listing all accounts and their balances at a particular date.

Answer: C

Posting transactions to T-accounts involves:

A) Analyzing source documents to determine the effects of transactions on the company's accounts.

B) Listing all accounts and their balances at a particular date to ensure that debits equal credits.

C) Preparing a chronological record of all transactions affecting the company.

D) Transferring debit and credit information from the journal to the accounts in the general ledger.

Answer: D