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40 Cards in this Set
- Front
- Back
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Which of the following sets of accounts have normal debit balances?
a. liabilities and assets b. assets and expenses c. assets and revenues d. revenues and dividends |
b. assets and expenses
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Which sets of accounts are increased with credits?
a. liabilities and assets b. assets and expenses c. liabilities and revenues d. revenues and dividends |
c. liabilities and revenues
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The general journal entry to record a cash investment by stockholders into the business includes a:
a.debit to Common Stock and a credit to Cash b. debit to Cash and a credit to Accounts Receivable c. debit to Cash and a credit to Common Stock d. debit to Accounts Receivable and a credit to Cash |
c. debit to Cash and a credit to Common Stock
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The general journal entry to record a purchase of supplies on account includes a:
a. debit to Cash and a credit to Supplies b. debit to Accounts Payable and a credit to Supplies c. debit to Supplies and a credit to Accounts Receivable d. debit to Supplies and a credit to Accounts Payable |
d. debit to Supplies and a credit to Accounts Payable
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The general journal entry to record a purchase of supplies on account is posted to the general ledger. This transaction will:
a. decrease the balance in the Supplies account b. increase the balance in the Accounts Payable account c. increase the balance in the Cash account d. decrease the balance in the Accounts Payable account |
b. increase the balance in the Accounts Payable account
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The general journal entry to record the payment of a year’s rent in advance is posted to the general ledger. This transaction will:
a. increase the balance in the Prepaid Rent account b. increase the balance in the Cash account c. decrease the balance in the Prepaid Rent account d. decrease the balance in the Rent Expense account |
a. increase the balance in the Prepaid Rent account
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A company pays $3,000 for 6 months rent on November 1, 2010. The adjusting entry on December 31, 2010 will include a:
a. debit to Rent Expense and a credit for Prepaid Rent for $3,000. b. debit to Prepaid Rent and a credit to Rent Expense for $2,000. c. debit to Rent Expense and a credit to Prepaid Rent for $1,000. d. debit to Rent Expense and a credit to Prepaid Rent for $2,000. |
c. debit to Rent Expense and a credit to Prepaid Rent for $1,000.
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A company received $2,400 for 4 months rent on October 1, 2010. The adjusting entry on December 31, 2010 will include a:
a. debit to Rental Revenue and a credit for Unearned Rental Revenue for $1,800. b. debit to Rental Revenue and a credit to Unearned Rental Revenue for $1,200. c. debit to Unearned Rental Revenue and a credit to Rental Revenue for $1,800. d. debit to Unearned Rental Revenue and a credit to Rental Revenue for $1,200. |
c. debit to Unearned Rental Revenue and a credit to Rental Revenue for $1,800.
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A company computes depreciation for the year on equipment to be $2,500. The adjusting entry required on December 31 includes a:
a. debit to Accumulated Depreciation-Equipment and a credit to Equipment for $2,500. b. debit to Depreciation Expense and a credit to Equipment for $2,500. c. debit to Depreciation Expense and a credit to Accumulated Depreciation-Equipment for $2,500. d. debit to Accumulated Depreciation-Equipment and a credit to Depreciation Expense for $2,500. |
c. debit to Depreciation Expense and a credit to Accumulated Depreciation-Equipment for $2,500.
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Prepare Dec. 31 adjusting entries based on the following information:
1. Depreciation expense on equipment for the year is $2,500. 2. $3,000 of prepaid rent has expired. 3. $6,000 of unearned rent has been earned by Dec. 31. 4. Wages incurred by not yet paid on Dec. 31 amount to $1,500. |
Dec. 31
Depreciation Expense 2,500 Accum. Depr.-Equipment 2,500 31 Rent Expense 3,000 Prepaid Rent 3,000 31 Unearned Rental Revenue 6,000 Rental Revenue 6,000 31 Wages Expense 1,500 Wages Payable 1,500 |
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The entry to close Supplies Expense with a balance of $2,300 includes a:
a. debit to Supplies Expense and a credit to Supplies for $2,300. b. debit to Income Summary and a credit to Supplies Expense for $2,300. c. debit to Income Summary and a credit to Supplies for $2,300. d. debit to Supplies Expense and a credit to Income Summary for $2,300. |
b. debit to Income Summary and a credit to Supplies Expense for $2,300.
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The entry to close $5,000 net income to the appropriate account includes a:
a. debit to Income Summary and a credit to Retained Earnings for $5,000. b. debit to Income Summary and a credit to Common Stock for $5,000. c. debit to Retained Earnings and a credit to Income Summary for $5,000. d. debit to Retained Earnings and a credit to Common Stock for $5,000. |
a. debit to Income Summary and a credit to Retained Earnings for $5,000.
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Which of the following sets of accounts will appear on a postclosing trial balance?
a. assets and dividends b. expenses and dividends c. liabilities and expenses d. liabilities and assets |
d. liabilities and assets
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Based on the following adjusted balances, prepare a post closing trial balance dated Dec. 31, 2010 for Blue’s Company.
Selling and Adm. Exp. 9,050 Common Stock 16,000 Unearned Rental Rev. 2,200 Retained Earnings 0 Cash 10,500 Office Supplies 350 Sales 9,800 Rental Revenue 3,400 Accounts Payable 2,900 Wages Payable 800 Accounts Receivable 13,500 Interest Expense 500 Prepaid Rent 1,500 Interest Payable 300 |
Postclosing Trial Balance
Cash $10,500 Accounts Receivable 13,500 Prepaid Rent 1,500 Office Supplies 350 Accounts Payable $ 2,900 Unearned Rental Revenue 2,200 Wages Payable 800 Interest Payable 300 Common Stock 16,000 Retained Earnings 3,650 Totals $25,850 $25,850 |
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The entry to establish petty cash includes a:
a. debit to the Cash account. b. credit to the Petty Cash account. c. debit to the Petty Cash account. d. debit to the Petty Cash Expense account. |
c. debit to the Petty Cash account.
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Prepare the entry on January 1 to establish a petty cash fund for $100.
Prepare the entry on January 31 to replenish petty cash assuming $19 was spent on postage, $55 on office supplies, and $20 on coffee and doughnuts. |
Jan. 1 Petty Cash 100
Cash 100 31 Postage Expense 19 Office Supplies Expense 55 Miscellaneous Expense 20 Cash 94 |
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A NSF check received from a customer is shown on bank reconciliation statement as a(n):
a. addition to the book balance. b. deduction from the bank balance. c. deduction from the book balance. d. addition to the bank balance. |
c. deduction from the book balance.
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Outstanding checks are shown on bank reconciliation statement as a(n):
a. addition to the book balance. b. deduction from the bank balance. c. deduction from the book balance. d. addition to the bank balance. |
b. deduction from the bank balance.
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The journal entry to record bank charges for printing checks includes a:
a. debit to Cash. b. credit to Accounts Payable. c. debit to Miscellaneous Expense. d. credit to Miscellaneous Expense. |
c. debit to Miscellaneous Expense.
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The amount paid to the seller within the discount period on a $1,500 sale on account, with credit terms of 2/10, n/30, and a credit for a return of $300 is:
a. $1,200. b. $1,176. c. $1,224. d. $1,470. |
b. $1,176.
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The entry to write off an account using the allowance method involves a debit to:
a. Uncollectible Accounts Expense. b. Accounts Receivable. c. Allowance for Uncollectible Accounts. d. Sales Discounts. |
c. Allowance for Uncollectible Accounts.
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The Allowance for Uncollectible Accounts is classified as a:
a. liability account. b. contra asset account. c. contra liability account. d. stockholders’ equity account. |
b. contra asset account.
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Prepare the entry on December 15, 2009, to record a sale on account for $5,000 to June DeLucas.
Prepare the entry on March 31, 2010, to write off the account in full for June DeLucas using the allowance method. |
2009
Dec. 15 Accounts Receivable-J. DeLucas 5,000 Sales 5,000 2010 Mar. 31 Allowance for Uncollectible Accounts 5,000 Accounts. Receivable-J. DeLucas 5,000 |
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Quick ratio =
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Quick Assets ÷ Current Liabilities
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A/R turnover ratio =
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Net credit sales ÷ Average A/R
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Age of receivables =
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360 days ÷ A/R turnover ratio
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One Day’s Sales =
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Sales ÷ 360 days
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A/R turnover =
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Average A/R ÷ One Day’s Sales
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Compute the quick ratio for MamaMia Soup Company for Year 1 and Year 2 based on the following information.
Year 1 Cash $ 94 Short-term investments 2 Accounts receivable (net) 578 Inventory 786 Property, plant & equipment (net) 2,401 Current liabilities 1,465 Long-term liabilities 1,338 Year 2 Cash $ 63 Short-term investments 7 Accounts receivable (net) 646 Inventory 904 Property, plant & equipment (net) 2,265 Current liabilities 1,851 Long-term liabilities 1,343 |
Year 1
Quick ratio = Quick Assets/Current Liabilities = ($94 + 42 + $578)/$1,465 = $674/$1,465 = .46 Year 2 Quick ratio = Quick Assets/Current Liabilities = ($63 + $7 + $646)/$1,851 = $716/$1,851 = .39 |
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The entry to purchase merchandise under a perpetual inventory system includes a debit to:
a. purchases. b. accounts payable. c. inventory. d. accounts receivable. |
c. inventory.
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The entry under a perpetual inventory system for the seller to record the cost of merchandise returned includes a credit to:
a. purchases. b. accounts payable. c. inventory. d. cost of goods sold. |
d. cost of goods sold.
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The entry under a perpetual inventory system to record the cost of merchandise sold includes a debit to:
a. accounts receivable. b. inventory. c. cost of goods sold. d. sales. |
c. cost of goods sold.
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Compute the ending inventory for Rayborn Company using the LIFO perpetual method based on the following information. On January 1 Rayborn Company had 25 units at a cost of $50 each.
Feb. 10- Purchases 20 units @ $56 April 5- Sales 32 units June 19-Purchases 26 units @ $60 Aug. 29- Sales 15 units Nov. 10-Purchases 10 units @ $63 |
Jan. 1-Balance 25 @ $50 = $1,250
Feb. 10-Purchases- 20 @ $56 = $1,120 Feb. 10-Balance- 25 @ $50 = $1,250 & 20 @ $56 = $1,120 April 5-Sales- 20 @ $56 = $1,120 & 12 @ $50 = $600 April 5-Balance - 13 @ $50 = $650 June 19-Purchases- 26 @ $60 = $1,560 June 19-Balance- 13 @ $50 = $650 & 26 @ $60 = $1,560 Aug. 29-Sales- 15 @ $60 = $900 Aug. 29-Balance- 13 @ $50 = $650 & 11 @ $60 =$660 Nov. 10-Purchases- 10 @ $63 = $630 Nov. 10-Balance 13 @ $50 = $650 & 11 @ $60 = $660 & 10 @ $63 = $630 Total ending inventory = $1,940 |
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Compute estimated ending inventory using the retail inventory method for the King Company on December 31, 2011.
Cost Jan. 1 inventory $50,000 Purchases during 2011 70,000 Sales during 2011 Retail Jan. 1 inventory $ 90,000 Purchases during 2011 150,000 Sales during 2011 200,000 |
Cost
Jan. 1 inventory $ 50,000 Purchases during 2011 70,000 Goods available for sale 120,000 Sales during 2011 Retail Jan. 1 inventory $ 90,000 Purchases during 2011 150,000 Goods available for sale 240,000 Sales during 2011 (200,000) Ending inventory at retail $ 40,000 Cost to retail % (120,000/240,000 = 50% Ending inventory at cost ($40,000 X 50%) $ 20,000 |
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John Company has 200 units of inventory on hand at December 31. John’s cost under FIFO is $52 per unit. The Dec. 31 current cost is $55 per unit. Using lower-of-cost-or-market, John should show an ending inventory balance of
a. $10,400. b. $11,000. c. $10,700. d. $10,500. |
a. $10,400.
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John Company overstated 2010 ending inventory by $25,000. What effect will this error have on 2010 and 2011 net income, respectively?
a. overstate and understate b. overstate and overstate c. understate and understate d. understate and overstate |
a. overstate and understate
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What does the inventory turnover ratio indicate?
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indicates the number of times that a company sells or "turns over" its inventory each year.
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Inventory Turnover Ratio =
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Cost of Goods Sold ÷ Average Inventory
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What does the age of inventory indicate?
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indicates the average period required to sell an item of inventory.
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Age of Inventory =
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360 days ÷ Inventory Turnover Ratio
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