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28 Cards in this Set

  • Front
  • Back

The process of transferring figures from the book of original entry to the ledger accounts is called:




a. adjusting


b. balancing


c. ledgering


d. posting

d. Posting

Debit always means:




a. a decrease


b. none of these answers are correct


c. an increase


d. the right side of an account

b. none of these answers are correct

A trial balance:




a. proves that debits and credits are equal in the ledger


b. supplies a listing of open accounts and their balances that are used in preparing financial statements.


c. all of the answers are correct


d. is normally prepared three times in the accounting cycle

c. all of the answers are correct

Which of the following is a real (permanent) account?




a. Service revenue


b. accounts receivable


c. both goodwill and accounts receivable


d. goodwill

c. both goodwill and accounts receivable

Which of the following is a nominal (temporary) account?




a. Inventory


b. Salaries and Wages Expense


c. Retained Earnings


d. Unearned Service Revenue

Salaries and Wages Expense

The accounting equation must remain in balance:




a. throughout each step in the accounting cycle


b. only when journal entries are recorded


c. only when formal financial statements are prepared


d. only at the time the trial balance is prepared

a. throughout each step in the accounting cycle

A trial balance may prove that debits and credits are equal, but...




a. All of the above


b. a transaction could have been entered twice


c. An amount could be entered in the wrong amount


d. a transaction could have been omitted

a. all of the above

Which of the following is an example of an accrued expense?




a. Rent organization during the period, to be received at the end of the year.


b. Property taxes incurred during the year, to be paid in the first quarter of the subsequent year.


c. Depreciation expense


d. Office supplies purchased at the beginning of the year and debited to an expense account

b. Property taxes incurred during the year, to be paid in the first quarter of the subsequent year.

How do these prepaid expenses expire?




a. Rent- Through use and concumption Supplies- through use and consumption


b. Rent- With the passage of time Supplies- Through use and consumption


c. Rent- With the passage of time Supplies- With the passage of time


d. Through use and consumption Supplies- With the passage of time

b. Rent- With the passage of time Supplies- Through use and consumption

Unearned revenue on the books of one company is likely to be:




a. an unearned revenue on the books of the company that made the advance payment


b. an accrued expense on the books of the company that made the advance payment


c. a prepaid expense on the books of the company that made the advance payment


d. an accrued revenue on the books of the company that made the advance payment

c. a prepaid expense on the books of the company that made the advance payment

Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?




a. To reduce the federal income tax liability


b. To match the costs of production with revenue as recognized


c. To aid management in cash-flow analysis


d. To adhere to the accounting constraint of conversation

b. To match the costs of production with revenue as recognized
During an accounting period, if an expense has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

a. a liability account and an asset account


b. an asset or contra asset account and an expense account.


c. a liability account and an expense account


d.a receivable account and a revenue account.

c. a liability account and an expense account
Which type of account is always debited during the closing process?

a.Revenue


b. Retained earnings


c. Expensed.


d. Dividends

a.Revenue
Which of the following statements best describes the purpose of closing entries?

a. To faciliate posting and taking a trial balance.


b. To determine the amount of net income or net loss for the following period.


c. To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period.


d. To complete the record of various transactions that were started in a prior period.

c. To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period.
Maso Company recorded journal entries for the issuance of common stock for $160,000, the payment of $52,000 on accounts payable, and the payment of salaries expense of $84,000. What net effect do these entries have on owners’ equity?

a. Increase of $24,000.


b. Increase of $108,000.


c. Increase of $160,000.


d. Increase of $76,000.

d. Increase of $76,000.
Maso Company recorded journal entries for the issuance of common stock for $160,000, the payment of $52,000 on accounts payable, and the payment of salaries expense of $84,000. What net effect do these entries have on owners’ equity?

a. Increase of $24,000.


b. Increase of $108,000.


c. Increase of $160,000.


d. Increase of $76,000.

d. Increase of $76,000.
Mune Company recorded journal entries for the declaration of $150,000 of dividends, the $96,000 increase in accounts receivable for services rendered, and the purchase of equipment for $63,000. What net effect do these entries have on owners’ equity?

a. Decrease of $213,000.


b. Decrease of $54,000.


c. Increase of $33,000.


d. Decrease of $117,000.

b. Decrease of $54,000.
Panda Corporation paid cash of $60,000 on June 1, 2014 for one year’s rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2014 adjusting entry is

a. debit Prepaid Rent and credit Cash, $25,000.


b. debit Rent Expense and credit Prepaid Rent, $35,000.


c. debit Prepaid Rent and credit Rent Expense, $25,000.


d. debit Prepaid Rent and credit Rent Expense, $35,000.

b. debit Rent Expense and credit Prepaid Rent, $35,000.
Tate Company purchased equipment on November 1, 2014 and gave a 3-month, 9% note with a face value of $60,000. The December 31, 2014 adjusting entry is

a. debit Interest Expense and credit Interest Payable, $5,400.


b. debit Interest Expense and credit Interest Payable, $900.


c. debit Interest Expense and credit Interest Payable, $1,350.


d. debit Interest Expense and credit Cash, $900.

b. debit Interest Expense and credit Interest Payable, $900.
Brown Company's account balances at December 31, 2014 for Accounts Receivable and the related Allowance for Doubtful Accounts are $920,000 debit and $1,400 credit, respectively. From an aging of accounts receivable, it is estimated that $23,000 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for

a. $1,400.


b. $23,000.


c. $24,400.


d. $21,600

d. $21,600
Chen Company's account balances at December 31, 2014 for Accounts Receivable and the Allowance for Doubtful Accounts are $480,000 debit and $900 credit. Sales during 2014 were $1,650,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for

a. $17,400.


b. $4,800.


c. $16,500.


d. $15,600.

c. $16,500.
Starr Corporation loaned $450,000 to another corporation on December 1, 2014 and received a 3-month, 8% interest-bearing note with a face value of $450,000. What adjusting entry should Starr make on December 31, 2014?

a. Debit Cash and credit Interest Receivable, $9,000.


b. Debit Cash and credit Interest Revenue, $3,000.


c. Debit Interest Receivable and credit Interest Revenue, $9,000.


d. Debit Interest Receivable and credit Interest Revenue, $3,000.

d. Debit Interest Receivable and credit Interest Revenue, $3,000.
Murphy Company sublet a portion of its warehouse for five years at an annual rental of $60,000, beginning on May 1, 2014. The tenant, Sheri Charter, paid one year's rent in advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy reports on a calendar-year basis. The adjustment on December 31, 2014 for Murphy should be

a. Unearned Rent Revenue40,000 Rent Revenue 40,000


b. No entry


c. Unearned Rent Revenue20,000 Rent Revenue 20,000


d. Rent Revenue20,000 Unearned Rent Revenue 20,000

a. Unearned Rent Revenue40,000 Rent Revenue 40,000
During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets. Supplies in the amount of $25,800 were purchased. Actual year-end supplies amounted to $5,600. The adjusting entry for store supplies will

a. increase expenses by $20,200.


b. debit Accounts Payable for $5,600.


c. decrease supplies by $5,600.


d. increase net income by $20,200.

a. increase expenses by $20,200.
A company receives interest on a $70,000, 8%, 5-year note receivable each April 1. At December 31, 2014, the following adjusting entry was made to accrue interest receivable:Interest Receivable4,200 Interest Revenue 4,200. Assuming that the company does not use reversing entries, what entry should be made on April 1, 2015 when the annual interest payment is received?

a. Cash4,200 Interest Receivable 4,200


b. Cash1,400 Interest Revenue 1,400


c. Cash5,600 Interest Receivable 4,200 Interest Revenue 1,400


d. Cash5,600 Interest Revenue 5,600

c. Cash5,600 Interest Receivable 4,200 Interest Revenue 1,400
On September 1, 2014, Lowe Co. issued a note payable to National Bank in the amount of $900,000, bearing interest at 9%, and payable in three equal annual principal payments of $300,000. On this date, the bank's prime rate was 8%. The first payment for interest and principal was made on September 1, 2015. At December 31, 2015, Lowe should record accrued interest payable of

a. $16,000.


b. $24,000.


c. $18,000.


d. $27,000

c. $18,000.
Total stockholders’ equity consists of common stock and the earnings retained in the business. True or False?

True

Which of the following criteria must be met before an event or item should be recorded for accounting purposes?

a. The event or item is an element.


b. The event or item is relevant and reliable.


c. All of these must be met.


d. The event or item can be measured objectively in financial terms.

c. All of these must be met.