Name:
Date:
Period:
Accounting I
State Test Review
Standard 2: Students will list and identify characteristics of the three basic accounting equation
elements. (Chapter 1)
1. Write the accounting equation.
2. List and define each part of the accounting equation.
3. Classify each item listed below as an asset, liability, or owner’s equity by placing a check mark in
the Asset, Liability, or Owner’s Equity column.
Account
Asset
Liability
Owner’s
Equity
Cash
Alice Jones, Capital
Prepaid Insurance
Accounts Payable – Steward Supply Company
Supplies
Any amount owed
Owner’s capital account
Anything owned
4. Balance the accounting equation.
Assets
19,000
=
Liabilities
9,000
6,500
+
Owner’s Equity
21,000
51,570
39,750
28,000
22,000
10,000
24,985
17,000
5,000
10,000
10,000
25,000
34,879
18,450
125,540
36,000
5. Explain why the accounting equation must be in balance.
46,000
Standard 3: Students will apply the theory of debit and credit to the accounting equation, define a
business transaction, and show how and why accounts are increased and decreased.
(Chapter 2)
1. What is a business transaction?
2. For each account listed, assign an account number in the chart of accounts.
Account Title
Cash in Bank
George Smith, Capital
Accounts Payable – Allen Systems
Accounts Receivable – Abe Dunn
Revenue/Sales
George Smith, Drawing
Advertising Expense
Supplies
Rent Expense
Prepaid Insurance
Account Number
3. Decide which accounts in the accounting equation are changed by each of the following
transactions. Place a plus (+) in the appropriate column if the account is increased. Place a minus (-)
in the appropriate column if the account is decreased.
Transactions
1.
Received cash from owner as an investment.
2.
Received cash from sales.
3.
Paid cash for telephone bill.
4.
Paid cash for advertising.
5.
Paid cash to owner for personal use.
6.
Paid cash for rent.
7.
Paid cash for equipment repairs.
8.
Bought supplies on account from Maxwell Company.
9.
Paid cash for insurance.
10.
Paid cash on account to Maxwell Company.
Assets
Trans.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Cash
+
Supplies
+
Prepaid
Insurance
=
Liabilities
+
Owner’s Equity
=
Accts. Payable
Maxwell
Company
+
Susan Sanders,
Capital
4. Determine how each transaction affects the accounting equation; analyze transactions into debit
and credit parts.
Cash
Supplies
Prepaid Insurance
Accounts Payable—Miller Supplies
Jeff Dixon, Capital
Jeff Dixon, Drawing
Sales
Advertising Expense
Miscellaneous Expense
Rent Expense
Repair Expense
Utilities Expense
1.
2.
3.
4.
Using the account titles shown above, write the accounts affected in Column 2.
For each account title, write the account classification in Column 3.
For each account title, place a check mark in either Column 4 or 5 to indicate the normal balance.
For each account title, place a check mark in either Column 6 or 7 to indicate if the account is
increased (+) or decreased (-) by this transaction.
5. For each account title, place a check mark in either Column 8 or 9 to indicate if the account is
changed by a debit or a credit.
Transactions
1. Received cash from owner as an investment.
2. Paid cash for supplies.
3. Paid cash for insurance.
4. Bought supplies on account from Miller Supplies.
5. Paid cash on account to Miller supplies.
6. Paid cash for rent.
7. Received cash from sales.
8. Paid cash to owner for personal use.
9. Paid cash for telephone bill (utilities expense).
1
2
3
Trans.
No.
Accounts
Affected
Account
Classification
1.
2.
3.
4.
5.
6.
7.
8.
9.
4
5
Account’s Normal
Balance
Debit
Credit
6
7
How is Account
Affected?
+
-
8
9
Entered in
Account as
Debit
Credit
Standard 4: Students will identify and use source documents for journalizing transactions; students
will post journal entries to a ledger. (Chapter 3 & 4)
1. List five different source documents and identify what type of transaction each source document
would be used for.
2. What is the purpose of the General Journal?
3. What are the steps in journalizing? (in order)
4. What is the purpose of the General Ledger?
5. What the steps in posting? (in order)
6. Explain the purpose of the posting references?
7. What is recorded in the Post. Ref. column of the General Ledger account?
8. What is recorded in the Post. Ref. column of the General Journal?
9. Analyze each transaction listed below.
1. Write the source document for each transaction in Column 2.
2. Using the following account titles, write the accounts affected by each transaction in Column 3.
Cash
Accounts Receivable—Darnell Lee
Supplies
Prepaid Insurance
Accounts Payable—Gable Supplies
Mary Jacobs, Capital
Mary Jacobs, Drawing
Sales
Advertising Expense
Miscellaneous Expense
Rent Expense
Repair Expense
Utilities Expense
3. For each account title, write the account classification in Column 4.
4. For each account title, place a check mark in either Column 5 or 6 to indicate the normal
balance.
5. For each account title, place a check mark in either Column 7 or 8 to indicate if the account is
increased (+) or decreased (-) by this transaction.
6. For each account title, place a check mark in either Column 9 or 10 to indicate if the account is
changed by a debit or a credit.
Transactions
1. Paid cash for advertising.
2. Paid cash for repairs.
3. Received cash from owner as an investment.
4. Paid cash for miscellaneous expense.
5. Bought supplies on account from Gable Supplies.
6. Paid cash on account to Gable Supplies.
7. Paid cash for water bill.
8. Paid cash for supplies.
9. Paid cash for rent.
10. Sold services on account to Darnell Lee
11. Received cash from sales.
12. Paid cash for insurance.
1
Trans.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
2
Source
Document
3
4
Accounts
Affected
Account
Classification
5
6
Account’s Normal
Balance
Debit
Credit
7
8
How Is Account
Affected?
+
-
9
10
Entered in Account as
a
Debit
Credit
Standard 5: Students will prepare, analyze and interpret financial statements. (Chapter 6)
1. Determine the General Ledger account balance.
1.
Beg. Balance
Debit
Credit
Debit
800
500
2.
3.
650
New Balance
Debit
Credit
250
575
360
4.
5.
Credit
435
150
6.
0
100
775
300
400
690
7.
290
850
40
8.
0
239
100
2. What is the purpose of the trial balance?
3. What are the steps for preparing a Work Sheet?
4. Extending account balances on a work sheet
1. Place a check mark in either Column 1 or 2 to indicate the Trial Balance column in which each
account’s balance will appear.
2. Place a check mark in Columns 5, 6, 7, or 8 to indicate the column to which each up-to-date
account balance will be extended.
Account Title
1. Advertising Expense
2. Accts. Pay.--Bell Supply
3. Cash
4. Miscellaneous Expense
5. Maria Dorn, Capital
6. Maria Dorn, Drawing
7. Prepaid Insurance
8. Rent Expense
9. Repair Expense
10. Sales
11. Supplies
12. Utilities Expense
1
2
Trial Balance
Debit
Credit
5
6
Income Statement
Debit
Credit
7
8
Balance Sheet
Debit
Credit
5. Calculating net income or net loss on a work sheet
The column totals from five different work sheets are given on the form below.
Complete the following for each company.
1. Calculate the amount of net income or net loss. Write the amount on line 2 in the correct
columns. Label the amount as Net Income or Net Loss.
2. Add the amounts in each column. Write the totals on line 3.
3. Verify the accuracy of your proving totals.
Debit
1. Column totals
Income Statement
Credit
Balance Sheet
Debit
Credit
$9,000
$9,500
$35,500
$35,000
$1,500
$2,000
$7,500
$7,000
$5,200
$4,800
$26,500
$26,900
$5,300
$8,150
$34,950
$32,100
$5,300
$4,130
$33,400
$34,570
2.
3. Proving totals
1. Column totals
2.
3. Proving totals
1. Column totals
2.
3. Proving totals
1. Column totals
2.
3. Proving totals
1. Column totals
2.
3. Proving totals
Standard 5: Students will prepare, analyze and interpret financial statements. (Chapter 7)
1. What document is used to prepare the financial statements?
2. What is the purpose of the Income Statement?
3. What information is reported on the Income Statement?
4. What is the purpose of the Balance Sheet?
5. What information is reported on the Balance Sheet?
6. Preparing an Income Statement and Balance Sheet
From the work sheet below, prepare an income statement and balance sheet for The Sound of
Stone.
Complete the following.
1. Total all columns of the work sheet
2. Calculate and record the amount of net income or net loss.
3. Using the form on the next page, prepare an income statement for the month ended
September 30, 20--.
4. Calculate and record the component percentages for total expenses and net income. Round
percentages to the nearest 0.1%
5. Prepare the September 30, 20-- balance sheet for The Sound of Stone.
Account Title
1. Cash
2. Petty Cash
3. Accts. Rec.—HartCo
4. Accts. Rec.—Starlite Club
5. Supplies
6. Prepaid Insurance
7. Accts. Pay.—First Audio
8. Accts. Pay.—Office Supply Co.
9. Shannon Stone, Capital
10. Shannon Stone, Drawing
11. Income Summary
12. Sales
13. Advertising Expense
14. Insurance Expense
15. Miscellaneous Expense
16. Rent Expense
17. Supplies Expense
18. Utilities Expense
20. Net Income
1
2
Trial Balance
Debit
Credit
3
4
Adjustments
Debit
Credit
8,272
200
100
720
4,051
1,200
5
6
Income Statement
Debit
Credit
7
8
Balance Sheet
Debit
Credit
8,272
200
100
720
1,487
1,100
2,564
100
1,360
20
10,000
1,360
20
10,000
600
600
4,411
4,411
273
100
10
250
2,564
115
273
100
10
250
2,564
115
Income Statement
% of
Sales
Balance Sheet
7. Determine the ending capital balances.
1.
2.
3.
4.
Beginning
Capital
Investments
Revenue
Expenses
Withdrawals
10,000
0
25,000
45,785
5,000
25,000
10,000
0
20,000
30,000
50,000
66,350
5,000
50,000
10,000
15,900
3,000
5,000
6,000
5,000
Ending Capital
Standard 6: Students will prepare adjusting and closing entries and a post-closing trial balance.
(Chapter 8)
1. What is the difference between permanent and temporary accounts?
2. Determining accounts affected by adjusting and closing entries
1. For each account title on the chart, place a check mark in either Column 2 or 3 to indicate
whether the account is affected by an adjusting entry.
2. For each account title on the chart, place a check mark in either Column 4 or 5 to indicate
whether the account is affected by a closing entry.
3. For each account title on the chart, place a check mark in either Column 6 or 7 to indicate
whether the account has a balance after closing entries are posted.
1
Account Title
2
3
Account Is Affected by
an Adjusting Entry
Yes
No
4
5
Account Is Affected by
a Closing Entry
Yes
No
6
7
After Closing Entries
Are Posted, Account
Has a Balance
Yes
No
1. Advertising Expense
2. Accts. Pay.--Baer Supplies
3. Cash
4. Accts. Pay.--Gates Office Supplies
5. Alisha Downs, Capital
6. Alisha Downs, Drawing
7. Income Summary
8. Insurance Expense
9. Miscellaneous Expense
10. Prepaid Insurance
11. Rent Expense
12. Sales
13. Supplies
14. Supplies Expense
15. Utilities Expense
3. Why is the post-closing trial balance prepared?
4. Why do only the balances of permanent accounts appear on the post-closing trial balance?
5. Journalize adjusting and closing entries using the information from the worksheet on the previous
page.
General Journal
Date
Account Title
Doc.
No.
Post.
Ref.
Debit
Credit
Standard 7: Students will demonstrate proper cash management. (Chapter 5)
1. Define and show an example of a blank endorsement.
2. Define and show an example of a restrictive endorsement.
3. What are the steps for preparing a bank reconciliation?
4. Using the information below, calculate the adjusted checkbook balance:
Balance on last unused check stub is $3,000; outstanding deposits of $400, bank service charge of
$25, outstanding checks totaling $450, and a dishonored check for $75. What is the adjusted
checkbook balance after the bank reconciliation is prepared?
5. Using the information below, calculate the adjusted bank balance:
Bank statement balance is $5,000; outstanding deposits of $150, bank service charge of $30, and
outstanding checks totaling $600. What is the adjusted bank balance after the bank reconciliation
is prepared?
6. Which accounts are affected when journalizing a bank service charge?
Debit:
Credit:
7. Which accounts are affected when journalizing a dishonored/NSF check?
Debit:
8. What does it mean to “prove cash”?
Credit:
9. Why is it important for a company to establish a petty cash fund?
10. What accounts are affected when establishing a petty cash fund?
Debit:
Credit:
11. What accounts are affected when replenishing a petty cash fund?
Debit:
Credit:
12. Journalize entries to replenishing a petty cash fund
KeepClean replenished petty cash on the dates shown in Column 2 of the following table. The
information in Columns 3 to 5 is obtained from the petty cash reports.
Record the journal entry for each petty cash replenishment.
1
2
Trans./Doc. No.
Replenished on
A / C43
B / C54
C / C67
D / C79
3
July 31
August 31
September 30
October 31
Supplies
4
Summary of Petty Cash Slips
Advertising
32.00
21.00
40.00
10.00
25.00
20.00
20.00
5
Miscellaneous
5.00
15.00
20.00
General Journal
Date
Account Title
Doc.
No.
Post.
Ref.
Debit
Credit