Accounting 11
Chp 8 Review
For each of the following, choose the most appropriate response.
1) The work sheet:
a. is an informal business paper.
b. may be prepared in pencil.
c. shows individual balances of accounts payable and receivable.
d. Two of the above are true.
2) Office Equipment is classified as a:
a. current liability.
b. revenue.
c. fixed asset.
d. current asset.
3) On the work sheet, the GST Recoverable account is extended to the:
a. income statement debit column.
b. balance sheet credit column.
c. income statement credit column.
d. balance sheet debit column.
4) On the work sheet, the Fees Earned account is extended to the:
a. credit column of the balance sheet.
b. debit column of the income statement.
c. credit column of the income statement.
d. debit column of the balance sheet.
5) The figure that an accountant uses as the base amount when preparing a common-size balance
sheet is:
a. total assets.
b. total liabilities.
c. total owner’s equity.
d. none of the above.
6) The obligation of a company’s officers to show how well they have been managing the
company is called:
a. auditing.
b. accountability.
c. shareholder responsibility.
d. performance reporting.
e. none of the above.
7) To manipulate the net income figure, a business changes the method of recording certain expenses.
The business may have violated:
a. the accountability principle.
b. the auditing principle.
c. the consistency principle.
d. the full disclosure principle.
e. the materiality principle.
2.
Prepare a percentage trend analysis, correct to one decimal place, for the following sales
data:
20-1
Sales $22 500
20-2
20-3
20-4
20-5
$24 700
$21 500
$26 900
$26 000
%
3. a) Convert the income statements below to common-size form. Round the %’s to 1 decimal.
Company A
$
Revenue
Sales
Company B
%
$
$125 000
$475 000
Expenses
Rent Expense
Wages Expense
Other
Expenses
$ 13 000
45 000
33 000
$ 28 000
275 000
125 000
Total Expenses
$ 91 000
$428 000
Net Income
$ 34 000
$ 47 000
%
b) Evaluate each company. Which company is the better buy? Give reasons.
4. Classify the accounts listed below, using abbreviations for the following classifications:
CA (Current Assets)
LTL (Long-Term Liabilities)
R (Revenue)
CL (Current Liabilities)
OE (Owner’s Equity)
E (Expense)
P & E (Plant and Equipment)
Account
a) Accounts Receivable
b) Accounts Payable
c) Bank Charges
d) Buildings
e) PST Payable
f) E. Tymko, Capital
g) Interest Earned
h) GST Payable
i) Supplies
j) Mortgage Payable
Classification
5. Refer to the worksheet below. Ignore GST
a. Identify five errors
1.
2.
3.
4.
5.
b. Make the necessary changes and balance the worksheet
Worksheet
Shea Company
December 31, 20—
Trial Balance
Accounts
DR
Income Statement
CR
DR
CR
Balance Sheet
DR
Bank
400
400
Accounts Receivable
140
140
Supplies
150
Equipment
3 400
3 400
Automobile
9 600
9 600
Bank Loan
5 000
Accounts Payable
R. Shea, Capital
R. Shea, Drawings
Advertising Expense
5 000
250
250
2 815
2 815
10 000
Revenue
10 000
30 000
30 000
1 200
1 200
Bank Charges Expense
300
300
Car Expense
940
940
35
35
Rent Expense
2 400
2 400
Utilities Expense
1 100
1 100
Wages Expense
8 400
8 400
Miscellaneous Expense
38 056
Net Income
CR
38 065
24 375
30 000
18 540
5 625
30 000
4 065
5 625
30 000
18 540
18 540
6. Indicate to which work sheet column each of the following accounts would be extended by
placing a checkmark () in the appropriate column.
Trial Balance
Example:
DR
CR

Commission Earned
Income Statement
DR
CR
Balance Sheet
DR
CR

a) Accounts Payable
b) Miscellaneous
Expense
c) Advertising Expense
d) Equipment
e) G. Rojek, Capital
f) GST Recoverable
g) GST Payable
h) G. Rojek, Drawings
i) Bank Charges
j) Supplies
7. The ledger of General Laundry was prepared by the owner, J. Travis, who is not a skilled
accountant. He uses an alphabetical arrangement for his accounts. On November 30, 2005, at
the end of a one-month fiscal period, the trial balance of General Laundry is as follows:
DR
Accounts Payable
Accounts Receivable
Bank Loan
Bank
Delivery Expense
Delivery Truck
Equipment
GST Payable
GST Recoverable
Miscellaneous Expense
Office Supplies
Rent Expense
Revenue
Telephone Expense
J. Travis, Capital
J. Travis, Drawings
Wages Expense
CR
3 900
9 850
12 000
5 500
700
15 000
10 000
600
300
350
600
1 500
22 000
450
16 750
3 000
8 000
55 250
55 250
a.
Rearrange the above accounts in correct order
b.
Complete the six-column work sheet below
c. Prepare an income statement and classified balance sheet.
6 Column Worksheet
Accounts
Net Income
Trial Balance
DR
CR
Income Statement
DR
CR
Balance Sheet
DR
CR
Income Statement
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Balance Sheet
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