Note
The correct options are marked with
correct
1. Which of the following is not a step in providing accounting information to stakeholders?
(Points: 4)
design the accounting information system
prepare accounting surveys
identify stakeholders correct
record economic data
2. The assets and liabilities of the company are $155,000 and $60,000 respectfully. Owner’s
equity should equal _____. (Points: 4)
$215,000
$155,000
$60,000
$95,000 correct
3. If total assets decreased by $47,000 during a period of time and owner's equity increased by
$24,000 during the same period, then the amount and direction (increase or decrease) of the
period's change in total liabilities is
DECREASE_______. (Points: 4)
$23,000 increase
$47,000 decrease
$71,000 decrease correct
$71,000 increase
4. The Kennedy Company sold land for $60,000 in cash. The land was originally purchased for
$40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that
purchase. After the sale, The Kennedy Company paid off the loan to First National Bank. What
is the effect of the sale and the payoff of the loan on the accounting equation? (Points: 4)
assets increase $20,000; liabilities decrease $15,000; owner's equity increases $5,000 correct
assets increase $5,000; liabilities decrease $15,000; owner's equity increases $20,000
assets increase $60,000; liabilities decrease $15,000; owner's equity increases $20,000
assets increase $20,000; liabilities decrease $15,000; owner's equity increases $35,000
5. Rivers Computer Makeover Company purchased $15,000 of Computer and Office Equipment.
The company paid $3,000 in cash at the time of the purchase and signed a promissory note for
the remainder to be paid in six monthly installments. How will this transaction affect the
accounting equation? (Points: 4)
Increase Assets (Computer and Office Equipment $15,000) and decrease Liabilities (Accounts
Payable $15,000)
Increase Total Assets by a net amount of $12,000 (increase Computer and Office Equipment
$15,000 and decrease Cash $3,000) and increase Liabilities (Notes Payable $12,000) correct
Increase Total Assets by a net amount of $15,000 (increase Computer and Office Equipment
$12,000 and increase Cash $3,000) and decrease Liabilities (Accounts Payable $15,000)
Increase Assets (Computer and Office Equipment $12,000) and increase Liabilities (Accounts
Payable $12,000)
6. The asset section of the Balance Sheet normally presents assets in ________. (Points: 4)
alphabetical order
order of largest to smallest dollar amounts
in the order what will be converted into cash correct
no order
7. Which of the following applications of the rules of debit and credit is true? (Points: 4)
decrease Prepaid Insurance with a credit and the normal balance is a credit
increase Accounts Payable with a credit and the normal balance is a debit
increase Supplies Expense with a debit and the normal balance is a debit correct
decrease Cash with a debit and the normal balance is a credit
8. Randomly listed below are the steps in the accounting cycle:
(1) prepare the financial statements
(2) post the journal entries to the ledger
(3) record journal entries
(4) prepare a trial balance
What is the proper order of these steps?
(Points: 4)
(3), (2), (4), (1) correct
(2), (3), (4), (1)
(3), (2), (1), (4)
(4), (3), (2), (1)
9. Joe Brown invests $10,000 into his new business. How would the journal entry for this
transaction be entered in the journal? (Points: 4)
Cash 10,000 correct
Brown, Capital 10,000
Invested cash in business
Cash &nbs p; 10,000
Brown, Capital 10,000
Invested cash in business
Brown, Capital 10,000
& nbsp; Cash 10,000
Invested cash in business
Brown, Capital 10,000
Cash &nbs p; 10,000
Invested cash in business
10. June 24 Land 15,000
Cash 15,000
Purchased land for business
What effects does this journal entry have on the accounts? (Points: 4)
Increase to Cash and increase to Land
Increase to Land and decrease to Cash correct
Decrease to Cash and decrease to Land
Increase to Cash and decrease to Land
11. June 26 Equipment 14,000
Cash 4,000
Notes Payable 10,000
?????????
Which is the best explanation for this journal entry? (Points: 4)
Purchased equipment, paid cash of $4,000, with the remainder to be paid in payments correct
Purchased equipment, paid cash of $4,000, with the remainder to be received in the future
Purchased equipment, paid cash for the entire amount
Purchased equipment on credit
12. An overpayment error was discovered in computing and paying the wages of a Bartson
Repair Shop employee. When Bartson receives cash from the employee for the amount of the
overpayment, which of the following entries will Bartson make? (Points: 4)
Cash, debit; Wages Expense, credit correct
Wages Payable, debit; Wages Expense, credit
Wages Expense, debit, Cash, credit
Cash, debit; Wages Payable, credit
13. The primary difference between deferred and accrued expenses is that deferred expenses
have ________. (Points: 4)
been incurred and accrued expenses have not
not been incurred and accrued expenses have been incurred
been recorded and accrued expenses have not been incurred
not been recorded and accrued expenses have been incurred correct
14. The balance in the office supplies account on June 1 was $5,200, supplies purchased during
June were $2,500, and the supplies on hand at June 30 were $2,000. The amount to be used for
the appropriate adjusting entry is _________. (Points: 4)
$4,500
$2,500
$9,700
$5,700 correct
15. A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day.
The adjusting entry necessary at the end of the fiscal period ending on Thursday is ________.
(Points: 4)
debit Salaries Payable, $16,000; credit Cash, $16,000
debit Salary Expense, $16,000; credit Drawing, $16,000
debit Salary Expense, $16,000; credit Salaries Payable, $16,000 correct
debit Drawing, $16,000; credit Cash, $16,000
16. The supplies account has a balance of $1,000 at the beginning of the year and was debited
during the year for $2,800, representing the total of supplies purchased during the year. If $750
of supplies are on hand at the end of the year, the supplies expense to be reported on the income
statement for the year is ________. (Points: 4)
$750
$3,550
$3,800
$3,050 correct
17. The following adjusting journal entry was found on page 4 of the journal. Select the best
explanation for the entry.
Wages Expense
2,555
Wages Payable
2,555
????????????????
(Points: 4)
Record the payment of wages
Record wages to be paid this month correct
Record wages paid in advance
Record wages expense incurred and to be paid next month
18. How will the following adjusting journal entry affect the accounting equation?
Unearned Subscriptions
12,000
Subscriptions earned
12,000
(Points: 4)
Increase assets, increase revenues
Increase liabilities, increase revenues
Decrease liabilities, increase revenues correct
Decrease liabilities, decrease revenues
19. The balance in the supplies account, before adjustment at the end of the year is $625. The
proper adjusting entry if the amount of supplies on hand at the end of the year is $325 would be
________. (Points: 4)
debit Cash $325, credit Supplies $325
debit Supplies Expense $300, credit Supplies $300 correct
debit Supplies Expense$325, credit Supplies $325
debit Supplies $300, credit Supplies Expense $300
20. When is the adjusted trial balance prepared? (Points: 4)
Before adjusting journal entries are posted
After adjusting journal entries are posted correct
After the adjusting journal entries are journalized
Before the adjusting journal entries are journalized
21. In the accounting cycle, the last step is _________. (Points: 4)
preparing the financial statements
journalizing and posting the adjusting entries
preparing a post-closing trial balance correct
journalizing and posting the closing entries
22. During the end-of-period processing which of the following best describes the logical order
of this process? (Points: 4)
Preparation of adjustments, adjusted trial balance, financial statements correct
Preparation of Income Statement, adjusted trial balance, Balance Sheet
Preparation of adjusted trial balance, cross-referencing, journalizing
Preparation of adjustments, adjusted trial balance, posting
23. Once the adjusting entries are posted, the Adjusted Trial Balance will prepared to ________.
(Points: 4)
verify that the debits and credits are in balance correct
verify that all of the adjustments were posted in the correct accounts
verify that the net income (loss) is correct for the period
verify the correct flow of accounts into the financial statements
24. Accumulated Depreciation appears on the ________. (Points: 4)
balance sheet in the current assets section
balance sheet in the property, plant and equipment section correct
balance sheet in the long-term liabilities section
income statement as an operating expense
25. The following is the adjusted trial balance for Steely Company.
Steely Company
Adjusted Trial Balance
For the Year ended December 31, 2008
Cash
6,130
Accounts Receivable
2,300
Prepaid Expenses
750
Equipment
13,400
Accumulated Depreciation
1,200
Accounts Payable
1,700
Notes Payable
5,000
Bob Steely, Capital
12,000
Bob Steely, Withdrawals
870
Fees Earned
6,600
Wages Expense
1,450
Rent Expense
900
Utilities Expense
475
Depreciation Expense
150
Miscellaneous Expense
75
Totals
26,500
26,500
Determine the net income (loss) for the period. (Points: 4)
Net Income 26,500
Net Loss 870
Net Loss 3,550
Net Income 3,550 correct
26. The owner’s equity is ________. (Points: 4)
added to assets and the two are equal to liabilities
added to liabilities and the two are equal to assets correct
subtract from liabilities and the net amount is equal to assets
subtract from owner’s equity and the net amount is equal to net income
27. There are four closing entries. The first one is to close ____, the second one is to close ____,
the third one is to close ____, and the last one is to close ____. (Points: 4)
Revenues, expenses, income summary, drawing account correct
Expenses, assets, income summary, capital account
Capital account, drawing account, income summary, assets
Drawing account, income summary, expenses, revenues
28. The entry to close the appropriate insurance account at the end of the accounting period is
_______. (Points: 4)
debit Income Summary; credit Prepaid Insurance
debit Prepaid Insurance; credit Income Summary
debit Insurance Expense; credit Income Summary
debit Income Summary; credit Insurance Expense
29. Mantle Company
Worksheet
For the Year Ended December 31, 2008
Adjusted Trial Balance
Income Statement
Balance Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
16,000
16,000
Accounts Receivable
6,000
6,000
Supplies
2,000
2,000
Equipment
19,000
correct
19,000
Accumulated Depr-Equip
6,000
6,000
Accounts Payable
10,000
10,000
Wages Payable
2,000
2,000
L. Mantle, Capital
11,000
11,000
L. Mantle, Drawing
1,000
1,000
Fees Earned
47,000
47,000
Wages Expense
21,000
21,000
Rent Expense
6,000
6,000
Depreciation Expense
5,000
5,000
Totals
76,000
76,000
32,000
47,000
44,000
29,000
Net Income (Loss)
15,000
15,000
47,000
47,000
44,000
44,000
The journal entry to close revenues would be: _________. (Points: 4)
debit Income Summary $47,000, credit Fees Earned $47,000
debit L. Mantle, Capital $47,000, credit Fees Earned $47,000
debit Fees Earned $47,000; credit Income Summary $47,000 correct
credit Fees Earned $47,000; credit L. Mantle, Capital $47,000
30. The following are steps to the accounting cycle. Of the following, which step should be done
first? (Points: 4)
Closing entries are journalized and posted to the ledger.
Transactions are posted to the ledger. correct
Adjusting entries are journalized and posted to the ledger.
Financial statements are prepared.
31. The following are steps in the accounting cycle. Of the following, which would be prepared
last? (Points: 4)
An adjusted trial balance is prepared. correct
Transactions are posted to the ledger.
An unadjusted trial balance is prepared.
Adjusting entries are journalized and posted to the ledger.
32. The accounting cycle requires three trial balances be done. In what order should they be
prepared? (Points: 4)
Post-closing, unadjusted, adjusted
Unadjusted, post-closing, adjusted
Unadjusted, adjusted, post-closing correct
Post-closing, adjusted, unadjusted
33. The fiscal year selected by companies _________. (Points: 4)
is the same as the calendar year
begins with the first day of the month and ends on the last day of the twelfth month
correct
must always begin on January 1
will change each year
34. A fiscal year ________. (Points: 4)
ordinarily begins on the first day of a month and ends on the last day of the following twelfth
month correct
for a business is determined by the federal government
always begins on January 1 and ends on December 31 of the same year
should end at the height of the business's annual operating cycle
35. The natural business year _______. (Points: 4)
is a fiscal year that ends when business activities are at its lowest point
is a calendar year that ends when business activities are at its lowest point correct
is a fiscal year that ends when business activities are at its highest point
is a calendar year that ends when business activities are at its highest point
36. The term "inventory" indicates ________. (Points: 4)
merchandise held for sale in the normal course of business
materials in the process of production or held for production
supplies
both (a) and (b) correct
37. A company using the periodic inventory system has the following account balances:
Merchandise Inventory at the beginning of the year, $4,000; Transportation-In, $450; Purchases,
$12,000; Purchases Returns and Allowances, $2,300; Purchases Discounts, $220. The cost of
merchandise purchased is equal to _______. (Points: 4)
$13,930
$9,930 correct
$9,489
$14,520
38. A company, using the periodic inventory system, has merchandise inventory costing $140 on
hand at the beginning of the period. During the period, merchandise costing $400 is purchased.
At year-end, merchandise inventory costing $180 is on hand. The cost of merchandise sold for
the year is _______. (Points: 4)
$720
$550
$360 correct
$140
39. A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a
25% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the
Merchandise Inventory account? (Points: 4)
$7,500 correct
$10,000
$9,800
$7,350
40. Merchandise with an invoice price of $4,000 is purchased on June 2 subject to terms of 2/10,
n/30, FOB destination. Transportation costs paid by the seller totaled $150. What is the cost of
the merchandise if paid on June 12, assuming the discount is taken? (Points: 4)
$4,150
$4,070 correct
$4,067
$3,920
41. Taking a physical count of inventory ________. (Points: 4)
is not necessary when a periodic inventory system is used
is a detective control correct
has no internal control relevance
is not necessary when a perpetual inventory system is used
42. Which of the following is not true about taking physical inventories? (Points: 4)
Large variances may require investigations and implementation of corrective actions.
Physical inventories are taken when inventory levels are at their lowest. correct
Physical inventories deter employee thefts and inventory misuses.
Physical inventories are taken when inventory levels are at their highest.
43. Inventory costing methods place primary emphasis on assumptions about _______. (Points:
4)
flow of goods
flow of costs
flow of goods or costs depending on the method correct
flow of values
44. The inventory data for an item for November are:
Nov. 1
Inventory
20 units at $20
4
Sold
10 units
10
Purchased
30 units at $21
17
Sold
20 units
30
Purchased
10 units at $22
Using the perpetual system, costing by the last-in, first-out method, what is the cost of the
merchandise inventory of 30 units on November 30? (Points: 4)
$640
$610
$620
$630 correct
45. The inventory data for an item for November are:
Nov. 1
Inventory
20 units at $20
4
Sold
10 units
10
Purchased
30 units at $21
17
Sold
20 units
30
Purchased
10 units at $22
Using the perpetual system, costing by the last-in, first-out method, what is the cost of the
merchandise sold for November? (Points: 4)
$640
$630
$620 correct
$610
46. The Baby Company sells blankets for $30 each. The following was taken from the inventory
records during July.
Date Product T
Units
Cost
July 3
Purchase
5
$15
July 10
Sale
3
July 17
Purchase
10
$17
July 20
Sale
6
July 23
Sale
3
July 30
Purchase
10
$20
Assuming that the company uses the perpetual inventory system, determine the cost of
merchandise sold for the sale of July 20 using the Lifo inventory cost method. (Points: 4)
$98
$102 correct
$120
$62
47. The Baby Company sells blankets for $30 each. The following was taken from the inventory
records during July.
Date Product T
Units
Cost
July 3
Purchase
5
$15
July 10
Sale
3
July 17
Purchase
10
$17
July 20
Sale
6
July 23
Sale
3
July 30
Purchase
10
$20
Assuming that the company uses the perpetual inventory system, determine the ending inventory
for the month of July using the Fifo inventory cost method. (Points: 4)
$132
$251 correct
$200
$395
48. The Baby Company sells blankets for $30 each. The following was taken from the inventory
records during July.
Date Product T
Units
Cost
July 3
Purchase
5
$15
July 10
Sale
3
July 17
Purchase
10
$17
July 20
Sale
6
July 23
Sale
3
July 30
Purchase
10
$20
Assuming that the company uses the perpetual inventory system, determine the ending inventory
for the month of July the Lifo inventory cost method. (Points: 4)
$181
$274
$260
$247 correct
49. The following lots of a particular commodity were available for sale during the year:
Beginning inventory
10 units at $50
First purchase
25 units at $53
Second purchase
30 units at $54
Third purchase
15 units at $60
The firm uses the periodic system and there are 20 units of the commodity on hand at the end of
the year. What is the amount of inventory at the end of the year according to the first-in, first-out
method? (Points: 4)
$1,030
$1,140
$1,170 correct
$1,060
50. The following lots of a particular commodity were available for sale during the year:
Beginning inventory
10 units at $60
First purchase
25 units at $63
Second purchase
30 units at $64
Third purchase
15 units at $70
The firm uses the periodic system and there are 20 units of the commodity on hand at the end of
the year. What is the amount of inventory at the end of the year according to the last-in, first-out
method? (Points: 4)
$1,230 correct
$1,220
$1,240
$1,340
51. The following lots of a particular commodity were available for sale during the year:
Beginning inventory
10 units at $61
First purchase
25 units at $63
Second purchase
30 units at $64
Third purchase
15 units at $73
The firm uses the periodic system and there are 20 units of the commodity on hand at the end of
the year. What is the amount of the inventory at the end of the year according to the average cost
method? (Points: 4)
$1,300 correct
$1,305
$1,415
$1,236
52. The following lots of a particular commodity were available for sale during the year:
Beginning inventory
10 units at $60
First purchase
25 units at $63
Second purchase
30 units at $64
Third purchase
15 units at $70
The firm uses the periodic system and there are 20 units of the commodity on hand at the end of
the year. What is the amount of the inventory at the end of the year according to the lower of cost
or market, using the first-in, first-out method, if the current replacement cost is $64 a unit?
(Points: 4)
$1,200
$1,230
$1,280 correct
$1,370
53. If the cost of an item of inventory is $60 and the current replacement cost is $65, the amount
included in inventory according to the lower of cost or market is ________. (Points: 4)
$5
$60 correct
$65
$125
54. If the estimated rate of gross profit is 40%, what is the estimated cost of the merchandise
inventory on June 30, based on the following data?
June 1
Merchandise inventory
$ 75,000
June 1-30
Purchases (net)
150,000
June 1-30
Sales (net)
135,000
(Points: 4)
$144,000 correct
$140,000
$ 81,000
$ 54,500
55. During times of rising prices, which of the following is not an accurate statement? (Points: 4)
Average costing will yield results that are between those of FIFO and LIFO
LIFO will result in a higher cost of goods sold than FIFO
FIFO will result in a higher net income than LIFO
LIFO will result in higher income taxes than FIFO correct
Optional Information:
Tennessee
Already Tried:
I am taking a 200 Question exam and these are the questions that I have two different answers
for. Just want a double check to see if I am correct. thank you