ACC 112 - Chapters 1 - 4 Exam

Question 0

The initials GAAP stand for

Answer 0

Generally Accepted Accounting Principles

Question 1

On April 25, Gregg’s Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, GRS accepted the seller’s counteroffer of $127,000. On June 20, the land was assessed at a value of $88,000 for property tax purposes. On August 4, GRS was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in GRS’s records?

Answer 1

$127,000

Question 2

Equipment with an estimated market value of $55,000 is offered for sale at $75,000. The equipment is acquired for $20,000 in cash and a note payable of $40,000. The amount used in the buyer’s accounting records to record the acquisition is

Answer 2

$60,000

Question 3

Donner company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?

Answer 3

$115,000

Question 4

The unit of measure concept

Answer 4

Requires that accounting data be reported in yen in Japan or dollars in the US

Question 5

Debts owed by a business are referred to as

Answer 5

Liabilities

Question 6

The accounting equation may be expressed as

Answer 6

Assets - Liabilities = Owner’s Equity

Question 7

The assets and liabilities of the company are $175,000 and $40,000, respectively. Stockholders’ Equity should equal

Answer 7

$135,000

Question 8

Declaring and paying cash dividends

Answer 8

Decreases stockholders’ equity

Question 9

The chart of accounts classifies the accounts to make edification of the accounts easier. This is done by was of assigning a number to each account. The first number identifies the classification of the type of account. Which of the following indicates the use of this classification?

Answer 9

1-Assets, 2-Liabilities, 3-Stockholders’ Equity, 4-Revenues, 5-Expenses

Question 10

Cash was paid by Ari’s Alarm Service to creditors on account. Which of the following entries for AAS records this transaction?

Answer 10

Accounts Payable, Debit; Cash, Credit

Question 11

Which of the following entries records the acquisition of office supplies on account?

Answer 11

Office Supplies, Debit; Accounts Payable, Credit

Question 12

Which of the following records records the receipt of cash from patients on account?

Answer 12

Cash, Debit; Accounts Receivable, Credit

Question 13

Which of the following entries records the collection of cash from cash customers?

Answer 13

Cash, Debit; Fees Earned, Credit

Question 14

The payment for the monthly rent will require which of the following entries?

Answer 14

Debit Rent Expense and Credit Cash

Question 15

Which of the following accounts increase with a credit?

Answer 15

Liabilities, Capital Stock, Revenues

Question 16

The accounts in the ledger of Monroe Entertainment Co are listed below. All accounts have normal balances. What is the balance for the trial balance?
Accounts Payable...1,500
Accounts Receivable...1,800
Investment...2,000
Fees Earned...3,000
Insurance Expense...1,300
Land...3,000
Cash...2,600
Capital Stock...2,500
Dividends...1,200
Wages Expense...1,400
Retained Earnings...6,300

Answer 16

$13,300

Question 17

Of the following, which will determine if the accounting equation is in balance?

Answer 17

Trial balance

Question 18

The balance in the prepaid rent account before adjustment at the end of the year is $24,000, which represents four months’ rent paid on December 1. The adjusting entry required on December 31 is

Answer 18

Debit Ret Expense, $6,000; Credit Prepaid Rent, $6,000

Question 19

The balances in the office supplies account on June 1 was $6,300, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,500. The amount to be used for the appropriate adjusting entry is

Answer 19

$6,900

Question 20

What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000?

Answer 20

Debit Insurance Expense, $10,000; Credit Prepaid Insurance, $10,000

Question 21

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 Tuesday is

Answer 21

Debit Salaries Expense, $8,000; Credit Salaries Payable, $8,000

Question 22

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Answer 22

Book Value

Question 23

As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called

Answer 23

Depreciation

Question 24

The adjusting entry to record the depreciation of equipment for the fiscal period is

Answer 24

Debit Depreciation Expense; Credit Accumulated Depreciation

Question 25

The income summary account is also called

Answer 25

The clearing account

Question 26

After posting the second closing entry to the income summary account, the balance will be equal to

Answer 26

The net income or (loss) for the period

Question 27

What is the last account that should be listed on the post-closing trial balance?

Answer 27

Retained Earnings

Question 28

There are four closing entries.

Answer 28

Revenues, Expenses, Income Summary, Dividends

Question 29

Closing entries

Answer 29

Must be journalized and posted

Question 30

Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?

Answer 30

Unearned Rent

Question 31

The fiscal year selected by companies

Answer 31

Begins with the first day of the month and ends with the last day of the twelfth month

Question 32

Which of the following is not an essential part of the accounting records?

Answer 32

Work Sheet