Chapter 2

Question 1

53.	Which account types normally have a debit balance?
A.	Revenues
B.	Expenses
C.	Liabilities
D.	Both A and B

Answer 1

B

Question 2

54. An attorney performs services of $800 for a client and receives $200 cash with the remainder on account. The journal entry for this transaction would
    A. Debit Cash, credit Service Revenue
    B. Debit Cash, debit Account Receivable, credit Service Revenue
    C. Debit Cash, debit Service Revenue, credit Account Receivable
    D. Debit Cash, credit Account Receivable, credit Service Revenue

Answer 2

B

Question 3

55.	Accounts Payable had a normal beginning balance of $1,700. During the period, there were debit postings of $200 and credit postings of $700. What was the ending balance?
A.	$2,200 credit
B.	$2,200 debit
C.	$1,000 debit
D.	$1,000 credit

Answer 3

Answer: A
Chapter: 2
Explanation: Beginning balance + credit – debit = Ending balance
$1,700 + $700 - $200 = $2,200

Question 4

56.	The list of all accounts with their balance is the
A.	Balance Sheet
B.	Chart of accounts
C.	Trial balance
D.	Journal

Answer 4

C

Question 5

57.	The basic summary device of business transactions is the
A.	Journal
B.	Ledger
C.	Trial Balance
D.	Account

Answer 5

D

Question 6

58.	The beginning Cash balance was $8,000. At the end of the period, the balance was $12,000. It total cash paid out during the period was $24,000, the amount of cash receipts was 
A.	$32,000
B.	$28,000
C.	$44,000
D.	$36,000

Answer 6

Answer: B
Chapter: 2
Explanation: Beginning balance + Cash receipts – Cash payments = Ending Balance
$8,000 + X - $24,000 = $12,000 X=$28,000

Question 7

61. A doctor purchases medical supplies of $740 and pays $320 cash with the remainder on account. The journal entry for this transaction would be which of the following?
    A. Debit Supplies, Credit Accounts Payable, Credit Cash
    B. Debit Supplies, Debit Accounts Payable, Credit Cash
    C. Debit Supplies, Credit Accounts Receivable, Credit Cash
    D. Debit Supplies, Debit Cash, Credit Accounts Payable

Answer 7

A

Question 8

62. Which is the correct sequence for recording transactions and preparing financial statements?
    A. Journal, ledger, trial balance, financial statements
    B. Ledger, journal, trial balance, financial statements
    C. Ledger, trial balance, journal, financial statements
    D. Financial statements, trial balance, ledger, journal

Answer 8

A

Question 9

63. The error of posting $300 as $30 can be detected by
    A. Dividing the out-of-balance amount by 2
    B. Dividing the out-of-balance amount by 9
    C. Examining the chart of accounts
    D. Totaling each account’s balance in the ledger

Answer 9

B

Question 10

64.	If the debit amount of an entry to record the purchase of supplies on account was not posted:
A.	Assets would be understated
B.	Assets would be overstated
C.	Liabilities would be understated
D.	Liabilities would be overstated

Answer 10

A

Question 11

66.	Which account types normally have a credit balance? 
A.	Revenues
B.	Dividends
C.	Liabilities
D.	Both A and C

Answer 11

D

Question 12

67.	On September 1, Company XYZ paid $9,000 for one year of end, in advance. Which of the following accounts and amounts will appear on an adjusted trial balance prepared on December 31? 
A.	Prepaid Rent, $9,000
B.	Prepaid Rent, $3,000
C.	Rent Expense, $6,000
D.	Rent Expense, $3,000

Answer 12

D

Question 13

68. The Unearned Revenue account was not adjusted for work performed in the current period. What is the effect of this error ?
    A. The assets will be understated and expenses will be understated
    B. The assets will be overstated and liabilities will be overstated
    C. The liabilities will be overstated and revenue will be understated
    D. The liabilities will be understated and revenues will be understated

Answer 13

C

Question 14

69. On August 1 of the current year, Company A received $5,400 for legal services to be performed evenly throughout the next six months. The adjusting entry on December 31 of the current year would include a:
    A. Credit to Unearned Service Revenue of $4,500
    B. Debit to Unearned Service revenue of $900
    C. Debit to Service Revenue of $900
    D. Credit to Service Revenue of $4,500

Answer 14

D
$5,400/6 = $900
$900 x 5 = $4,500

Question 15

70.	Which of the following transactions will increase an asset and increase a liability: 
A.	Payment of a debt
B.	Payment of an account payable
C.	Borrowing money from a bank
D.	Purchasing office equipment with cash

Answer 15

C

Question 16

72.	ABC Company paid nine months’ rent in advance for an amount of $6,300. At the end of the first month, the adjusting entry for rent would include a:
A.	Debit to rent expense for $700
B.	Debit to prepaid rent for $700
C.	Credit to prepaid rent for $5,600
D.	Credit to unearned rent for $6,300

Answer 16

Answer: A
Chapter: 2
Explanation:
$6,300/9 = $700

Question 17

73. The journal entry to accrue $600 of service revenue earned is
    A. Debit Accounts payable 600; Credit Service revenue 600
    B. Debit Unearned revenue 600; Credit Service revenue 600
    C. Debit Accounts receivable 600; Credit Service revenue 600
    D. Debit Service revenue 600; Credit Unearned revenue 600

Answer 17

C

Question 18

74.	A business purchases a truck by signing a note payable to the seller. This transaction would include a 
A.	Credit to Truck
B.	Debit to Note Payable
C.	Credit to Note Payable
D.	Debit to Truck expenses

Answer 18

C

Question 19

75.	If the debit amount of an entry to record the purchase of inventory on account was not posted:
A.	Assets would be understated
B.	Assets would be overstated
C.	Liabilities would be understated
D.	Liabilities would be overstated

Answer 19

A

Question 20

77.	ON December 31, 2016, salaries owed to employees total $4,150. These will be paid on January 4, 2017. The adjusting entry prepared on December 31, 2016, includes a:
A.	Debit to Salary Expense for $4,150
B.	Debit to Salary Payable for $4,150
C.	Credit to Cash for $4,150
D.	Credit to Salary Expense for $4,150

Answer 20

A