exam 1

Question 1

Which of the following accounts represents a resource of the company?

Answer 1

accounts receivable

Question 2

Which of the following accounts represents a liability of the company?

Answer 2

accounts payable and unearned revenue

Question 3

Which of the following best explains the meaning of total stockholders’ equity?

Answer 3

the amount of common stock plus profits retains over the life of the company

Question 4

Which of the following is true about a debit?

Answer 4

it represents an increase in assets, a decrease to liabilities, is part of the double-entry procedure that keeps the accounting equation in balance

Question 5

When preparing a bank reconciliation, a check outstanding would be…

Answer 5

Subtracted from the bank’s cash balance

Question 6

On March 1, a company paid $24,000 for 12 months of rent in advance. How should the company record this transaction on March 1?

Answer 6

Debit prepaid rent 24,000; credit cash 24000

Question 7

adjusting entries…

Answer 7

always involve at least one income statement account and one balance sheet account

Question 8

closing entries…

Answer 8

reduce the balance of temporary accounts to zero and transfer the balance of temporary accounts to retained earnings

Question 9

At the beginning of the year, ABC company had 5000 insupplies on hand. During the year, supplies purchases amounted to 3500. By the end of the year, the supplies balance was only 900. What is the appropriate adjusting entry for ABC company?

Answer 9

Depit Supplies 7600; credit supplies expense 7600.

Question 10

the act of collusion refers to

Answer 10

two or more people acting in coordination to circumvent internal controls

Question 11

on july 31, XYZ company’s cash account showed a balance of 7500 before the bank reconciliation was preparted. After examining the july bank statement and items included with it, the company’s accountant found the following items;
NSF check … 300
Checks outstanding… 2250
service fees… 50
deposits outstanding… 1000
error: XYZ company wrote a check for 250 but recorded it incorrectly for 300. What is the amount of cash that should be reported in the company’s balance sheet as of July 31?

Answer 11

7200

Question 12

ABC company takes out a loan for 40000 with 10% interest on April 1, 2018. This amount plus interest is due on March 31, 2019. Record the adjusting entry for Dec 3, 2018

Answer 12

Debit interest expense 3000; credit interest payable 3000

Question 13

Which of the following accounts are current assets?
1. equipment
2. cahs
3. accoutns receivable
4. supplies

Answer 13

1,2,4

Question 14

which of the following accounts are current liabilities?
1. unearned revenue
2. notes payable (due in 36 months)
3. interest payable
4. accounts payable

Answer 14

1,2,4

Question 15

suppose a customer rents a vehicle for six months from Rent-a-car on september 1, paying 6000 (1000/month). Record rent-a-car’s adjusting entry on december 31.

Answer 15

debit deferred revenue 4000; credit service revenue 4000

Question 16

XYZ Company provides services to customers toatling 5000. If the customers are expected to pay in 30 days, how would the transaction be recorded?

Answer 16

debit accounts receivable 5000; credit service revenue 5000

Question 17

ABC had the following net income (loss) the first three years of operations: 7800 (1500) 2500. If the retained earning balance at the end of year three is 800, what was the total amount of dividends paid over these three years.

Answer 17

8000

Question 18

use the following appropriate amounts to calculate owners’ claims to the company’s resources: assets 1200000 liabilities 800000 net income 100000 retained earnings 250000

Answer 18

400000

Question 19

a company receives 3000 for servies to be provided over the next three months. How would the transaction be recorded today?

Answer 19

debit cash 3000; credit deferred revenue 3000

Question 20

XYZ general ledger shows a balance of, 12500 before the bank reconciliation was prepared. After examining the July bank statement and items included with it, the company’s accountant found the following items: checks outstanding 3150 NSF checks 160 service charges 75 deposits outstanding 29000 XYZ also wrote a check for 115 but recorded it incorrectly for 1150. What is the amount of cash that should be reported in the company’s balance sheet as of July 31?

Answer 20

13300

Question 21

what account is debited when a company provides a service to a customer

Answer 21

accounts receivable

Question 22

what accounts are considered assets

Answer 22

debited assets:
cash
accounts receivable
interest receivable
inventory
prepaid insurance
prepaid rent
equipment
supplies
notes receivable
equipment
land
building

credited asset:
accumulated depreciation

Question 23

liabilities

Answer 23

credited:
accounts payable
salaries payable
interest payable
unearned revenue
notes payable

Question 24

stockholders’ equity

Answer 24

credited:
common stock
retained earnings
debited:
dividends

Question 25

expenses accounts:

Answer 25

debited:
salaries expense
rent expense
supplies expense
Advertising expense
Utilities expense
interest expense
depreciation expense
service fee expense

Question 26

revenue

Answer 26

credited:
Service revenue
sales revenue
interest revenue

Question 27

accounting equation

Answer 27

assets= liabilities + stockholders’ equity

Question 28

stockholders’ equity breaks into…

Answer 28

common stock and retained earnings

Question 29

retained earnings breaks down into

Answer 29

net income - dividends

Question 30

net income is

Answer 30

revenue - expenses

Question 31

DEALOR means

Answer 31

Dividends
Expenses
Assets
———————debits^ credits v
Liabilities
Owners’ Equity
Revenue

Question 32

in adjusting entries what is credited and what is debited

Answer 32

expenses are debited
revenues are credited

Question 33

adjusting entries will always include…

Answer 33

expenses or revenues

Question 34

closing entries involve which accounts

Answer 34

revenue, expenses and dividends

Question 35

closing entries do…

Answer 35

They close temporary accounts into retained earnings by using three journals
add the amount of revenues to retained earnings
subtract expenses and dividends from retained earnings

Question 36

closing revenues

Answer 36

debit revenue
credit retained earnings

Question 37

closing expenses

Answer 37

debit retained earnings
credit salaries expense and rent expense

Question 38

closing dividends

Answer 38

debit retained earnings
credit dividends

Question 39

bank reconciliations are between

Answer 39

bank statement and company book/ledger

Question 40

what affects the bank statement side?

Answer 40

checks outstanding (-)
Deposits outstanding (+)
bank errors (-/+)

Question 41

what affects the company side

Answer 41

service fees (-)
interest earned (+)
cash collections by the bank (+)
NSF bad checks (-)
company errors (-/+)