Midterm Study CH0

Question 1

An accountant debited an asset account $800 and credited a liability $700. What is a correct way to record the transaction?

Answer 1

Credit an equity account $100, an asset $100, or another liability $100.

Question 2

X company billed a client. What is the result of the transaction

Answer 2

assets and equity increased

Question 3

classification and normal balance of Unearned Rev.

Answer 3

liability and credit

Question 4

Baden Industries borrows $20,000 at 7% annual interest for 6 months on 10/1/17. What is the appropriate way to accrue interest if the fiscal year ends Dec. 31, 2017?

Answer 4

debit interest expense $350, credit interest payable $350

Question 5

post closing trial balance shows

Answer 5

only balance sheet accounts

Question 6

Accounts receivable, retained earnings, common stock, and notes payable are all on the adjusted trial balances. Which will not show the same balances?

Answer 6

retained earnings

Question 7

sort the accounts by their appearance of debit or credit on the balance sheet:
service revenue, cash, equipment, prepaid insurance, unearned service revenue, depreciation expense, salaries and wages expense, accumulated depreciation, common stock, and retained earnings.

Answer 7

debit: cash, equipment, prepaid insurance, depreciation expense, and salaries and wages expense
credit: service revenue, unearned service revenue, accumulated depreciation, common stock, and retained earnings

Question 8

what is the entry to close the income summary for net income

Answer 8

debit income summary and credit retained earnings

Question 9

what is the final step in the accounting cycle

Answer 9

post-closing trial balance

Question 10

On January 1, 2016 Lenny bought equipment for $25,000. It depreciates at $1,000 per month. What is the Accumulated Depreciation balance on January 31, 2017?

Answer 10

$13,000 credit

Question 11

how does a company record money received in advance of performing a service

Answer 11

debit cash and credit unearned service revenue

Question 12

revenue collected in advance, and earned over a period of time across two different periods would be recorded:

Answer 12

each year at the amount earned.

Question 13

an investment by an owner in a business increases

Answer 13

assets and stockholders’ equity

Question 14

primary source in preparing financial statements is:

Answer 14

adjusted trial balance

Question 15

difference between cost of a depreciable asset and its related accumulated depreciation is referred to as the

Answer 15

book value of the asset

Question 16

The policy at X corporation is to expense office supplies at the time of purchase. On the last day of the accounting period supplies were counted at $1,100 unused. The balance in supplies expense is $3,500. What is the adjusting entry?

Answer 16

debit supplies and credit supplies expense $1,100

Question 17

Realty R Co. received a check for $18,000 on July 1, which was a 6 mo advance pmt of rent for a building rented by a client. Unearned Rent Revenue was credited $18,000 upon received. What is the adjusting entry on July 31?

Answer 17

debit unearned rent revenue $3,000 and credit rent revenue $3,000

Question 18

which of: unearned revenue, retained earnings, prepaid rent, and prepaid insurance will show the accounts beginning balance on the adjusted trial balance?

Answer 18

retained earnings