Question 1

If a company reports a loss for the year, the closing entry will result in which of the following?

Accepted Answer

A) A debit to retained earnings 
B) A debit to miscellaneous expense 
C) A credit to unearned revenue 
D) A debit to capital stock 
A) A debit to retained earnings 
B) A debit to miscellaneous expense 
C) A credit to unearned revenue 
D) A debit to capital stock

Question 2

Use journal entries to record the following transactions.
A) Company purchases $10,000 worth of goods on credit.
B) Company signs a lease and pays the first month's rent of $750
C) Company pays $500 for advertising in the local newspaper.
D) Company sells $15,000 worth of goods during the first month; $12,000 for cash and $3,000 on credit.E) Company pays $10,000 for the goods bought in A)
F) Company collects $2,000 of the amount owing from customers.
G) Owner pays herself a $500 dividend from the first month's earnings.

Accepted Answer

The answer of Use journal entries to record the following...

Question 3

A business bought a new delivery truck worth $45,000.They paid $5,000 down and took out a loan for the balance.How would the transaction be recorded?

Accepted Answer

A) Dr.Capital assets $45,000, Cr.Cash $5,000, Cr.Bank loan $40,000 
B) Dr.Capital assets $40,000, Cr.Bank loan $40,000 
C) Dr.Cash $5,000, Dr.Bank loan $40,000, Cr.Capital asset $45,000, 
D) Dr.Bank loan $40,000, Cr.Capital assets $40,000, 
A) Dr.Capital assets $45,000, Cr.Cash $5,000, Cr.Bank loan $40,000 
B) Dr.Capital assets $40,000, Cr.Bank loan $40,000 
C) Dr.Cash $5,000, Dr.Bank loan $40,000, Cr.Capital asset $45,000, 
D) Dr.Bank loan $40,000, Cr.Capital assets $40,000,

Question 4

Which of the following normally has a credit balance?

Accepted Answer

A) Accounts receivable 
B) Capital assets 
C) Prepaid insurance 
D) Retained earnings 
A) Accounts receivable 
B) Capital assets 
C) Prepaid insurance 
D) Retained earnings

Question 5

Which of the following best describes the profit margin ratio?

Accepted Answer

A) It is a measure of the risk and liquidity of the entity. 
B) It measures how much revenue is available after paying for the cost of goods sold to meet other expenses. 
C) It is a measure of the effectiveness of the entity at controlling costs. 
D) It is a measure of the amount of dividends to be paid to the shareholders. 
A) It is a measure of the risk and liquidity of the entity. 
B) It measures how much revenue is available after paying for the cost of goods sold to meet other expenses. 
C) It is a measure of the effectiveness of the entity at controlling costs. 
D) It is a measure of the amount of dividends to be paid to the shareholders.

Question 6

Identify three different points in time that an expense could be recognized relative to when it is paid.Give an example of each.

Accepted Answer

The three points in time are: 1) Before

Question 7

Accumulated depreciation is an example of which of the following?

Accepted Answer

A) Prepaid expense 
B) Deferred expense 
C) Contra account 
D) Accrued expense 
A) Prepaid expense 
B) Deferred expense 
C) Contra account 
D) Accrued expense

Question 8

Which of the following would cause the trial balance to not balance?

Accepted Answer

A) Posting an entry twice. 
B) Reversing the debit and credit accounts in a journal entry. 
C) Posting both sides of the entry as debits. 
D) Forgetting to record an entry. 
A) Posting an entry twice. 
B) Reversing the debit and credit accounts in a journal entry. 
C) Posting both sides of the entry as debits. 
D) Forgetting to record an entry.

Question 9

Richmond owns land and a building.The land was bought for $75,000 and the building was built for $625,000.The company expects to use the site for 25 years.If the company has owned and used the assets for five years, what are their net book values (NBV)? 
$\begin{array}{cc}
&\text { Land NBV } & \text { Building NBV } \
A.&\$ 60,000 & \$ 500,000 \
B.&\$ 75,000 & \$ 500,000 \
C.&\$ 60,000 & \$ 625,000 \
D.&\$ 75,000 & \$ 625,000
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 10

Turin Turbines had $250,000 worth of goods on hand at the beginning of the year.During the year they made purchases of $2,200,000 and sales of $4,200,000.At year-end they counted the inventory still on hand and had $212,500.What was their cost of sales for the year?

Accepted Answer

A) $1,787,500 
B) $2,462,500 
C) $2,200,000 
D) $2,237,500 
A) $1,787,500 
B) $2,462,500 
C) $2,200,000 
D) $2,237,500

Question 11

In its first month of operation a company made purchases of goods to sell totaling $58,000, and at the end of the month they had $7,500 of them still on hand.What would be the cost of sales expense for the month?

Accepted Answer

A) $7,500 
B) $50,500 
C) $58,000 
D) Cannot be determined without knowing what the sales were for the month. 
A) $7,500 
B) $50,500 
C) $58,000 
D) Cannot be determined without knowing what the sales were for the month.

Question 12

Where in the financial statement is the account "Accumulated depreciation" found?

Accepted Answer

A) Balance Sheet: Current assets 
B) Balance Sheet: Non-current assets 
C) Balance Sheet: Current liabilities 
D) Income Statement 
A) Balance Sheet: Current assets 
B) Balance Sheet: Non-current assets 
C) Balance Sheet: Current liabilities 
D) Income Statement

Question 13

Which of the following best describes the matching concept in accounting?

Accepted Answer

A) Revenues should be recorded in the same period as the expenses related to it are paid. 
B) Revenue should be recorded in the same period as the cash is received. 
C) Expenses should be recorded when paid. 
D) Expenses should be recorded in the same period as the revenue they helped earn is recorded. 
A) Revenues should be recorded in the same period as the expenses related to it are paid. 
B) Revenue should be recorded in the same period as the cash is received. 
C) Expenses should be recorded when paid. 
D) Expenses should be recorded in the same period as the revenue they helped earn is recorded.

Question 14

Which of the following would be used to reset the income statement accounts to zero at the end of the period?

Accepted Answer

A) A journal entry 
B) An adjusting entry 
C) A closing entry 
D) A temporary account 
A) A journal entry 
B) An adjusting entry 
C) A closing entry 
D) A temporary account

Question 15

Which of the following account balances increases with debits?

Accepted Answer

A) Accounts payable 
B) Cash sales 
C) Retained earnings 
D) Salary expense 
A) Accounts payable 
B) Cash sales 
C) Retained earnings 
D) Salary expense

Question 16

On May 15th, Bain Bathtubs signed a lease to rent a storefront starting on June 1st for the next two years at $1,000 per month.They paid the first two months' rent in advance on signing the lease.On May 15th how would the transaction be recorded?

Accepted Answer

A) An increase in expenses of $2,000 and a decrease in cash of $2,000. 
B) An increase in expenses of $24,000 and a decrease in cash of $24,000. 
C) An increase in prepaid rent of $2,000 and a decrease in cash of $2,000. 
D) An increase in prepaid rent of $24,000 and a decrease in cash of $24,000. 
A) An increase in expenses of $2,000 and a decrease in cash of $2,000. 
B) An increase in expenses of $24,000 and a decrease in cash of $24,000. 
C) An increase in prepaid rent of $2,000 and a decrease in cash of $2,000. 
D) An increase in prepaid rent of $24,000 and a decrease in cash of $24,000.

Question 17

Which of the following is an example of an adjusting entry?

Accepted Answer

A) Recording the increase in the market value of land. 
B) Recording the salary expense earned in the last week of the year, to be paid next year. 
C) Recording the receipt of inventory in the last week of the year that will be paid next year. 
D) Recording the payment of year-end dividends. 
A) Recording the increase in the market value of land. 
B) Recording the salary expense earned in the last week of the year, to be paid next year. 
C) Recording the receipt of inventory in the last week of the year that will be paid next year. 
D) Recording the payment of year-end dividends.

Question 18

Briefly describe what is meant by the term "earnings management." Why should users of financial statements be concerned with earnings management?

Accepted Answer

Earnings management refers to the use of

Question 19

What is used to enter the information about economic events into the accounting system?

Accepted Answer

A) A journal entry 
B) An adjusting entry 
C) A closing entry 
D) A temporary account 
A) A journal entry 
B) An adjusting entry 
C) A closing entry 
D) A temporary account

Question 20

Mad Mags sells magazines with one-year subscriptions.They require the payment in full before they start sending out the magazines.The payment received would be an example of which of the following?

Accepted Answer

A) Unearned revenue 
B) Prepaid expenses 
C) Accrued liability 
D) Revenue 
A) Unearned revenue 
B) Prepaid expenses 
C) Accrued liability 
D) Revenue

If a company reports a loss for the year, the closing entry will result in which of the following?

A business bought a new delivery truck worth $45,000.They paid $5,000 down and took out a loan for the balance.How would the transaction be recorded?

Which of the following normally has a credit balance?

Which of the following best describes the profit margin ratio?

Identify three different points in time that an expense could be recognized relative to when it is paid.Give an example of each.

Accumulated depreciation is an example of which of the following?

Which of the following would cause the trial balance to not balance?

Turin Turbines had $250,000 worth of goods on hand at the beginning of the year.During the year they made purchases of $2,200,000 and sales of $4,200,000.At year-end they counted the inventory still on hand and had $212,500.What was their cost of sales for the year?

In its first month of operation a company made purchases of goods to sell totaling $58,000, and at the end of the month they had $7,500 of them still on hand.What would be the cost of sales expense for the month?

Where in the financial statement is the account "Accumulated depreciation" found?

Which of the following best describes the matching concept in accounting?

Which of the following would be used to reset the income statement accounts to zero at the end of the period?

Which of the following account balances increases with debits?

On May 15th, Bain Bathtubs signed a lease to rent a storefront starting on June 1st for the next two years at $1,000 per month.They paid the first two months' rent in advance on signing the lease.On May 15th how would the transaction be recorded?

Which of the following is an example of an adjusting entry?

Briefly describe what is meant by the term "earnings management." Why should users of financial statements be concerned with earnings management?

What is used to enter the information about economic events into the accounting system?

Mad Mags sells magazines with one-year subscriptions.They require the payment in full before they start sending out the magazines.The payment received would be an example of which of the following?

The Accounting Environment: What Is Accounting and Why Is It Done

Financial Statements: a Window on an Entity

Income Measurement and the Objectives of Financial Reporting

Cash Flow, Profitability, and the Cash Flow Statement

Cash, Receivables, and the Time Value of Money

Inventory

Capital Assets

Liabilities

Owners Equity

Investments in Other Companies

Analyzing and Interpreting Financial Statements

Filters

Exam 3: The Accounting Cycle

If a company reports a loss for the year, the closing entry will result in which of the following?

A business bought a new delivery truck worth $45,000.They paid $5,000 down and took out a loan for the balance.How would the transaction be recorded?

Which of the following normally has a credit balance?

Which of the following best describes the profit margin ratio?

Identify three different points in time that an expense could be recognized relative to when it is paid.Give an example of each.

Accumulated depreciation is an example of which of the following?

Which of the following would cause the trial balance to not balance?

Turin Turbines had $250,000 worth of goods on hand at the beginning of the year.During the year they made purchases of $2,200,000 and sales of $4,200,000.At year-end they counted the inventory still on hand and had $212,500.What was their cost of sales for the year?

In its first month of operation a company made purchases of goods to sell totaling $58,000, and at the end of the month they had $7,500 of them still on hand.What would be the cost of sales expense for the month?

Where in the financial statement is the account "Accumulated depreciation" found?

Which of the following best describes the matching concept in accounting?

Which of the following would be used to reset the income statement accounts to zero at the end of the period?

Which of the following account balances increases with debits?

On May 15th, Bain Bathtubs signed a lease to rent a storefront starting on June 1st for the next two years at $1,000 per month.They paid the first two months' rent in advance on signing the lease.On May 15th how would the transaction be recorded?

Which of the following is an example of an adjusting entry?

Briefly describe what is meant by the term "earnings management." Why should users of financial statements be concerned with earnings management?

What is used to enter the information about economic events into the accounting system?

Mad Mags sells magazines with one-year subscriptions.They require the payment in full before they start sending out the magazines.The payment received would be an example of which of the following?

The Accounting Environment: What Is Accounting and Why Is It Done

Financial Statements: a Window on an Entity

Income Measurement and the Objectives of Financial Reporting

Cash Flow, Profitability, and the Cash Flow Statement

Cash, Receivables, and the Time Value of Money

Inventory

Capital Assets

Liabilities

Owners Equity

Investments in Other Companies

Analyzing and Interpreting Financial Statements

Filters