Question 1

If expired insurance is not recorded at the end of the current accounting period,net income will be overstated.

Accepted Answer

A) True 
 B)False

Question 2

What is the final step in the recording process?

Accepted Answer

A) preparation of trial balance 
B) preparation of journal entries 
C) preparation of source documents 
D) transferring journal entries in the general journal to the ledger 
E) preparation of financial statements 
A) preparation of trial balance 
B) preparation of journal entries 
C) preparation of source documents 
D) transferring journal entries in the general journal to the ledger 
E) preparation of financial statements

Question 3

The following errors occurred in the accounting records of Lorenzo Catering for the year ended December 31,2012:
1.Lorenzo Catering received $3,000 in 2012 from a customer in advance of work to be performed.At the time of the cash receipt,revenue was recognized for the full amount.As of year end,30% of the work had been completed,with the remainder completed in 2013.
2.Lorenzo Catering provided services of $2,300 for one of its customers in 2012,but did not bill the customer until 2013.
3.Lorenzo Catering paid $5,400 on September 1,2012,for one year's rent in advance.At the time of the payment,the company used the prepaid rent account for the full amount.No other journal entry was made with respect to this transaction.
4.Lorenzo Catering failed to record wages earned but unpaid as of December 31,2012,of $2,600.The wages were paid and recognized as an expense in 2013.
State whether each item has understated (U),overstated (O),or had no effect (N)on the 2012 revenue,expense,and net income,as well as the year-end total assets,total liabilities,and total stockholder's equity balances.

Accepted Answer

None

Question 4

Closing entries deal primarily with balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 5

Kasper Shack,Inc.acquired merchandise inventory for $1,300 cash on January 12th.On January 21st,it noticed that the wrong merchandise had been shipped and returned it to the supplier for a cash refund.Which of the following is the journal entry that would be required for the return of the merchandise on January 21st?

Accepted Answer

A) $\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
{\text { Cash }} & 1,300 & \
\text { Merchandise Inventory } & &1,300 & \
\end{array}$ 
B) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Merchandise Inventory } & 1,300 & \
\quad \text { Cash } & & 1,300\
\end{array}$ 
C) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {  Accounts Payable  } & 1,300 & \
\quad \text { Merchandise Inventory } & & 1,300\
\end{array}$ 
D) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Merchandise Inventory } & 1,300 & \
\quad \text {  Accounts Payable } & & 1,300\
\end{array}$ 
E) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 1,300 & \
\quad \text { Accounts Payable   } & & 1,300\
\end{array}$ 
A) $\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
{\text { Cash }} & 1,300 & \
\text { Merchandise Inventory } & &1,300 & \
\end{array}$ 
B) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Merchandise Inventory } & 1,300 & \
\quad \text { Cash } & & 1,300\
\end{array}$ 
C) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {  Accounts Payable  } & 1,300 & \
\quad \text { Merchandise Inventory } & & 1,300\
\end{array}$ 
D) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Merchandise Inventory } & 1,300 & \
\quad \text {  Accounts Payable } & & 1,300\
\end{array}$ 
E) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 1,300 & \
\quad \text { Accounts Payable   } & & 1,300\
\end{array}$

Question 6

Randy Stall invests $25,000 in cash in the company to start his own company.Randy Stall should:

Accepted Answer

A) debit Retained Earnings and credit Cash for $25,000. 
B) debit Cash and credit Retained Earnings for $25,000. 
C) debit Paid-in Capital and credit Retained Earnings for $25,000. 
D) debit Paid-in Capital and debit Retained Earnings for $25,000. 
E) debit Cash and credit Paid-in Capital for $25,000. 
A) debit Retained Earnings and credit Cash for $25,000. 
B) debit Cash and credit Retained Earnings for $25,000. 
C) debit Paid-in Capital and credit Retained Earnings for $25,000. 
D) debit Paid-in Capital and debit Retained Earnings for $25,000. 
E) debit Cash and credit Paid-in Capital for $25,000.

If expired insurance is not recorded at the end of the current accounting period,net income will be overstated.

What is the final step in the recording process?

Closing entries deal primarily with balance sheet accounts.

Randy Stall invests $25,000 in cash in the company to start his own company.Randy Stall should:

Accounting: the Language of Business

Measuring Income to Assess Performance

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Inventories and Cost of Goods Sold

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

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Exam 3: Recording Transactions

If expired insurance is not recorded at the end of the current accounting period,net income will be overstated.

What is the final step in the recording process?

Closing entries deal primarily with balance sheet accounts.

Randy Stall invests $25,000 in cash in the company to start his own company.Randy Stall should:

Accounting: the Language of Business

Measuring Income to Assess Performance

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Inventories and Cost of Goods Sold

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

Filters