Question 1

When a firm purchases supplies for its business:

Accepted Answer

A)  the supplies account should always be debited. 
B)  the supplies expense account should always be debited. 
C)  either the supplies account or the supplies expense account should be credited. 
D) an adjustment will probably be required as supplies are used. 
A)  the supplies account should always be debited. 
B)  the supplies expense account should always be debited. 
C)  either the supplies account or the supplies expense account should be credited. 
D) an adjustment will probably be required as supplies are used. D

Question 2

Martin & Associates borrowed $15,000 on April 1, 2016 at 8% interest with both principal and interest due on March 31, 2017.Which of the following journal entries should the firm use to accrue interest at the end of each month?

Accepted Answer

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

Question 3

At the beginning of the current fiscal year, Surrey Corp.'s balance sheet showed assets of $1,350,000 and liabilities of $1,050,000. During the year, liabilities decreased by $70,000. Net Income for the year was $350,000, and net assets at the end of the year were $386,000. There were no changes in paid-in capital during the year.Calculate the dividends, if any, declared during the year.Calculate the total assets at the end of the year.

Accepted Answer

Steps: (1.) $1,350,000 - $1,050,000 = $300,000 Stockholders' Equity at beginning of year. (2.) $300,000 + $350,000 - Dividends = $386,000; Dividends = $264,000 (3.) $1,050,000 - $70,000 = $980,000 Liabilities at end of year. (4.) $980,000 + $386,000 = $1,366,000 Assets at end of year. Alternative computation of assets at end of year: Follow steps (1.) and (2.) above. (3.) Compute the change in assets during the year. Asset change = -$70,000 + $350,000 - $264,000 Asset change = $16,000 (4.) $1,350,000 + $16,000 = $1,366,000 Assets at end of year.

Question 4

An expanded version of the accounting equation could be:

Accepted Answer

A)  Assets + Revenues = Liabilities + Stockholders' Equity - Expenses 
B)  Assets - Liabilities = Paid-in Capital - Revenues - Expenses 
C)  Assets = Liabilities + Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends 
D) Assets = Liabilities + Paid-in Capital - Revenues + Expenses 
A)  Assets + Revenues = Liabilities + Stockholders' Equity - Expenses 
B)  Assets - Liabilities = Paid-in Capital - Revenues - Expenses 
C)  Assets = Liabilities + Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends 
D) Assets = Liabilities + Paid-in Capital - Revenues + Expenses

Question 5

A credit entry will:

Accepted Answer

A)  increase an asset account. 
B)  increase a liability account. 
C)  decrease paid-in capital. 
D) increase an expense account. 
A)  increase an asset account. 
B)  increase a liability account. 
C)  decrease paid-in capital. 
D) increase an expense account.

Question 6

A ledger:

Accepted Answer

A)  is where transactions are initially recorded. 
B)  is where transactions are posted to after they are initially recorded. 
C)  is the same as a chart of accounts, with each account numbered to facilitate frequent references that are made to it. 
D) is the same as a source document, such as an invoice from a supplier or a copy of a credit purchase made by a customer. 
A)  is where transactions are initially recorded. 
B)  is where transactions are posted to after they are initially recorded. 
C)  is the same as a chart of accounts, with each account numbered to facilitate frequent references that are made to it. 
D) is the same as a source document, such as an invoice from a supplier or a copy of a credit purchase made by a customer.

Question 7

The effect of an adjustment is:

Accepted Answer

A)  to correct an entry that was not in balance. 
B)  to increase the accuracy of the financial statements. 
C)  to record transactions not previously recorded. 
D) to close the books. 
A)  to correct an entry that was not in balance. 
B)  to increase the accuracy of the financial statements. 
C)  to record transactions not previously recorded. 
D) to close the books.

Question 8

Which of the following is not one of the 5 questions of transaction analysis?

Accepted Answer

A)  What's going on? 
B)  Which accounts are affected? 
C)  Is this an accrual? 
D) Does the balance sheet balance? 
E)  Does my analysis make sense? 
A)  What's going on? 
B)  Which accounts are affected? 
C)  Is this an accrual? 
D) Does the balance sheet balance? 
E)  Does my analysis make sense?

Question 9

At the beginning of the current fiscal year, the balance sheet of Arches Co. showed liabilities of $760,000. During the year liabilities increased by $20,000, assets increased by $110,000, and paid-in capital increased by $40,000 to $330,000. Dividends declared and paid during the year were $120,000. At the end of the year, stockholders' equity totaled $804,000. Calculate net income or loss for the year.

Accepted Answer

Steps: (1.) $804,000 - $330,000 = $474,0

Question 10

In the buyer's records, the purchase of merchandise on account would:

Accepted Answer

A)  increase assets and increase expenses. 
B)  increase assets and increase liabilities. 
C)  increase liabilities and increase paid-in capital. 
D) have no effect on total assets. 
A)  increase assets and increase expenses. 
B)  increase assets and increase liabilities. 
C)  increase liabilities and increase paid-in capital. 
D) have no effect on total assets.

Question 11

The balance in the Wages Payable account increased from $24,400 at the beginning of the month to $30,000 at the end of the month. Wages accrued during the month totaled $122,000.

Accepted Answer

A)  Wages paid during the month totaled $116,400. 
B)  Wages paid during the month totaled $129,600. 
C)  Wages expense for the month totaled $116,400. 
D) Wages expense for the month totaled $152,000. 
A)  Wages paid during the month totaled $116,400. 
B)  Wages paid during the month totaled $129,600. 
C)  Wages expense for the month totaled $116,400. 
D) Wages expense for the month totaled $152,000.

Question 12

A debit entry will:

Accepted Answer

A)  decrease an asset account. 
B)  increase a liability account. 
C)  increase paid-in capital. 
D) increase an expense account. 
A)  decrease an asset account. 
B)  increase a liability account. 
C)  increase paid-in capital. 
D) increase an expense account.

Question 13

Sage, Inc. has 20 employees who work Monday through Friday each week; each employee earns $200 per day and is paid every Friday. The end of the accounting period is on a Wednesday. How much wages expense should the firm accrue at the end of the period?

Accepted Answer

A)  $4,000 
B)  $2,000 
C)  $0 
D) $12,000 
A)  $4,000 
B)  $2,000 
C)  $0 
D) $12,000

Question 14

A chart of accounts:

Accepted Answer

A)  is where transactions are initially recorded. 
B)  is where transactions are posted to after they are initially recorded. 
C)  serves as an index to the ledger, with each account numbered to facilitate frequent references that are made to it. 
D) is the same as a T-account, with debits on the left and credits on the right. 
A)  is where transactions are initially recorded. 
B)  is where transactions are posted to after they are initially recorded. 
C)  serves as an index to the ledger, with each account numbered to facilitate frequent references that are made to it. 
D) is the same as a T-account, with debits on the left and credits on the right.

Question 15

In the seller's records, the sale of merchandise on account would:

Accepted Answer

A)  increase assets and increase expenses. 
B)  increase assets and decrease liabilities. 
C)  increase assets and increase paid-in capital. 
D) increase assets and decrease revenues. 
A)  increase assets and increase expenses. 
B)  increase assets and decrease liabilities. 
C)  increase assets and increase paid-in capital. 
D) increase assets and decrease revenues.

Question 16

The accountant at Abco, Inc. made an adjusting entry at the end of February to accrue interest on a note receivable from a customer. The effect of this entry is to:

Accepted Answer

A)  decrease ROI for February. 
B)  increase ROI for February. 
C)  decrease working capital at February 28. 
D) decrease the acid-test ratio at February 28. 
A)  decrease ROI for February. 
B)  increase ROI for February. 
C)  decrease working capital at February 28. 
D) decrease the acid-test ratio at February 28.

Question 17

In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would:

Accepted Answer

A)  decrease assets and decrease expenses. 
B)  increase liabilities and increase expenses. 
C)  decrease assets and increase revenue. 
D) increase assets and decrease liabilities. 
A)  decrease assets and decrease expenses. 
B)  increase liabilities and increase expenses. 
C)  decrease assets and increase revenue. 
D) increase assets and decrease liabilities.

Question 18

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

Accepted Answer

A) 
  
B) 
  
C) 
  
D) No adjustment will probably be required. 
A) 
  
B) 
  
C) 
  
D) No adjustment will probably be required.

Question 19

The accounting concept/principle being applied when an adjustment is made is usually:

Accepted Answer

A)  matching revenue and expense. 
B)  consistency. 
C)  original cost. 
D) materiality. 
A)  matching revenue and expense. 
B)  consistency. 
C)  original cost. 
D) materiality.

Question 20

Using the column headings provided below, show the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name, amount, and indicating whether it is an addition (+) or subtraction (-). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity.(1.) The firm borrowed $4,000 from the bank; a short-term note was signed.(2.) Merchandise inventory costing $1,500 was purchased; cash of $400 was paid and the balance is due in 30 days.(3.) Employee wages of $2,000 were accrued at the end of the month.(4.) Merchandise that cost $700 was sold for $900 in cash.(5.) This month's rent of $1,400 was paid.(6.) Revenues from services during month totaled $13,000. Of this amount, $4,000 was received in cash and the balance is expected to be received within 30 days.(7.) During the month, supplies were purchased on account at a cost of $1,040, and debited into the Supplies (asset) account. A total of $800 of supplies were used during the month.(8.) Interest of $480 has been earned on a note receivable, but has not yet been received.

Accepted Answer

The answer of Using the column headings provided below, show...

When a firm purchases supplies for its business:

Martin & Associates borrowed $15,000 on April 1, 2016 at 8% interest with both principal and interest due on March 31, 2017.Which of the following journal entries should the firm use to accrue interest at the end of each month?

An expanded version of the accounting equation could be:

A credit entry will:

A ledger:

The effect of an adjustment is:

Which of the following is not one of the 5 questions of transaction analysis?

In the buyer's records, the purchase of merchandise on account would:

The balance in the Wages Payable account increased from $24,400 at the beginning of the month to $30,000 at the end of the month. Wages accrued during the month totaled $122,000.

A debit entry will:

Sage, Inc. has 20 employees who work Monday through Friday each week; each employee earns $200 per day and is paid every Friday. The end of the accounting period is on a Wednesday. How much wages expense should the firm accrue at the end of the period?

A chart of accounts:

In the seller's records, the sale of merchandise on account would:

The accountant at Abco, Inc. made an adjusting entry at the end of February to accrue interest on a note receivable from a customer. The effect of this entry is to:

In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would:

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

The accounting concept/principle being applied when an adjustment is made is usually:

Accounting-Present and Past

Financial Statements and Accounting Conceptsprinciples

Fundamental Interpretations Made From Financial Statement Data

Accounting for and Presentation of Current Assets

Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Stockholders Equity

The Income Statement and the Statement of Cash Flows

Corporate Governance, Notes to the Financial Statements, and Other Disclosures

Financial Statement Analysis

Managerial Accounting and Cost-Volume-Profit Relationships

Cost Accounting and Reporting

Cost Planning

Cost Control

Costs for Decision Making

Filters

Exam 4: The Bookkeeping Process and Transaction Analysis

When a firm purchases supplies for its business:

Martin & Associates borrowed $15,000 on April 1, 2016 at 8% interest with both principal and interest due on March 31, 2017.Which of the following journal entries should the firm use to accrue interest at the end of each month?

An expanded version of the accounting equation could be:

A credit entry will:

A ledger:

The effect of an adjustment is:

Which of the following is not one of the 5 questions of transaction analysis?

In the buyer's records, the purchase of merchandise on account would:

The balance in the Wages Payable account increased from $24,400 at the beginning of the month to $30,000 at the end of the month. Wages accrued during the month totaled $122,000.

A debit entry will:

Sage, Inc. has 20 employees who work Monday through Friday each week; each employee earns $200 per day and is paid every Friday. The end of the accounting period is on a Wednesday. How much wages expense should the firm accrue at the end of the period?

A chart of accounts:

In the seller's records, the sale of merchandise on account would:

The accountant at Abco, Inc. made an adjusting entry at the end of February to accrue interest on a note receivable from a customer. The effect of this entry is to:

In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would:

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

The accounting concept/principle being applied when an adjustment is made is usually:

Accounting-Present and Past

Financial Statements and Accounting Conceptsprinciples

Fundamental Interpretations Made From Financial Statement Data

Accounting for and Presentation of Current Assets

Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Stockholders Equity

The Income Statement and the Statement of Cash Flows

Corporate Governance, Notes to the Financial Statements, and Other Disclosures

Financial Statement Analysis

Managerial Accounting and Cost-Volume-Profit Relationships

Cost Accounting and Reporting

Cost Planning

Cost Control

Costs for Decision Making

Filters