Deck 7: Accounting Information Systems

Question 1

The entry to record the full payment of the premium on a two-year insurance policy would include a:

A)debit to insurance expense
B)debit to prepaid insurance
C)credit to accounts receivable
D)credit to accounts payable

Answer 1

debit to prepaid insurance

Question 2

For each of the following transactions indicate its impact ( + or - )on the accounting equation.

Answer 2

Question 3

The following is a list of the eight steps in the accounting cycle.Match the numbers 1 though 8 to the events below to indicate the sequence of the accounting cycle steps.
_____
A.Prepare and adjusted trial balance
_____
B.Prepare financial statements
_____
C.Identify, analyze, and record events in journal
_____
D.Prepare post closing trial balance
_____
E.Make closing entries in journal and post to ledger
_____
_____ F.Enter adjusting entries in journal and post to ledger
_____G.Post entries from journal to ledger
_____H.Prepare trial balance

Answer 3

A.5 B.6 C.1 D.8 E.7 F.4 G.2 H.3

Question 4

For each of the following transactions indicate its impact ( + or - )on the accounting equation.

Question 5

Place each of the following accounting elements in the financial statement(s)in which it would be reported:
Retained earnings
Net income
Accounts receivable
Unearned fees

Question 6

Expenses are increased with ______ because they ______ owners' equity.

A)debits,decrease
B)credits,increase
C)debits,increase
D)credits,decrease

Question 7

For each of the following events using debits and credits indicate the increase or decrease in particular account affected by the transaction.

Question 8

Revenues are increased with ______ because they ______ owners' equity.

A)debits,decrease
B)credits,increase
C)debits,increase
D)credits,decrease

Question 9

Debit and credit mean which of the following. Debit Credit

A).Increase Decrease
B)Positive Negative
C)Decrease Increase
D)Left Right

Question 10

Indicate the normal balance of the following accounts

Question 11

The entry to record a purchase of supplies on account would include a:

A)debit to cash
B)debit to accounts receivable
C)credit to supplies
D)credit to accounts payable

Question 12

Accountants use the term "credit" to refer to

A)a firm's good accounting events
B)a reduction in amounts owed
C)events that increases in accounts
D)an amount entered on the right-hand side of an account

Question 13

Debiting an account always means

A)entering an amount on the right side of the account
B)entering an amount on the left side of the account
C)increasing the account balance
D)decreasing the account balance

Question 14

All of the following accounts are decreased by debits except:

A)liabilities
B)revenues
C)assets
D)contributed capital accounts

Question 15

Accountants use the term "debit" to refer to

A)events that are negative for the firm
B)a reduction in amounts owed
C)events that increases accounts
D)an amount entered on the left-hand side of an account

Question 16

All of the following accounts are increased by credits except:

A)liabilities
B)revenues
C)assets
D)contributed capital accounts

Question 17

Which of the following accounts are decreased by credits:

A)liabilities
B)revenues
C)assets
D)contributed capital accounts

Question 18

Place each of the following accounting elements in the financial statement(s)in which it would be reported:
Inventory
Credit sales
Cash dividends
Common stock
Expenses

Question 19

Which of the following terms is used to refer to balance sheet accounts?

A)Permanent accounts
B)Temporary accounts
C)Contra accounts
D)Tangible accounts

Question 20

Which of the following is not a characteristic of an accounting event?

A)Must be the result of a management decision.
B)Must be specific to the entity for which records are being kept.
C)Must be measurable in monetary term.
D)Must impact the entity's assets,liabilities,and/or owners' equity.

Question 21

On November 4,2010,Blazek,Inc.received $24,000 in advance for work to be performed over the next several months.By December 31,2010,1/3 of the amount had been earned.The required adjusting entry would be:

A)
B)
C)
D)No adjusting entry is required

Question 22

Only one of the following could be an adjusting entry which one is it?

A)An increase in an asset and an increase in a liability
B)A increase in an expense and an increase in a revenue
C)A decrease in an asset and a decrease in a expense
D)An decrease in an asset and an increase in a liability

Question 23

The fact that a trial balance is in balance:

A)guarantees that correct accounts have been debited and credited
B)proves the equality of debits and credits
C)assures the preparer that all journal entries were made
D)all of the above are correct

Question 24

Which of the following could not be an adjusting entry?

A)An increase in an expense and a decrease in an asset
B)A decrease in a liability and an increase in a revenue
C)A decrease in a asset and a decrease in a liability
D)An increase in an expense and an increase in a liability

Question 25

All of the following are categories of adjusting entries except:

A)accruals
B)deferrals
C)estimated allocations
D)estimated payments

Question 26

The adjusting entry to record depreciation of a building would be:

A)
B)
C)
D)

Question 27

A record of all accounts,showing account activity and cumulative balances is maintained in the:

A)general journal
B)trial balance
C)general ledger
D)financial statements

Question 28

The accounts in the ledger are listed in what type of order?

A)In the order they appear on the financial statements
B)Alphabetical
C)Size of the Account
D)Random

Question 29

Which of the following is an index for the accounts listed in the ledger?

A)Chart of Accounts
B)Trial balance
C)Adjusted Trial Balance
D)Ledger Account index

Question 30

The entry to record collections from credit customers would include a:

A)debit to accounts payable
B)credit to cash
C)debit to unearned revenue
D)credit to accounts receivable

Question 31

The adjusting entry to accrue interest earned would include a:

A)credit to interest payable
B)debit to interest receivable
C)debit to cash
D)credit to interest expense

Question 32

The year-end accrual adjustment to record the estimated expense for a telephone bill not yet received would include a:

A)debit to telephone payable
B)debit to cash
C)credit to accounts payable
D)credit to prepaid telephone expense

Question 33

After closing entries are made which of the following grouping of accounts will all have balances?

A)Assets,Revenue,Liability
B)Liabilities,Assets,Expenses
C)Owners' Equity,Assets,Liabilities
D)Assets,Liabilities,Expenses

Question 34

Which of the following is not a part of the formal process of recording accounting events?

A)general journal
B)general ledger
C)T-Accounts
D)All of the above are part of the formal process of recording accounting events.

Question 35

Kate Corporation began the year with $6,200 in supplies and purchased $12,500 in supplies during the year.At year end,$5,100 in supplies remained on hand.The required adjusting entry would be:

A)
B)
C)
D)

Question 36

An example of a permanent account is the:

A)utilities expense account
B)unearned revenue account
C)service revenue account
D)depreciation expense account

Question 37

Which of the following could not be an adjusting entry?

A)An increase in an expense and a decrease in an asset
B)A decrease in a liability and an increase in a revenue
C)A decrease in a asset and a decrease in a liability
D)An increase in an expense and an increase in a liability

Question 38

A chronological record of accounting events is maintained in the:

A)general journal
B)general ledger
C)trial balance
D)T-accounts

Question 39

After closing entries are made which accounts not have balances?

A)Assets Liabilities and Owners' Equity
B)Revenues Expenses and Liabilities
C)Assets Revenues and Owners' Equity
D)Revenues,Expenses,Gains and Losses

Question 40

Closing entries are necessary to update the:

A)income summary account
B)cash account
C)retained earnings account
D)capital stock account

Question 41

Net income would decrease as a result of which of the following adjustments:

A)Adjusting an unearned revenue account
B)Accruing a revenue
C)Accruing an expense
D)Billing a customer for services rendered

Question 42

The following journal entry affected the accounting equation by:

A)increasing assets and increasing liabilities
B)decreasing liabilities and increasing owners' equity
C)increasing assets and increasing owners' equity
D)decreasing assets and decreasing owners' equity

Question 43

The following journal entry affected the accounting equation by:

A)increasing assets and increasing liabilities
B)decreasing assets and increasing owners' equity
C)decreasing assets and decreasing owners' equity
D)increasing liabilities and decreasing owners' equity

Question 44

Which of the following cases would not require an adjusting entry?

A)a client has paid for services in advance
B)paid for three months rent in advance
C)capital stock has been issued for cash but not yet paid for
D)interest on a note receivable will not be received until the note is paid off next year

Question 45

The following journal entry affected the accounting equation by:

A)decreasing liabilities and increasing owners' equity
B)increasing assets and increasing liabilities
C)decreasing assets and increasing owners' equity
D)increasing liabilities and increasing owners' equity

Question 46

Clio,Inc.has one expense account,salary expense,which is to be closed out at year end.The closing entry would be:

A)
B)
C)
D)

Question 47

The following journal entry affected the accounting equation by:

A)increasing assets and increasing liabilities
B)decreasing assets and increasing owners' equity
C)increasing liabilities and decreasing owners' equity
D)increasing assets and increasing owners' equity

Question 48

The last step in the accounting cycle is to prepare:

A)the post-closing trial balance
B)adjusting entries
C)financial statements
D)closing entries

Question 49

Computek,Inc.has one revenue account,service revenue,which is to be closed out at year end.The closing entry would be:

A)
B)
C)
D)

Question 50

The ______ lists only the permanent accounts of an organization.

A)post-closing trial balance
B)trial balance
C)adjusted trial balance
D)income statement

Question 51

Dividends are listed on the:

A)balance sheet
B)income statement
C)statement of financial position
D)statement of retained earnings

Question 52

Capital stock is listed on the:

A)balance sheet only
B)statement of stockholders' equity only
C)balance sheet and the income statement
D)statement of stockholders' equity and the balance sheet

Question 53

The following journal entry affected the accounting equation by:

A)increasing assets and increasing liabilities
B)decreasing assets and increasing owners' equity
C)increasing liabilities and decreasing owners' equity
D)increasing assets and increasing owners' equity

Question 54

Which of these steps in the accounting cycle comes first?

A)posting
B)adjusting entries
C)financial statements
D)closing entries

Question 55

All adjusting entries involve

A)credits to income statement accounts
B)debits to income statement account
C)at least one income statement and one balance sheet account
D)the decrease of an asset or the increase in a liability account

Question 56

Net income would increase as a result of which of the following adjustments:

A)Recording depreciation
B)Accruing a revenue
C)Accruing an expense
D)Adjusting a prepaid account

Question 57

The most likely explanation for the following journal entry would be:

A)performed a service and immediately received the cash
B)performed a service and billed the customer
C)performed a service for a customer who had paid for the service ahead of time
D)recorded the receipt of cash from a customer for services previously performed

Question 58

The ending cash balance can be found on the:

A)balance sheet and statement of cash flows
B)balance sheet only
C)statement of cash flows only
D)balance sheet and income statement

Question 59

Which of the following cases would require an adjusting entry to accrue revenue?

A)a client has paid for services in advance
B)customers have been billed for services but not yet paid
C)capital stock has been issued for cash but not yet paid for
D)interest on a note receivable will not be received until the note is paid off next year

Question 60

As a result of closing entries which of the following is true?

A)Cash is increased.
B)Retained earning is increased by the amount of income earned during the year.
C)Total assets are increased by the amount of income earned during the year.
D)Liabilities are decreased by the amount of income earned during the year.

Question 61

Which of the following appears on both the income statement and the statement of stockholders' equity?

A)Net income
B)Operating income
C)Retained earnings
D)Unearned revenue

Question 62

If an adjustment for expense that has been incurred but not paid was not recorded.

A)net income and assets would be understated
B)liabilities and owners' equity would be understated
C)assets and owners' equity would be overstated
D)revenues and liabilities would be overstated

Question 63

A firm issued stock for cash.How would this affect the accounting equation?

A)
B)
C)
D)

Question 64

If an adjustment for revenue that has been earned but not recorded was not made

A)net income and assets would be understated
B)liabilities and owners' equity would be understated
C)assets and owners' equity would be overstated
D)revenues and liabilities would be overstated

Question 65

A firm billed a customer for services but did not collect cash.What is the effect of this transaction?

A)Increases assets,increases revenues
B)Increases assets,decreases assets
C)Decreases assets,increases expenses
D)Decreases assets,decreases liabilities

Question 66

Which of the following results in a revenue event?

A)Stock is issued for cash
B)A telephone bill is received but not paid
C)A customer pays for merchandise purchased earlier
D)A customer buys merchandise but does not pay for it

Question 67

A firm received a payment in advance on a customer's special order.What is the effect of this transaction?

A)Increases assets,increases revenues
B)Increases assets,increases liabilities
C)Decreases assets,increases expenses
D)Decreases assets,decreases liabilities

Question 68

On April 1,2010,a firm borrowed $100,000 on a 6% note.The note is due on April 1,2011.No interest is to be paid until then.What amount of interest expense should it report in its income statement for December 31,2010?

A)$0
B)$1,500
C)$4,500
D)$6,000

Question 69

A firm received and paid a utilities bill.How would this affect the elements of the fundamental accounting equation?

A)
B)
C)
D)

Question 70

On which financial statement would salaries expense appear?

A)statement of stockholders' equity
B)statement of cash flows
C)income statement
D)balance sheet

Question 71

Where would the issuance of stock for cash be reported?

A)On both the income statement and the statement of cash flows
B)On both the statement of cash flows and the statement of stockholders' equity
C)On the statement of cash flows but not the statement of stockholders' equity
D)On neither the income statement nor the statement of cash flows

Question 72

If the year-end depreciation adjustment was not recorded:

A)assets and owners' equity would be understated
B)liabilities and owners' equity would be overstated
C)assets and net income would be overstated
D)net income and owners' equity would be understated

Question 73

A company began the month with $400 of supplies and purchased $1,000 more.At the end of the month,$300 of supplies were on hand.The expense for the month was

A)$1,400
B)$1,300
C)$1,100
D)$1,000

Question 74

Which of the following association of accounts and statements is not correct?

A)Cash & Balance Sheet
B)Revenue & Income Statement
C)Dividends Paid & Income Statement
D)Prepaid Insurance & Balance Sheet

Question 75

A firm paid for goods,which had been purchased in an earlier period.How would this affect assets and equities?

A)
B)
C)
D)

Question 76

Net income would decrease as a result of which of the following adjustments?

A)Adjusting unearned revenue
B)Accruing a revenue
C)Accruing an expense
D)Recording revenue earned but not received

Question 77

On November 1,2010 Clyde Corp recieved $6,000 for six months rent in advance.What is the appropriate adjusting entry for December 31,2010?

A)No adjustment needed because no cash paid.
B)Unearned Rent $4,000
Rent Expense $4,000
C)Unearned Rent $2,000
Rent Income $2,000
D)Cash $2,000
Rent Income $2,000

Question 78

A firm billed clients for services rendered.How would this affect the fundamental accounting equation?

A)
B)
C)
D)

Question 79

On September 1,2010,Olpe Corporation paid $2,400 for a 1-year insurance policy.What amount of expense should Olpe report for the year ended December 31,2010?

A)$800
B)$1,200
C)$2,400
D)$0

Question 80

On November 1,2010 Clyde Corp paid $6,000 for six months rent in advance.What is the appropriate adjusting entry for December 31,2010?

A)No adjustment needed because no cash paid.
B)Prepaid Rent $4,000
Rent Expense $4,000
C)Rent Expense $2,000
Cash $2,000
D)Rent Expense $2,000
Prepaid Rent $2,000