Question 1

At the beginning of the current fiscal year, Surrey Corp.'s balance sheet showed assets of $675,000 and liabilities of $525,000. During the year, liabilities decreased by $35,000. Net Income for the year was $175,000, and net assets at the end of the year were $193,000. 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. $$\begin{array} { | l | c | l | c | l | c | l | } 
\hline & \mathrm { A } & = & \mathrm { L } & + & \text { SE } & \
\hline \text { Beginning } & \$ 675,000 & = & \$ 525,000 & + & ( 1 ) & \
\hline \text { Changes } & & & - 35,000 & + & + 175,000 & \text { Net income } \
\hline & & & & & - ( 2 ) & \text { Dividends } \
\hline \text { Ending } & ( 4 ) & & ( 3 ) & & \$ 193,000 & \
\hline
\end{array}$$

Accepted Answer

The answer of At the beginning of the current fiscal...

Question 2

A journal entry recording an accrual:

Accepted Answer

A)  results in a better matching of revenues and expenses. 
B)  will involve a debit or credit to cash. 
C)  will affect balance sheet accounts only. 
D)  will most likely include a debit to a liability account.

Question 3

A credit entry will:

Accepted Answer

A)  always decrease the account balance. 
B)  always increase the account balance. 
C)  increase the balance of a revenue account. 
D)  increase the balance of an expense account.

Question 4

An engineering consultant provided $300 of services to a client; the client paid $50 when the bill was submitted and will pay the balance within a week. The consultant will record this transaction by: 
A.
$\begin{array}{llcc}
  \text { Dr. Cash  } &50\
 \text {  Dr. Fees receivable} &250\
 \text {  Cr. Fees revenue} &&300\
\end{array}$

B.
$\begin{array}{llr}
\text { Dr. } & \text { Fees revenue } & 300 \
\text { Cr. } & \text { Fees receivable } && 250 \
\text { Cr. } & \text { Cash } && 50
\end{array}$

C.
$\begin{array}{ll}
\text { Dr. Cash } & 50 \
\text { Cr. Fees revenue } &&50
\end{array}$

D.
$\begin{array}{llr}
\text { Dr. } & \text { Cash } & 50 \
\text { Dr. } & \text { Fees revenue } & 250 \
\text { Cr. } & \text { Fees receivable } &&300
\end{array}$

Accepted Answer

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

Question 5

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.

Question 6

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.

Question 7

Martin & Associates borrowed $5,000 on April 1, 2013 at 8% interest with both principal and interest due on March 31, 2014. Which of the following journal entries should the firm use to record the payment of interest on March 31, 2014? 
A.
$\begin{array}{llcc}
  \text {Dr. Interest payable  }\
  \text { Cr. Cash } \
\end{array}$

B.
$\begin{array}{llcc}
  \text {Dr. Interest receivable  } \
 \text { Cr. Interest payable } \
\end{array}$

C.
$\begin{array}{llcc}
  \text {Dr. Interest expense  } \
  \text { Cr. Interest payable } \
\end{array}$

D.
$\begin{array}{llcc}
  \text { Dr. Interest payable  } \
  \text {  Cr. Interest expense} \
\end{array}$

Accepted Answer

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

Question 8

To accrue $3,200 of employee salaries for the last week of February, the employer's journal entry is: 
A.
$\begin{array}{llcc}
  \text { Dr. Salaries expense } &3,200\
 \text {  Cr. Cash} &&3,200\
\end{array}$

B.
$\begin{array}{ccc}
\text { Dr. } & \text { Salaries expense } & 3,200 \
\text { Cr. } & \text { Salaries payable } && 3,200
\end{array}$

C.
$\begin{array}{llcc}
  \text {   Dr. Salaries payable } &3,200\
 \text { Cr. Cash } &&3,200\
\end{array}$

D.
$\begin{array}{ll}
\text { Dr. Salaries expense } & 3,200 \
\text { Cr. Fee revenue } && 3,200
\end{array}$

Accepted Answer

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

Question 9

A debit entry will:

Accepted Answer

A)  always decrease the account balance. 
B)  always increase the account balance. 
C)  increase the balance of a revenue account. 
D)  increase the balance of an expense account.

Question 10

A newspaper ad submitted and published this week, with the agreement to get paid for it next week would, in the newspaper's records:

Accepted Answer

A)  increase assets and increase revenues. 
B)  increase assets and decrease liabilities. 
C)  increase assets and increase expenses. 
D)  have no effect on total assets.

Exam 4: The Bookkeeping Process and Transaction Analysis

A journal entry recording an accrual:

A credit entry will:

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

When a firm purchases supplies for its business:

A debit entry will:

A newspaper ad submitted and published this week, with the agreement to get paid for it next week would, in the newspaper's records: