Question 1

Which of the following is an item that is reportable in the financial records of an enterprise?

Accepted Answer

A) The value of goodwill earned through business operations 
B) The value of human resources 
C) Changes in personnel 
D) Changes in inventory costing methods

Question 2

A routine collection on a customer's account was recorded and posted as a debit to Cash and a credit to Sales Revenue.The journal entry to correct this error would be

Accepted Answer

A) a debit to Sales Revenue and a credit to Accounts Receivable. 
B) a debit to Sales Revenue and a credit to Unearned Revenue. 
C) a debit to Cash and a credit to Accounts Receivable. 
D) a debit to Accounts Receivable and a credit to Sales Revenue.

Question 3

Which of the following is true regarding the accounting process?

Accepted Answer

A) Preparation of the trial balance ensures that all amounts have been posted to the correct accounts. 
B) Preparation of the trial balance is a step in the recording process. 
C) Preparation of the trial balance determines that total debits equal total credits. 
D) Preparation of the trial balance determines both that total debits equal total credits and that all amounts have been posted to the correct accounts.

Question 4

L.Lane received $12,000 from a tenant on December 1 for four months' rent of an office.This rent was for December,January,February,and March.If Lane debited Cash and credited Unearned Rental Income for $12,000 on December 1,what necessary adjustment would be made on December 31?

Accepted Answer

The answer of L.Lane received $12,000 from a tenant on...

Question 5

The trial balance and transaction descriptions below are for Coachman Company:
  
Summary transactions for February:
(a)Collected $100 on open account
(b)Purchased $130 inventory for $20 cash and the remainder on open account.
(c)Bought new equipment costing $200 for $50 cash,with the remainder due on a mortgage payable.
(d)Paid $85 on open account.
(e)Recorded depreciation expense of $35.
(f)Sold goods costing $90 for $30 cash and $120 on open account.
What is Coachman's total equity at the end of February?

Accepted Answer

The answer of The trial balance and transaction descriptions below...

Question 6

The following is a summary of the increases in the account categories of the balance sheet of Riley Company for the most recent fiscal year:

The only change to retained earnings during the fiscal year was for $20,000 of dividends.What was the company's net income for the fiscal year?

Accepted Answer

A) $25,000 
B) $15,000 
C) $5,000 
D) $20,000

Question 7

Schroeder Co.had the following transactions pertaining to the fiscal year ended October 31,2011.
--
June 15,2011,paid an annual casualty insurance premium of $5,400 for a policy beginning July 1,2011.
--
October 1,2011,received advance payment of $6,930 from a customer for a 9-month equipment rental.
Provide the appropriate journal entries to record the preceding transactions.Adjust the accounts at year-end assuming that no entries have been made between the transaction date and year-end and assuming that:
(1)transactions were originally recorded in asset and liability accounts.
(2)transactions were originally recorded in revenue and expense accounts.

Accepted Answer

The answer of Schroeder Co.had the following transactions pertaining to...

Question 8

On March 1,2012,Forest Co.borrowed cash and signed a 36-month,interest-bearing note on which both the principal and interest are payable on February 28,2015.At December 31,2014,the liability for accrued interest should be

Accepted Answer

A) 10 months' interest. 
B) 22 months' interest. 
C) 34 months' interest. 
D) 36 months' interest.

Question 9

The basic financial statements are listed below:
(1)Balance sheet
(2)Statement of retained earnings
(3)Income statement
(4)Statement of cash flows
In which of the following sequences does the accountant ordinarily prepare the statements?

Accepted Answer

A) 1, 4, 3, 2 
B) 2, 1, 3, 4 
C) 3, 2, 1, 4 
D) 3, 2, 4, 1

Question 10

Which of the following accounts most likely would not appear in a post-closing trial balance?

Accepted Answer

A) Retained Earnings 
B) Inventory 
C) Sales Revenue 
D) Common Stock

Question 11

The work sheet of PSI Company shows Income Tax Expense of $9,000 and Income Tax Payable of $9,000 in the Adjustments columns.What will be the ultimate disposition of these items on the work sheet?

Accepted Answer

A) Income Tax Expense will appear as a debit of $9,000 and Income Tax Payable as credit in the Balance Sheet columns. 
B) Income Tax Expense will appear as a debit of $9,000 and Income Tax Payable as credit in the Income Statement columns. 
C) Income Tax Expense will appear as a debit of $9,000 in the Balance Sheet columns and Income Tax Payable as credit in the Income Statement columns. 
D) Income Tax Expense will appear as a debit of $9,000 in the Income Statement columns and Income Tax Payable as credit in the Balance Sheet columns.

Question 12

Presented below is the December 31 trial balance of Cassini Studios.
  
(1)Prepare adjusting journal entries for the following items:
(a)Adjust the Allowance for Doubtful Accounts to 8 percent of the accounts receivable.
(b)Furniture and equipment is depreciated at 20 percent per year.
(c)Insurance expired during the year,$2,040.
(d)Interest accrued on notes payable,$2,688.
(e)Sales salaries earned but not paid,$1,920.
(f)Advertising paid in advance,$560.
(g)Office supplies on hand,$1,200,charged to Office Expense when purchased.
(2)Prepare closing entries for Cassini after the above adjusting entries have been made.Additional information shows the inventory on December 31 was $64,000.

Accepted Answer

The answer of Presented below is the December 31 trial...

Question 13

Montague Company reported the following balances:

Montague paid suppliers $122,500 during the year.What is Montague's cost of goods sold for the year?

Accepted Answer

A) $136,250 
B) $123,750 
C) $121,250 
D) $108,750

Question 14

The debit and credit analysis of a transaction normally takes place when the

Accepted Answer

A) entry is posted to a subsidiary ledger. 
B) entry is recorded in a journal. 
C) trial balance is prepared. 
D) financial statements are prepared.

Question 15

On December 31 of the current year,Holmgren Company's bookkeeper made an entry debiting Supplies Expense and crediting Supplies on Hand for $12,600.The Supplies on Hand account had a $15,300 debit balance on January 1.The December 31 balance sheet showed Supplies on Hand of $11,400.Only one purchase of supplies was made during the month,on account.The entry for that purchase was

Accepted Answer

A) debit Supplies on Hand, $8,700 and credit Cash, $8,700. 
B) debit Supplies Expense, $8,700 and credit Accounts Payable, $8,700. 
C) debit Supplies on Hand, $8,700 and credit Accounts Payable, $8,700. 
D) debit Supplies on Hand, $16,500 and credit Accounts Payable, $16,500.

Question 16

A chart of accounts is a

Accepted Answer

A) subsidiary ledger. 
B) listing of all account titles. 
C) general ledger. 
D) general journal.

Question 17

A common business transaction that would not affect the amount of owners' equity is

Accepted Answer

A) signing a note payable to purchase equipment. 
B) payment of property taxes. 
C) billing of customers for services rendered. 
D) payment of dividends.

Question 18

Account balances taken from the ledger of Middler Company on December 31,2013,are as follows:
  
Adjustments on December 31,2013,are required as follows:
(a)The inventory on hand is $135,915.
(b)The allowance for doubtful accounts is to be increased to a balance of $6,250.
(c)Buildings are depreciated at the rate of 5 percent per year.
(d)Accrued selling expenses are $6,075.
(e)There are supplies of $1,050 on hand.
(f)Prepaid insurance at December 31,2013,totals $1,290.
(g)Accrued interest on long-term investments is $360.
(h)Accrued real estate and payroll taxes are $1,170.
(i)Accrued interest on the mortgage is $240.
(j)Income tax is estimated to be 30 percent of the income before income tax (round to nearest dollar).
(1)Prepare an eight-column work sheet.
(2)Prepare adjusting and closing entries.

Accepted Answer

The answer of Account balances taken from the ledger of...

Question 19

Which of the following is not among the first five steps in the accounting cycle?

Accepted Answer

A) Record transactions in journals. 
B) Record closing entries. 
C) Adjust the general ledger accounts. 
D) Post entries to general ledger accounts.

Question 20

Which of the following is not presented in an income statement?

Accepted Answer

A) Revenues 
B) Expenses 
C) Net income 
D) Dividends

Exam 2: A Review of the Accounting Cycle