Question 1

Indirect Personnel,Inc.obtained a $20,000 note payable on August 1,2012,that is due in 5 years.Interest,at an annual rate of 12%,will be paid once a year on July 31.The accountant made the appropriate journal entry on August 1,2012.No other journal entry has been made.What journal entry is necessary as of December 31,2012?

Accepted Answer

A) Debit Interest Expense and credit Notes Payable for $1,000 
B) Debit Interest Expense and credit Notes Payable for $2,400 
C) Debit Interest Expense and credit Interest Payable for $1,000 
D) Debit Interest Expense and credit Interest Payable for $2,400 
E) Debit Interest Expense and credit Interest Receivable for $2,400

Question 2

The purchase of office equipment on account would increase assets and decrease stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 3

Contributor Enterprise borrowed $2,400 on February 1,2012.All interest has been paid and properly recorded for separately.On March 31,2012,the company repaid the loan.Which of the following is the journal entry to be made at the time of the loan repayment?

Accepted Answer

A) $\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
{\text {  Notes Payable Expense }} & 2,400 & \
\text {Cash } & & 2,400 & \
\end{array}$ 
B) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Notes Payable  } &  2,400& \
\quad \text { Cash } & &  2,400\
\end{array}$ 
C) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash  } &  2,400 & \
\quad \text { Notes Payable Expense } & &  2,400\
\end{array}$ 
D) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } &  2,400 & \
\quad \text { Notes Payable  } & &  2,400\
\end{array}$ 
E) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 2,400 & \
\quad \text { Notes Receivable  } & & 2,400\
\end{array}$

Question 4

The entry to collect cash on account involves a

Accepted Answer

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

Question 5

Which of the following accounts would not be found on the credit side of a trial balance?

Accepted Answer

A) Equipment 
B) Accounts Payable 
C) Retained Earnings 
D) Sales Revenue 
E) Paid-in Capital

Question 6

Palladia Publishing paid $450 for an advertisement that will appear in today's newspaper.Which of the following is the journal entry to record this transaction?

Accepted Answer

A) $\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash  } & 450 & \
\text { Prepaid Advertising } & &450\
\end{array}$ 
B) $\begin{array}{lll}
\text { } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Advertising Expense   } & 450 & \
\text { Cash } & &450\
\end{array}$ 
C) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Advertising Expense   } & 450 & \
\text { Prepaid Advertising } & &450\
\end{array}$ 
D) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash  } & 450 & \
\text { Advertising Expense  } & &450\
\end{array}$ 
E) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Advertising Expense  } & 450 & \
\text {  Cash } & &450\
\end{array}$

Question 7

Given the following complete list of balances,what will be the total credits in the trial balance,assuming no errors exist in the accounts? Note: The accounts payable records were damaged by a flood,and the company is not certain what the correct balance should be. $\begin{array}{lll}
\text { 1. Retained Earnings } & \$ 28,000 \
\text { 2. }  \text { Merchandise Inventory } & 9,000 \
\text { 3. }  \text { Accumulated Depreciation } & 5,000 \
\text { 4. Sales } & 42,000 \
\text { 5. Selling Expenses } & 11,000 \
\text { 6. Accounts Receivable } & \$ 7,000 \
\text { 7. Cost of Goods Sold } & 22,000 \
\text { 8. } \quad \text { Accounts Payable } & ? \
\text { 9. Cash } & 5,000 \
\text { 10. Equipment } & 33,000
\end{array}$

Accepted Answer

A) $72,000 
B) $69,000 
C) $58,000 
D) $87,000 
E) Due to the damage of the accounts payable records,it is impossible to determine the amount of the total credits on the trial balance.

Question 8

The Income Summary account

Accepted Answer

A) can be found on the Income Statement since it is an expense account. 
B) can be found on the Income Statement since it is a revenue account. 
C) can be found on the Balance Sheet since it is an asset account. 
D) can be found on the Balance Sheet since it is a liability account. 
E) cannot be found on any of the financial statements.

Question 9

Sharpington,Inc.manufactures and sells phone cases.The company sold a shipment of cases costing $5,000 to a customer for $8,000.The customer paid cash.Which of the following is the journal entry that Sharpington would make to record the sale of the shipment of cases?

Accepted Answer

A) $\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash  } & 8,000 & \
\text { Sales } & &3,000 \
\quad \text { Merchandise Inventory } & & 5,000\
\end{array}$ 
B)  $\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
 \text { Merchandise Inventory } & 5,000\
\text { Sales } & 3,000 \
\text {Cash  } & &8,000 & \
\end{array}$ 
C) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash  } & 8,000 & \
\text { Net Income  } & &3,000 \
\quad \text { Merchandise Inventory } & & 5,000\
\end{array}$ 
D) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
 \text { Cash } & 8,000\
\text {Cost of Goods Sold } & 5,000 \
\text { Sales } & &8,000 & \
 \text { Merchandise Inventory } && 5,000\
\end{array}$ 
E) $\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
 \text {Sales  } & 8,000\
\text {Merchandise Inventory } & 5,000 \
\text { Cash } & &8,000 & \
 \text { Cost of Goods Sold } && 5,000\
\end{array}$

Question 10

Assets,expenses,and revenues have normal balances on the debit side of a T-account.

Accepted Answer

A) True 
 B)False

Question 11

The SEC requires publicly held companies to file 10-K reports within ________ after the fiscal year ends.

Accepted Answer

A) 30 days 
B) 60 days 
C) 90 days 
D) 120 days 
E) none of the above

Question 12

Which of the following errors would a trial balance help the accounting staff to find?

Accepted Answer

A) A sale for $8,300 occurred,and instead of debiting Cash for $8,300,Accounts Receivable was debited for $8,300. 
B) A sale for $8,300 occurred,and instead of debiting Cash for $8,300,Accounts Payable was debited for $8,300. 
C) A sale for $8,300 occurred,and instead of debiting Cash and crediting Sales for $8,300,Cash was credited and Sales was debited for $8,300. 
D) A sale for $8,300 occurred,and instead of debiting Cash and crediting Sales for $8,300,Cash was debited for $700,and Sales was credited for $8,300. 
E) A sale for $8,300 occurred and instead of debiting Cash for $8,300 and crediting Sales for $8,300,Cash was debited for $7,000 and Sales was credited for $7,000.

Question 13

Which of the following accounts are expected to have a credit normal balance? 1.Cash
2)Salary Expense
3)Retained Earnings
4)Accumulated Depreciation
5)Sales
6)Prepaid Rent
7)Accounts Payable

Accepted Answer

A) Cash,Retained Earnings,Sales 
B) Salary Expense,Accounts Payable,Accumulated Depreciation 
C) Cash,Retained Earnings,Accumulated Depreciation,Prepaid Rent,Accounts Payable 
D) Cash,Salary Expense,Prepaid Rent 
E) Retained Earnings,Accumulated Depreciation,Sales,Accounts Payable

Question 14

Publishing for Personnel,Inc.,received and paid its utility bill of $800.As the accountant,you would tell the bookkeeper to

Accepted Answer

A) debit Utility Expense and credit Cash for $800. 
B) debit Cash and credit Utility Payable for $800. 
C) debit Cash and credit Utility Expense for $800. 
D) debit Cash and credit Retained Earnings for $800. 
E) debit Utility Receivable and credit Cash for $800.

Question 15

Stile Paving Company had the following journal entries for each of the transactions described.Prepare the correcting entry needed for each transaction.
a.A credit customer paid $200 to Stile Paving Company for the customer's outstanding balance.The journal entry made by the company was
 
$\begin{array}{lccc}
\text { Cash } & 200\
 \text { Sales } && 200
\end{array}$
 b.A repair was made on some equipment.The cost was supposed to be charged to Repair Expense.The journal entry made by the company was
 $\begin{array}{lccc}
\text { Equipment } & 550\
 \text { Accounts Payeble} && 550
\end{array}$ 
c.Depreciation for the current year was supposed to be $2,800,however the company made the following journal entry:
 $\begin{array}{lccc}
\text { Depreciation Expense } & 800\
 \text { Equipment} && 800
\end{array}$ 
d.Supplies were acquired on account for $1,300.The company made the following journal entry:
 $\begin{array}{lccc}
\text { Supplies } & 1,300\
 \text { Accounts Receivable } && 1,300
\end{array}$ 
e.The company paid $100 on account.The journal entry was:
 $\begin{array}{lccc}
\text { Accounts Receivable } &100\
 \text { Cash } && 100
\end{array}$

Accepted Answer

The answer of Stile Paving Company had the following journal...

Question 16

Which of the following accounts is classified differently from the others in the list?

Accepted Answer

A) Notes Payable 
B) Accounts Receivable 
C) Merchandise Inventory 
D) Prepaid Rent 
E) Cash

Question 17

In a trial balance,the number of accounts that are debited do not have to equal the number of accounts that are credited,but the total dollar amount of the debits must equal the total dollar amount of the credits.

Accepted Answer

A) True 
 B)False

Question 18

When expense accounts are closed,we credit each expense account.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true regarding attributes of the general ledger and the general journal?

Accepted Answer

A) Both the general ledger and the general journal focus on general accounting concepts and not specific events or occurrences. 
B) The general journal displays the balance in a particular account. 
C) The general ledger and the general journal are separate and distinct accounting records that are not related or cross-referenced to each other. 
D) The general ledger is account driven and the general journal is transaction driven. 
E) General ledger accounts are only used in ERP systems.

Question 20

Given the following transactions,what is the ending balance in the Cash account? 1.The owner started the company by investing $6,000 cash.
2)The company paid $1,200 for 6 months' rent in advance.
3)The company acquired $2,400 in merchandise inventory with one-half of the purchase on account.
4)The company sold merchandise inventory costing $1,500 for $3,100 on account.

Accepted Answer

A) $3,600 debit balance 
B) $3,600 credit balance 
C) $5,100 credit balance 
D) $4,800 debit balance 
E) $4,800 credit balance

Exam 3: Recording Transactions

The purchase of office equipment on account would increase assets and decrease stockholders' equity.

Contributor Enterprise borrowed $2,400 on February 1,2012.All interest has been paid and properly recorded for separately.On March 31,2012,the company repaid the loan.Which of the following is the journal entry to be made at the time of the loan repayment?

The entry to collect cash on account involves a

Which of the following accounts would not be found on the credit side of a trial balance?

Palladia Publishing paid $450 for an advertisement that will appear in today's newspaper.Which of the following is the journal entry to record this transaction?

The Income Summary account

Sharpington,Inc.manufactures and sells phone cases.The company sold a shipment of cases costing $5,000 to a customer for $8,000.The customer paid cash.Which of the following is the journal entry that Sharpington would make to record the sale of the shipment of cases?

Assets,expenses,and revenues have normal balances on the debit side of a T-account.

The SEC requires publicly held companies to file 10-K reports within ________ after the fiscal year ends.

Which of the following errors would a trial balance help the accounting staff to find?

Which of the following accounts are expected to have a credit normal balance? 1.Cash 2) Salary Expense 3) Retained Earnings 4) Accumulated Depreciation 5) Sales 6) Prepaid Rent 7) Accounts Payable

Publishing for Personnel,Inc.,received and paid its utility bill of $800.As the accountant,you would tell the bookkeeper to

Which of the following accounts is classified differently from the others in the list?

In a trial balance,the number of accounts that are debited do not have to equal the number of accounts that are credited,but the total dollar amount of the debits must equal the total dollar amount of the credits.

When expense accounts are closed,we credit each expense account.

Which of the following statements is true regarding attributes of the general ledger and the general journal?