2024 – 1 Question A company s Office Supplies account shows

1.            Question :           A company’s Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

 

                                                  $2,700

 

                                                  $2,900

 

                                                  $3,300

 

                                                  $3,500

 

                                                  $3,700

 

Question 2.         Question :           A 10-column spreadsheet used to draft a company’s unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements and which is an optional tool in the accounting process is a(n):

 

                                                  Adjusted trial balance

 

                                                  Work sheet

 

                                                  Post-closing trial balance

 

                                                  Unadjusted trial balance

 

                                                  General ledger

 

Question 3.         Question :           Unearned revenue is reported on the financial statements as:

 

                                                  A revenue on the balance sheet

 

                                                  A liability on the balance sheet

 

                                                  An unearned revenue on the income statement

 

                                                  An asset on the balance sheet

 

                                                  An operating activity on the statement of cash flows

Question 4.         Question :           A company shows a $600 balance in Prepaid Insurance in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired insurance of $200. This adjusting entry results in:

 

                                                  $200 less in net income

 

                                                  $200 more in net income

 

                                                  $200 difference between the debit and credit columns of the Unadjusted Trial Balance

                                                  $200 of prepaid insurance

 

                                                  An error in the financial statements

 

Question 5.         Question :           A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

 

                                                  $75

 

                                                  $125

 

                                                  $175

 

                                                  $250

 

                                                  $325

 

Question 6.         Question :           A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

 

                                                  2%

 

                                                  20%

 

                                                  200%

 

                                                  500%

 

                                                  $8,000

Question 7.         Question :           The Income Summary account is used:

 

                                                  To adjust and update asset and liability accounts

 

                                                  To close the revenue and expense accounts

 

                                                  To determine the appropriate dividend amount

 

                                                  In some situations to replace the income statement

 

                                                  To replace the retained earnings account in some businesses

Question 8.         Question :           A company purchased a new truck at a cost of $42,000 on July 1, 2011. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. How much depreciation expense will be recorded for the truck for the year ended December 31, 2011?

 

                                                  $3,250

 

                                                  $3,500

 

                                                  $4,000

 

                                                  $6,500

 

                                                  $7,000

 

Question 9.         Question :           Which of the following accounts would not be on the post closing trial balance?

 

                                                  Accounts Payable

 

                                                  Accounts Receivable

 

                                                  Common Stock

 

                                                  Dividends

 

                                                  Retained Earnings

 

Question 10.      Question :           A trial balance prepared after the closing entries have been journalized and posted is the:

 

                                                  Unadjusted trial balance

 

                                                  Post-closing trial balance

 

                                                  General ledger

 

                                                  Adjusted trial balance

 

                                                  Work sheet

Question 11.      Question :           An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

 

                                                  Accrued expense

 

                                                  Contra account

 

                                                  Accrued revenue

 

                                                  Intangible asset

 

                                                  Adjunct account

Question 12.      Question :           The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

 

                                                  Cash basis accounting

 

                                                  The matching principle

 

                                                  The time period principle

 

                                                  Accrual basis accounting

 

                                                  Revenue basis accounting

 

Question 13.      Question :           The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

 

                                                  $8,000

 

                                                  $15,400

 

                                                  $23,400

 

                                                  $17,000

 

                                                  $32,400

Question 14.      Question :           A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

 

                                                  Debit Unpaid Salaries $600 and credit Salaries Payable $600

 

                                                  Debit Salaries Expense $400 and credit Salaries Payable $400

 

                                                  Debit Salaries Expense $600 and credit Salaries Payable $600

 

                                                  Debit Salaries Payable $400 and credit Salaries Expense $400

 

Question 15.      Question :           The adjusted trial balance contains information pertaining to:

 

                                                  Asset accounts only

 

                                                  Balance sheet accounts only

 

                                                  Income statement accounts only

 

                                                  All general ledger accounts

 

                                                  Revenue accounts only

Question 16.      Question :           On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. What is the amount that should be recorded as depreciation on December 31?

 

                                                  $27,000

 

                                                  $24,900

 

                                                  $29,100

 

                                                  $135,000

 

Question 17.      Question :           The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

 

                                                  Income Summary account

 

                                                  Closing account

 

                                                  Balance column account

 

                                                  Contra account

 

Question 18.      Question :           Financial statements are typically prepared in the following order:

 

                                                  Balance sheet, statement of retained earnings, income statement

 

                                                  Statement of retained earnings, balance sheet, income statement

 

                                                  Income statement, balance sheet, statement of retained earnings

 

                                                  Income statement, statement of retained earnings, balance sheet

 

Question 19.      Question :           A classified balance sheet:

 

                                                  Measures a company’s ability to pay its bills on time

 

                                                  Organizes assets and liabilities into important subgroups

 

                                                  Presents revenues, expenses and net income

 

                                                  Reports operating, investing and financing activities

 

                                                  Reports the effect of profit and dividends on retained earnings

Question 20.      Question :           Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?

Cash      $ 6,754  Dividends            $ 2,000

Accounts receivable       $ 13,733                Consulting fees earned $ 13,718

Office supplies  $ 2,625  Rent expense    $ 3,673

Land      $ 37,153                Salaries expense              $ 6,642

Office equipment            $ 14,535                Telephone expense       $ 560

Accounts payable            $ 6,463  Miscellaneous expense                $ 280

Common stock  $ 54,490                Retained Earnings            ?

 

 

                     $0

 

                                                  $13,718

 

                                                  $13,155

 

                                                  $13,284

Question 21.      Question :           If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

 

                                                  A debit to Cash and a credit to Salaries Payable

 

                                                  A debit to Cash and a credit to Prepaid Salaries

 

                                                  A debit to Salaries Payable and a credit to Cash

 

                                                  A debit to Salaries Payable and a credit to Salaries Expense

 

                                                  No entry would be necessary on January 5

 

Question 22.      Question :           On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

 

                                                  Debit Prepaid Insurance, $1,800; credit Cash, $1,800

 

                                                  Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440

                                                  Debit Prepaid Insurance, $360; credit Insurance Expense, $360

 

                                                  Debit Insurance Expense, $360; credit Prepaid Insurance, $360

 

                                                  Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440

 

Question 23.      Question :           The accrual basis of accounting:

 

                                                  Is generally accepted for external reporting since it is more useful for most business decisions

                                                  Is flawed because it gives complete information about cash flows

 

                                                  Recognizes revenues when received in cash

 

                                                  Recognizes expenses when paid in cash

 

                                                  Eliminates the need for adjusting entries at the end of each period

 

Question 24.      Question :           The difference between the cost of an asset and the accumulated depreciation for that asset is called

 

                                                  Depreciation Expense

 

                                                  Unearned Depreciation

 

                                                  Prepaid Depreciation

 

                                                  Depreciation Value

 

                                                  Book Value

 

Question 25.      Question :           A trial balance prepared after adjustments have been recorded is called a(n):

 

                                                  Balance sheet

 

                                                  Adjusted trial balance

 

                                                  Unadjusted trial balance

 

                                                  Classified balance sheet

 

 

                                                  Unclassified balance sheet