978-0134125053 Chapter 2 Part 3

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30) Sky Co. collected $600 from one of its customers for payment on their account. The journal

entry would include a:

A) debit to Accounts Receivable and a credit to Cash.

B) debit to Cash and a credit to Accounts Payable.

C) debit to Cash and a credit to Accounts Receivable.

D) debit to Cash and a credit to Sales Revenue.

Question Type: Application

31) S & C, Inc. purchases a building for $70,000 cash. The journal entry would include a:

A) debit to Building and a credit to Cash.

B) debit to Common Stock and a credit to Building.

C) debit to Building and a credit to Accounts Payable.

D) debit to Building and a credit to Common Stock.

Question Type: Application

32) Renoir Associates paid one of its creditors $584 on their balance due. The journal entry

would require a:

A) debit to Cash and a credit to Accounts Payable.

B) debit to Cash and a credit to Accounts Receivable.

C) credit to Cash and a debit to Accounts Receivable.

D) debit to Accounts Payable and credit to Cash.

Question Type: Application

33) Shaman, Inc. purchased $325 of office supplies on account and treated the supplies as a

prepaid expense. The journal entry would require a:

A) debit to Office Supplies Expense and a credit to Cash.

B) debit to Office Supplies and a credit to Cash.

C) debit to Office Supplies and a credit to Accounts Payable.

D) debit to Office Supplies Expense and a credit to Office Supplies.

Question Type: Application

34) Alaska Alehouse purchased a $700 two-year insurance policy for cash. The journal entry

would require a:

A) debit to Prepaid Insurance and a credit to Cash.

B) debit to Insurance Expense and credit to Cash.

C) debit to Insurance Expense and a credit to Accounts Payable.

D) debit to Insurance Expense and a credit to Retained Earnings.

Question Type: Application

35) Mozart Co. sold season tickets for $5,500 on account. The journal entry would be to:

A) debit Cash and credit season Ticket Sales Revenue.

B) debit Accounts Receivable and credit season Ticket Sales Revenue.

C) debit Cash and credit Accounts Payable.

D) debit Cash and credit Accounts Receivable.

Question Type: Application

36) The ________ keeps a running balance of an individual account.

A) general journal

B) Balance Sheet

C) general ledger

D) posting reference

Question Type: Concept

37) The ________ indicates where the information originated and to where the information was

transferred.

A) general journal

B) Balance Sheet

C) general ledger

D) posting reference

Question Type: Concept

38) One of the customers of Metro Roofing, Inc. paid $400 on her bill. The journal entry that

Metro Roofing, Inc. would record is:

A) debit Accounts Receivable and credit Sales.

B) debit Cash and credit Sales.

C) debit Accounts Receivable and credit Cash.

D) debit Cash and credit Accounts Receivable.

Question Type: Concept

39) The information from the general journal is transferred to the:

A) Balance Sheet.

B) Income Statement.

C) general ledger.

D) Statement of Retained Earnings.

Question Type: Concept

40) Journalizing does NOT include:

A) debiting account(s) that are affected.

B) crediting account(s) that are affected.

C) posting the debits and credits to the accounts.

D) entering the date of the transaction.

Question Type: Concept

41) The posting reference column of the general journal provides a cross-reference between the:

A) ledger and accounts.

B) journal and ledger.

C) ledger and financial statements.

D) journal and financial statements.

Question Type: Concept

42) Every entry in the general journal should include all of the following EXCEPT:

A) the title of each account affected.

B) the amounts of debits and credits.

C) a brief description of the transaction.

D) the balance of the accounts affected.

Question Type: Concept

43) The account “Salaries Expense” began with a zero balance and then had the following

changes: increase of $550, decrease of $275, increase of $600, and an increase of $375. The final

balance is a:

A) credit balance of $1,250.

B) debit balance of $1,250.

C) credit balance of $1,800.

D) debit balance of $1,800.

Question Type: Application

44) The account “Accounts Receivable” began with a zero balance and then had the following

changes: increase of $625, decrease of $275, increase of $350 and increase of $200. The final

balance is a:

A) credit balance of $900.

B) debit balance of $900.

C) credit balance of $1,450.

D) debit balance of $1,450.

Question Type: Application

45) The account “Accounts Payable” began with a zero balance and then had the following

changes: increase of $250, increase of $600, decrease of $225, and an increase of $375. The final

balance is a:

A) credit balance of $1,000.

B) debit balance of $1,000.

C) credit balance of $1,450.

D) debit balance of $1,450.

Question Type: Application

46) Where is the best place for a company’s accountant to find the information necessary to

review the activity in the cash account?

A) General journal

B) General ledger

C) Trial balance

D) Bank statement

Question Type: Concept

47) Coyote Co. paid $8,000 rent in advance. The journal entry would require:

A) debit to Cash, credit to Rent Expense.

B) debit to Cash, credit to Prepaid Rent.

C) debit to Rent Expense, credit to Cash.

D) debit to Prepaid Rent, credit to Cash.

Question Type: Application

48) Monet Designs provided services to a client on account. The journal entry would require:

A) debit to Cash, credit to Service Revenue.

B) debit to Service Revenue, credit to Accounts Receivable.

C) debit to Accounts Receivable, credit to Service Revenue.

D) debit to Service Revenue, credit to Accounts Receivable.

Question Type: Application

49) Fischers, Inc. paid $1,200 of dividends. The journal entry would require:

A) debit to Cash, credit to Dividends

B) debit to Dividends, credit to Cash.

C) debit to Dividends, credit to Accounts Payable

D) debit to Accounts Payable, credit to Dividends

Question Type: Application

2.4 Use a trial balance to prepare financial statements

1) A trial balance is a list of the accounts and their balances taken from the general journal.

Question Type: Concept

2) The trial balance is an official financial statement.

Question Type: Concept

3) A trial balance contains the name of the company, the words “trial balance” and the date of the

statement.

Question Type: Concept

4) The required accounting period for a trial balance is one year.

Question Type: Concept

5) If debits equal credits on the trial balance, it means that all the steps in the accounting process

are correct.

Question Type: Concept

6) Once the trial balance is correct, the next step is to prepare the financial statements, beginning

with the Income Statement.

Question Type: Concept

7) An entry could have been posted twice and the trial balance might still balance.

Question Type: Concept

8) The purpose of the trial balance is to verify that all account balances are correct.

Question Type: Concept

9) If a journal entry is recorded twice, both entries must be reversed in order to correct the error.

Question Type: Concept

10) Revenues and expenses are listed in different columns on the trail balance.

Question Type: Concept

11) A trial balance will determine if:

A) an entry was recorded twice.

B) an entry was posted twice.

C) debits equal credits.

D) the right accounts were debited or credited.

Question Type: Concept

12) On the trial balance, which account balances should be listed in the debit column?

A) Assets, Revenues, and Dividends

B) Liabilities, Revenues, and Common Stock

C) Assets, Dividends, and Expenses

D) Liabilities, Revenues, and Dividends

Question Type: Concept

13) On the trial balance, which account balances should be listed in the credit column?

A) Liabilities, Retained Earnings, and Revenues

B) Assets, Retained Earnings, and Expenses

C) Liabilities, Common Stock, and Expenses

D) Assets, Dividends, and Expenses

Question Type: Concept

14) Which document would be best to prove that the account balances are correct?

A) General journal

B) General ledger

C) Trial balance

D) Income Statement

Question Type: Concept

15) Motor Work, Inc.’s trial balance contains the following balances:

Cash $367 Accounts Payable $268 Revenue $635

Accounts Receivable $430 Expenses $106

What is the amount of total debits for this trial balance?

A) $903

B) $797

C) $741

D) $1,806

Question Type: Application

16) Caesar’s Company’s trial balance contains the following balances:

Cash $423 Accounts Receivable $380 Revenue $725

Accounts Payable $287 Expenses $209

What is the amount of total debits for this trial balance?

A) $1,528

B) $496

C) $1,012

D) $1,299

Question Type: Application

17) Anthoney Inc’s trial balance contains the following balances:

Cash $533 Accounts Payable $347 Revenue $671

Accounts Receivable $280 Expenses $205

What is the amount of total credits for this trial balance?

A) $552

B) $1,018

C) $1,484

D) $1,689

Question Type: Application

18) Sassycat Company’s trial balance contains the following balances:

Cash $670

Accounts Receivable $590

Common Stock $1,500

Accounts Payable $720

Dividends $960

What is the amount of total credits for this trial balance?

A) $2,760

B) $3,180

C) $3,130

D) $2,220

Question Type: Application

19) Only the ________ accounts from the trial balance will be used to prepare the Income

Statement.

A) asset and liabilities

B) liabilities and Retained Earnings

C) revenue and expense

D) Stockholders‘ Equity and asset

Question Type: Concept

20) The columns on a trial balance represent:

A) revenues and expenses.

B) debits and credits.

C) common stock and dividends.

D) subtotals and totals.

Question Type: Concept

21) The trial balance:

A) lists only the accounts, with their balances, which are used to prepare the Balance Sheet.

B) lists only the accounts, with their balances, which are used to prepare the Income Statement.

C) lists account names but no balances.

D) lists all accounts, with their balances, on a given date.

Question Type: Concept

22) A $375 purchase of supplies on account was recorded by debiting Supplies for $375 and

crediting Cash for $375. The entry needed to correct this error is:

A) Debit Accounts Payable for $375 and credit Cash for $375.

B) Debit Accounts Receivable for $375 and credit Cash for $375.

C) Debit Cash for $375 and credit Accounts Payable for $375.

D) Debit Cash for $375 and credit Accounts Receivable for $375.

Question Type: Application

23) The sequence of steps used to record and report business transactions is referred to as:

A) transaction analysis.

B) the accounting cycle.

C) journalizing.

D) the accounting period.

Question Type: Concept

24) The purpose of the trial balance is to:

A) summarize all account balances.

B) determine that account balances are correct.

C) verify that total debits equal total credits.

D) all of the above.

E) A and C both pertain to the purpose of the trial balance.

Question Type: Concept

25) A company accidentally records the rent payment twice in October. The effect on the trial

balance will be:

A) debits will be more than credits.

B) credits will be more than debits.

C) debits will still be equal to credits.

D) not enough information provided.

Question Type: Application

26) A cash payment was made to pay for delivery expenses, but was mistakenly charged to

Advertising Expense. What effect will this have on the trial balance?

A) Advertising Expense will be understated.

B) Delivery Expense will be overstated.

C) The trial balance will still balance.

D) Cash will be overstated.

Question Type: Application

27) A company purchased a truck for $800 on credit. The journal entry to record this transaction,

however, was a debit to ‘Truck’ for $700 and a credit to ‘Account Payable’ for $700. What will

the effect be on the trial balance?

A) Debits will be $100 less than credits.

B) Debits will be $100 more than credits.

C) The trial balance will still balance.

D) None of the above

Question Type: Application

28) A company purchased supplies on account; however, the journal entry to record the purchase

was a debit to Supplies for $200 and a credit to Cash for $200. What will the effect be on the trial

balance?

A) There will be no effect on the trial balance.

B) Debits will be $200 more than credits.

C) Debits will be $200 less than credits.

D) None of the above.

Question Type: Application