Which of the following accounts would most likely NOT need to be adjusted at the end
of the year?
A) Office Supplies
B) Prepaid Insurance Expense
C) Accumulated Depreciation
D) Cash
Record the following transactions into the expanded accounting equation for the
Mayoras’ Law Firm. Note that all titles have beginning balances. (You will need to
determine the beginning capital balance.)
a. Provided legal services for cash, $1,200
b. Billed customers for services rendered, $2,000
c. Received and paid the monthly utility bill, $300
d. Collected $500 on account from customers
e. Paid supplies expense, $250
f. Withdrew $200 cash for personal use
Mayoras’ Law Firm
A unit or department that incurs costs and generates revenues is known as a:
A) cost center
B) profit center
C) revenue center
D) None of these answers is correct.
In a department store, the men’s clothing section would be a(n):
A) profit center.
B) direct expense.
C) cost center.
D) indirect expense.
A written promise to pay a certain sum of money to another person or company is a:
A) Promissory Accounts Payable.
B) Promissory Note Payable.
C) Promissory Accounts Receivable.
D) Promissory Note Receivable.
A company purchased new machinery and incurred freight, assembly, and installation
costs in addition to the invoice cost of the machinery. These additional costs should be
debited to:
A) Miscellaneous Expense.
B) Machinery.
C) Installation Expense.
D) Machinery Expense.
Capital expenditures would include:
A) additions.
B) betterments.
C) extraordinary repairs.
D) All of these answers are correct.
When the market rate of interest on bonds is higher than the contract rate, the bonds
will sell at:
A) a premium.
B) their face value.
C) their maturity value.
D) a discount.
When treasury stock is reissued for more than cost, the journal entry would include a:
A) credit to Cash
B) credit to Common Stock.
C) debit to Treasury Stock.
D) credit to Paid-in Capital from Treasury Stock.
The amount to include in the entry to record the cost of a property, plant, and equipment
asset would NOT include:
A) acquisition cost.
B) routine maintenance costs.
C) installation.
D) All of these answers are correct.
Cory issued a note to his creditor in exchange for an account. Cory records the
transaction as follows:
A) debit Notes Payable; credit Accounts Payable.
B) debit Notes Receivable; credit Accounts Receivable.
C) debit Accounts Payable; credit Notes Payable.
D) debit Accounts Receivable; credit Notes Payable.
When a corporation purchases a building for cash, it:
A) does not affect the cash flow statement.
B) is shown as an investing activity.
C) is shown as a financing activity.
D) is shown as an operating activity.
The date of record for cash dividends is:
A) the date the board of directors pays a dividend.
B) the date established by the board of directors that determines who will receive
dividends.
C) the date that creates a liability for the company.
D) None of these answers is correct.
Which of the following is normally the report prepared for a department?
A) cash flow statement.
B) statement of equity.
C) income statement.
D) balance sheet.
The payment of FUTA would include:
A) a debit to FUTA Payable.
B) a credit to FUTA Payable.
C) a debit to FUTA Expense.
D) a credit to FUTA Expense.
Topiary’s Unlimited has a cost of goods sold of $1,500,000. The beginning merchandise
inventory was $125,000 and its ending merchandise inventory is $175,000. Topiary’s
merchandise inventory turnover ratio is:
A) 8.50 times.
B) 10.0 times.
C) 1.0 times.
D) 0.1 times.
Max Realty paid $3,000 rent on a building in advance for two years on May 1. The
amount that should be recorded as rent expense as of December 31 is:
A) $1,000.
B) $3,000.
C) $1,500.
D) $875.
Strum Hardware has total assets of $60,000. What are the total assets if new equipment
is purchased for $5,000 cash?
A) $45,000
B) $50,000
C) $55,000
D) $60,000
Calculate the costume jewelry department net income given the following:
A) $1,300
B) $1,000
C) $300
D) ($250)
Appropriations to retained earnings can be:
A) contractual only.
B) an increase in retained earnings.
C) a decrease in total retained earnings.
D) None of these answers is correct.
When equipment that is fully depreciated is discarded:
A) debit the original cost of the asset.
B) credit the balance of Accumulated Depreciation.
C) debit Accumulated Depreciation and credit Equipment.
D) None of these answers is correct.
Shayla’s Design uses a periodic inventory system. Shayla sold 33 artist kits during
January. Other data for January includes:
Cost of Goods Sold under the LIFO method is:
A) $1,219.
B) $1,055.
C) $950.
D) $789.
The financial statement that shows business results in terms of revenue and expenses is:
A) an income statement.
B) a balance sheet.
C) a statement of owner’s equity.
D) the statement of cash flows.
The ending merchandise inventory was understated. This error would cause:
A) assets to be understated.
B) assets to be overstated.
C) net income to be overstated.
D) None of these is correct.
The ending inventory for this year is overstated. This error would cause:
A) the period’s net income to be overstated.
B) the period’s net income to be understated.
C) the period end assets to be understated.
D) None of these is correct.
At the end of the accounting cycle, net income will be closed into:
A) Treasury Stock.
B) Paid-in Capital.
C) Cash.
D) Retained Earnings.
Which of the following is an element in a voucher system?
A) General journal
B) Sales journal
C) Paid voucher file
D) All of these elements are used in a voucher system.
The net income or net loss is calculated on the:
A) balance sheet.
B) statement of owner’s equity.
C) income statement.
D) None of these
Shoes ‘R Us bought some new shoes for its fashion line and is required to pay the
freight costs. The freight terms are:
A) F.O.B. destination.
B) F.O.B. shipping point.
C) 3/10, n/30.
D) B and C are correct.
Which of the following would be used to record the payment for purchases under the
periodic system?
A) Debit to Accounts Payable
B) Debit to Purchase Discounts
C) Credit to Accounts Payable
D) Debit to Cash
Merchandise Inventory is what type of account?
A) Asset
B) Liability
C) Expense
D) Contra-Asset
The two methods of accounting for uncollectible receivables are the allowance method
and the:
A) cost method.
B) direct write-off method.
C) interest method.
D) equity method.
If stock shares are sold at more than their par value, the excess money is called:
A) earnings.
B) paid-in capital in excess of par value.
C) gain on issue of stock.
D) discount on issue of stock.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).
To determine the interest payment on a bond, multiply the ________ interest rate times
the ________ value.
Determine the amount of cash collected at the time of making a sale of $1,000 worth of
merchandise subject to a 3% sales tax.
$ ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement that the account in which the account balance is reported, and in Column 4
the account’s nature (temporary/permanent).
Determine the unadjusted balance per bank statement given the following:
The balance per general ledger is $200.
There is a credit memo for a note collected, $450.
There is a debit memo for interest expense, $50.
There is a debit memo for a customer’s NSF check $425.
Outstanding checks amount to $2,000.
This month’s service charge amounts to $50.
Deposits in transit amount to $1,500.
$ ________
The three categories of writing off plant assets, natural resources, and intangible assets
are ________, ________, and ________, respectively.
Sports Galore is trying to allocate its building’s depreciation based on floor space.
Determine the amount that should be assigned to the golf department and to the
basketball department.
Golf Basketball Total
Floor Space 75,000 125,000 200,000
Depreciation Exp $40,000
For each of the following, identify in Column 1 the balance the account will have in the
adjusted trial balance columns (debit or credit), in Column 2 the financial statement
column(s) in which the account balance will be found (income statement or balance
sheet), and in Column 3 the effect the account will have on the determination of net
income (increase, decrease, or none).
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 30.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
The following accounts are on the Balance Sheet section of Scents Galore worksheet
for the date November 30, 201X.
Additional information: Withdrawals for the period are $4, and Net Income is $12.
Given the following payroll items you are to identify whether they are the responsibility
of the employer and/or the employee by placing an X in the appropriate column.
Journalize the following transactions. All purchases are on account and subject to terms
of 2/10, n/30. The periodic inventory method is used.
Nov. 3 Purchased merchandise with a price of $2,000 from the Bartkowski Inc.
Nov. 5 Purchased merchandise from the Thiesman and Co. with a price of $4,000.
Nov. 7 Purchased merchandise with a price of $2,000 from the Montana Supply Co.
Nov. 10 Paid the amount due to Bartkowski Inc.
Nov. 12 Paid the amount due to Thiesman and Co.
Nov. 23 Paid the amount due to Montana Supply Co.
Journalize the Nov. 7 transaction.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
Marie’s Law Firm’s unadjusted trial balance includes the following:
Cash $5,000
Unearned Legal Fees 2,200
Legal Fees Revenue 14,200
Using the above data, record the adjusting entry for $1,000 of the unearned accounting
fees earned.
The general ledger controlling account for Accounts Receivable shows a debit balance
of $120,000. The Allowance for Doubtful Accounts has a credit balance of $5,000. An
aging report of accounts receivable accounts resulted in an estimate of $23,000 of
uncollectible accounts receivable. Calculate the amount of the adjustment using the
balance sheet approach.
Amount of the adjustment ________
Determine the beginning assets of a business having ending liabilities of $4,000, the
liabilities decreased by $1,500 during the year, an ending owner’s equity of $10,700,
additional investments of $2,000, withdrawals of $15,600, and after closing the
revenues and expenses the Income Summary account has a credit balance of $6,800.
$ ________
Why would it be advisable for a company to keep separate accounting records for
various departments?
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Accrued interest on bonds which sold beneath face value.
Debit ________ Credit ________ & ________
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement in which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
Estimate the annual advance premium for workers’ compensation insurance, and record
it in general journal form using the following data: