1) Match the following.
A) gross margin percentage
B) inventory turnover
1> Gross margin divided by net sales revenue
2> Ratio of cost of goods sold to average inventory
2) Indicate how the following columns are posted from the sales journal, cash payments
journal, and the cash receipts journal. Use the following letters to indicate your answer:
a) In total only
b) Individually only
c) In total and individually
1>Sales discounts debit column of the sales journal________
2>Cost of goods sold debit and inventory
credit column of the sales journal________
3>Accounts receivable credit column of the
cash receipts journal________
4>Accounts receivable debit and sales revenue
credit column of the sales journal________
5>Cash credit column of the cash payments journal________
6>Cash debit column of the cash receipts journal________
7>Inventory debit column of the cash payments journal________
8>Other accounts credit column of the cash receipts Journal________
9>Accounts payable debit column of the cash payments journal________
10>Other accounts debit column of the cash payments journal________
3) Allowance for doubtful accounts has a debit balance of $980 at the end of the current
year (prior to adjustment). Net credit sales for the current period amount to $900,000
and 2.5% is estimated to be uncollectible. The adjusting entry would require a credit to:
A) bad-debt expense for $23,480
B) allowance for doubtful accounts for $21,520
C) allowance for doubtful accounts for $22,500
D) accounts receivable accounts for $22,500
4) A three-month note dated April 8 matures on:
A) July 7
B) July 6
C) July 9
D) July 8
5) If a required unearned revenue adjustment had not been made, the financial
statements would have been affected as follows:
A) net income understated, assets overstated, liabilities unaffected, and owner’s equity
overstated
B) net income overstated, assets unaffected, liabilities understated, and owner’s equity
unaffected
C) net income understated, assets unaffected, liabilities overstated, and owner’s equity
understated
D) net income overstated, assets overstated, liabilities overstated, and owner’s equity
unaffected
6) The following data are available for Remas Designs for October:
What is the adjusted book balance on October 31 for Remas Designs based on the
above data?
A) $5,500
B) $5,550
C) $7,466
D) $4,966
7) Inventory is classified:
A) as a property, plant, and equipment asset on the balance sheet
B) as a current asset on the balance sheet
C) as a current liability on the balance sheet
D) as either an investment or a current asset on the balance sheet
8) The three stages of data processing are:
A) inputs, outputs, and processing
B) source documents, processing, and decision making
C) processing, reports, and decision making
D) inputs, decision making, and outputs
9) The payment of salaries to employees for wages of the current period would:
A) increase owner’s equity and decrease liabilities
B) increase net income and decrease assets
C) decrease assets and owner’s equity
D) increase assets and decrease owner’s equity
10) A loss is recorded on the disposal of property, plant and equipment when:
A) an asset is sold for a price greater than the asset’s book value
B) the asset’s residual value is less than the cash received
C) the asset’s book value is greater than the amount of cash received from the sale
D) the asset’s amortizable cost is greater than the cash received
11) Given the following totals for the financial statement columns on the worksheet,
determine the net income or loss for the period:
Income StatementBalance Sheet
DebitCreditDebitCredit
$8,800$11,500$9,400$6,700
A) $11,500 net income
B) $2,700 net income
C) $9,400 net loss
D) $6,800 net loss
12) Referring to Table 10-5, what is the amortization expense in 2014 if Button uses
units-of-production amortization?
A) $8,208
B) $4,500
C) $6,192
D) $5,156
13) Table 9-12 Adirondac Marine Supplies
On September 1, 2013, Adirondac Marine Supplies made a loan to one of its customers.
The customer signed a 6-month note for $1,500 at 10%.
Refer to Table 9-12. When the note matured on March 1, 2014, the customer settled
with the company in full. How much cash did Adirondac collect from the customer?
A) $1,575
B) $75
C) $2,500
D) $1,500
14) Net pay is equal to:
A) gross pay minus all deductions
B) all deductions plus all withholdings
C) take-home pay plus all deductions
D) straight time plus overtime, if any
15) The statement that presents a summary of the revenues and expenses of an entity is
called the:
A) statement of owner’s equity
B) statement of financial position
C) income statement
D) balance sheet
16) Table 4-4
Selected accounting data as at December 31, 2014 for Huma Delivery follows:
Cash$11,000
Accounts payable8,000
Accounts receivable5,500
Salary payable6,300
Supplies1,200
Unearned revenue2,200
Prepaid rent4,600
Mortgage payable (due 2018)5,500
Equipment22,000
J. Huma, Capital19,900
Accum. amort.-equipment6,100
Service revenue29,000
Salary expense8,000
Furniture12,000
Accum. amort.-furniture4,000
Amortization expense6,800
Utilities expense4,300
Rent expense5,600
Referring to Table 4-4, current assets and total assets are:
A) $17,700 and $46,200, respectively
B) $17,700 and $41,600, respectively
C) $22,300 and $46,200, respectively
D) $22,300 and $56,300, respectively
17) Which of the following transactions would both increase and decrease an asset?
A) purchasing equipment for cash
B) borrowing money from a bank
C) performing a service and receiving the cash immediately
D) purchasing office supplies on account
The entry to record the receipt of $650 on account for services previously rendered and
billed would be:18) A)
B)
C)
D)
19) Accumulated amortization on an asset plus its book value equals:
A) amortization expense for the current year
B) amortization expense to be recorded in future years
C) amortization expense recorded in past years
D) the cost of the equipment
20) Table 9-6
Jerri’s Jewellery accepted a $2,400 note receivable from S. Wells in settlement of an old
account receivable. The 10% note was dated October 2, 2013, and was due in 120 days.
Referring to Table 9-6, what is the journal entry on Jerri’s books on October 2, 2013?
A)
B)
C)
D)
21) The Accounting Standards Board is responsible for authorizing:
A) the Canadian Institute of Chartered Accountants
B) the IFRS and ASPE accounting standards used in Canada
C) the code of professional conduct for accountants
D) the Securities and Exchange Commission
22) On April 10, Salt Company received a cheque from Pepper Company for payment
of an invoice dated March 24 for $2,000 with credit terms of 2/10 n/30. On March 28,
Pepper had returned $200 of the merchandise because it was defective. How would this
transaction be recorded in Salt’s cash receipts journal?
A) debit Cash $2,000; credit Accounts Receivable-Pepper Company $2,000
B) debit Cash $1,800; credit Accounts Receivable-Pepper Company $1,800
C) debit Cash $1,764; credit Accounts Receivable-Pepper Company $1,764
D) debit Cash $1,764 and Sales Discounts $36; credit Accounts Receivable-Pepper
Company $1,800
23) Table 5-5
The following items were taken from the December 31, 2013 records of Speedy Boat
Company, which uses a periodic inventory system:
Refer to Table 5-5. The net sales for Speedy Boat Company are:
A) $427,000
B) $445,000
C) $480,000
D) $462,000
24) Eyewear Unlimited has accounts receivable of $16,000 and an allowance for
doubtful accounts with a credit balance of $1,700 before a specific account of $60 is
written off. What were net accounts receivable before and after the write-off?
A)
B)
C)
D)
25) The capital account has an ending balance of $17,000 and a beginning balance of
$12,500. If withdrawals were $13,500, then the income summary account had a balance
of ________ before closing.
A) $18,000 credit
B) $4,500 credit
C) $3,500 credit
D) $18,000 debit
26) Rockhill Industries received payment after the expiration of the discount period
from a customer who had purchased merchandise on account. The sales invoice was for
$3,000, and credit terms were 3/15 n/30. The cost of the merchandise was $1,800. In the
cash receipts journal:
A) $3,000 will appear in the sales revenue credit column
B) $3,000 will appear in the accounts receivable debit column
C) $3,000 will appear in the accounts receivable credit column
D) $90 will appear in the sales discounts debit column
27) A petty cash fund was established with a $400 balance. It currently has cash of $9
and petty cash tickets as shown below.
The journal entry to replenish the account would be which of the following:
A) Debit to Cash Short & Over for $1
B) Credit Cash Short & Over for $1
C) Debit Petty Cash for $1
D) Credit Petty Cash for $1
28) Indicate the proper journal to use to record each of the following transactions. Use
S for sales journal, P for purchases journal, CR for cash receipts journal, CP for cash
payments journal, and G for general journal.
a)Owner investment of cash________
b)Owner withdrawal of cash________
c)Payment of accrued salaries________
d)Sales of furniture in exchange for
a note receivable________
e)Receipt of payment on account________
f)Purchase of land for cash________
g)Returned merchandise, receiving
a cash refund________
h)Payment for the purchase of inventory
within the discount period________
i)Made a cash refund to a customer for
returned merchandise________
j)Sale of merchandise on account________
k)Purchase of merchandise for cash________
l)Purchase of supplies on account________
m) Sale of merchandise for cash________
n)Owner investment of equipment________
29) By the end of December, how much subscription revenue will Real Losers have
earned?
A) $180,000
B) $240,000
C) $360,000
D) $210,000
30) The entry to record the purchase of supplies for $200 cash would be:
A)
B)
C)
D)
31) Net income is reported on the income statement at $30,000. Adjusting entries for
accrued revenues of $2,000 and unearned revenue earned during the current period of
$5,500 were accidentally omitted. The correct net income is:
A) $22,500
B) $37,500
C) $33,500
D) $26,500
32) Earning revenue on account:
A) decreases assets
B) increases liabilities
C) decreases owner’s equity
D) increases owner’s equity
33) Match the following.
A) income from operations
B) operating expenses
C) other revenue
D) single-step income statement
E) cost of goods sold
1> Expenses, other than cost of goods sold, that are incurred in the entity’s major line of
business
2> Gross margin minus operating expenses
3> The largest single expense of most merchandising businesses
4> A format that groups all revenues together and then lists and deducts all expenses
together without drawing any subtotals
5> Revenue that originates outside the main operations of a business
34) Under the allowance method, if uncollectible account write-offs during the year
exceed the allowance amount, the balance in allowance for doubtful accounts at year
end prior to adjustment:
A) will be zero
B) should be deducted from accounts receivable
C) will be a debit
D) should be adjusted by debiting it to bring the balance back to zero
35) Which of the following expenditures would be debited to an expense account?
A) cost to overhaul the company car’s engine
B) cost to replace the engine of the company car
C) cost to paint the car after a fender bender
D) cost to overhaul the engine and the transmission of the company car
36) Given the following adjusted account balances in random order, prepare the closing
entries for Sheer Fabrics on December 31, 2013 .
Cash35,000
Suzie Sheer, Capital85,000
Accounts payable33,000
Service revenue84,000
Amortization expense-building 12,000
Salary expense29,000
Unearned service revenue24,000
Prepaid rent9,000
Supplies expense6,000
Note payable71,000
Land65,000
Accounts receivable32,000
Accum. amortization-building12,000
Interest revenue14,000
Interest payable3,000
Suzie Sheer, Withdrawals20,000
Rent expense15,000
Building95,000
Supplies4,000
Interest expense4,000
37) The inventory of Runners Company was destroyed by flood on Jun 1 . From an
examination of the accounting records, the following data for the first five months (Jan
to May) of the year are obtained:
Sales$55,000
Sales Returns and Allowances 2,000
Purchases 34,500
Freight-In1,000
Purchase Returns and Allowances1,400
Required:
Determine the merchandise lost by flood using the Gross Profit Method, assuming a
beginning inventory of $3,000 and a gross profit rate of 40% on net sales.
38) Thermo HVAC is a heating and air conditioning service business. On December 31,
2014, after its first month of business, Thermo HVAC had the following balances in its
accounts, listed alphabetically.
Determine the balance in the cash account and prepare a trial balance using proper
format.
39) Describe the difference between a perpetual inventory system and a periodic
inventory system.
40) Identify the following accounts as temporary or permanent.
TemporaryPermanent
Cash____________________
Utilities expense____________________
Unearned service revenue____________________
Prepaid insurance____________________
Accounts receivable____________________
Interest expense____________________
Accumulated amort.-equip.____________________
Amortization expense-equip.____________________
Leonard Lucas, Withdrawals____________________
Leonard Lucas, Capital____________________
Salary payable____________________
Accounts payable____________________
Interest revenue____________________
Mortgage payable____________________
Prepaid rent____________________
Rent expense____________________
Equipment____________________