1) The current credit balance in allowance for doubtful accounts before adjustment is
$658. An aging schedule reveals $3,500 of uncollectible accounts. The journal entry for
estimated uncollectible accounts should be prepared for:
A) $658
B) $3,500
C) $4,158
D) $2,842
2) Jacob’s Event Planning Service has just prepared the unadjusted trial balance, which
shows the following balances:
Salary expense: debit $8,000
Service revenue: credit $3,000
Interest expense: $0
Late in this month, Jacob signed a contract with a new client, providing event planning
services for an upcoming event. The work will be started and completed in the
following month at which time the company will collect the full amount of $900 from
this client. The company makes accrual adjustments monthly. The adjusted balance of
service revenue, as shown on the adjusted trial balance for this month, should be a:
A) credit balance of $2,100
B) credit balance of $900
C) debit balance of $900
D) credit balance of $3,000
3) A company has $50,000 in cash, $85,000 in short-term investments, $120,000 in net
current receivables, and $145,000 in inventory. The total current liabilities of the firm
are $275,000. The acid-test ratio of the company is:
A) 0.93
B) 0.64
C) 1.45
D) 1.76
4) A system that relies on electronic communications, not paper documents, to transfer
cash is known as:
A) electronic remittance
B) electronic funds transfer
C) electronic mail
D) electronic imaging
5) Which of the following is not an acceptable inventory cost method?
A) first-in, first-out
B) last-out, first-in
C) specific-unit-cost
D) weighted-average cost
6) Table 11-11
On April 1st 2013 Maudlin Sales purchased inventory for $80,000 by signing a
one-year note payable, due March 31, 2014 . The note bears interest at an annual rate of
8%.
Refer to Table 11-11. What is the correct adjusting journal entry on December 31,
2013?
A)
B)
C)
D)
7) Liabilities are reported on the:
A) statement of owner’s equity
B) income statement
C) statement of owner’s equity and the income statement
D) balance sheet
8) Prepare a balance sheet dated December 31, 2013, for Canfield Enterprises based on
the following transactions completed during 2013 .
a) Marilyn Canfield invested $16,000 cash and equipment valued at $6,000 into the
business.
b) Purchased $500 of supplies on account.
c) Purchased $2,000 of equipment for cash.
d) Purchased a building by issuing a $10,000 note.
9) A trial balance contains:
A) a list of all accounts without account balances
B) only balance sheet accounts with account balances
C) all accounts contained in the general ledger with account balances
D) only income statement accounts with account balances
10) Rules of professional conduct for accountants should:
A) be considered a minimum standard of performance
B) not be seen as strict when the client requests certain requirements
C) be the same as those for lawyers or engineers
D) clearly spell out right from wrong in every situation
11) Given the following adjustment data, state whether the resulting adjustment will be
a deferral or an accrual.
a) Recorded salaries earned by employees at end of month, payment to be made early
next month.
b) Recorded service revenue received in advance from clients.
c) Estimated current month’s utilities bill and recorded the amount. The bill is to be
received and paid next month.
d) Prepaid insurance was used during the month.
e) Supplies were used during the month.
f) Performed services on account, payment to be received next month.
12) Purchasing a building for $120,000 by paying cash of $30,000 and obtaining a
mortgage for $90,000 would:
A) increase assets and increase liabilities by $90,000
B) increase owner’s equity by $90,000
C) increase liabilities by $30,000
D) decrease assets and decrease liabilities by $30,000
13) The income statement debit column exceeds the income statement credit column on
a worksheet. This indicates:
A) a net income for the company
B) a net loss for the company
C) that mistakes were made in the preparation of the worksheet
D) the owner’s capital account increased during the period
14) If the shipping terms are FOB shipping point and the freight bill is $200, the
purchaser, using a periodic inventory system would record payment of the freight with a
debit to:
A) Inventory and credit to Cash for $200
B) Freight In and a credit to Cash for $200
C) Inventory and credit to Purchases Discounts for $200
D) Purchases Discounts and credit to Inventory for $200
15) Following is a list of errors made during the posting process. Indicate the exact
dollar impact each error would have on (1) total revenue, (2) total expenses, and (3) net
income.
a) A $600 debit to salary expense was posted as a $600 credit to salary expense.
b) A $700 credit to service revenue was never posted.
c) A $2,000 debit to the withdrawals account was posted as a $2,000 debit to utilities
expense.
d) A $1,500 credit to the revenue account was debited to the revenue account.
e) A $30,000 debit to the land account was debited to an expense account instead.
Error Revenue Expenses Net Income
a)
b)
c)
d)
e)
16) The current credit balance in allowance for doubtful accounts before adjustment is
$658. An aging schedule reveals $3,500 of uncollectible accounts. The ending balance
in allowance for doubtful accounts should be:
A) $3,500
B) $2,842
C) $4,158
D) $658
17) Table 1-2
Following is a list showing the account balances of various assets, liabilities, revenues,
and expenses for Tim’s Landscaping at December 31, 2014, the end of its first year of
operations.
The owner, Tim Brown, invested $45,200 during the year and withdrew $10,000 during
the year for personal use.
Refer to Table 1-2. Not including the investment, the net change in owner’s equity for
the year ended December 31, 2014, was:
A) an increase of $200
B) an increase of $45,400
C) an increase of $10,200
D) a decrease of $15,600
18) Following is a list of errors made during the posting process. Indicate the exact
dollar impact each error would have on (1) total assets, (2) total liabilities, and (3)
owner’s equity.
a) A $600 debit to the accounts payable account was posted as a $400 debit.
b) A $700 credit to cash was never posted.
c) A $2,000 debit to the withdrawals account was posted as a $2,200 debit.
d) A $1,700 credit to the revenue account was debited to the revenue account.
e) A $4,000 debit to the land account was debited to an expense account instead.
Error Assets Liabilities Owner’s Equity
a)
b)
c)
d)
e)
19) Which of the following statements is FALSE?
A) A trial balance proves no errors were made during the accounting process
B) A trial balance is a list of all accounts in the ledger with their balances
C) A trial balance provides a check on the equality of debits and credits
D) A trial balance may be taken at any time the postings are up to date
20) Robert Rogers, a professional accountant, performed accounting services for a
client in December. A bill was mailed to the client on December 30 . Robert received a
cheque in the mail on January 5 . The recognition criteria for revenues requires that
which of the following accounts appears on the balance sheet at December 31?
A) Prepaid expense
B) Accounts receivable
C) Unearned revenue
D) Accounts payable
21) The acid-test ratio includes in the numerator all:
A) current assets
B) current assets except cash
C) current assets except cash and prepaid expenses
D) current assets except prepaid expenses and inventory
22) An accrued expense adjustment entry has the following effect on the balance sheet:
A) decreases liabilities
B) increases assets
C) increases liabilities
D) correct this year but incorrect next year
23) Match the following:
A) amortization
B) cash-basis accounting
C) accrual accounting
D) unearned revenue
E) accrued expense
F) contra account
G) book value
H) recognition criteria for revenues
I) accrued revenue
J) matching objective
1> An accounting system that records only transactions in which cash is received or
paid
2> An accounting system that records the impact of a business event as it occurs,
regardless of whether the transaction affected cash
3> An expense that has been incurred but not yet paid in cash
24) Net income appears on the:
A) balance sheet
B) income statement
C) statement of owner’s equity
D) income statement and the statement of owner’s equity
25) Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended
December 31, 2014, prior to any adjustments:
Aging of accounts receivable at December 31, 2014:
Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for
estimating uncollectible accounts. Ritchie estimates that uncollectible accounts will be
aged as follows: 3% for 1-30 days; 5% for 31-60 days; 8% for 61-90 days; and 20% for
over 90 days. The adjusting entry to record bad-debt expense for the year is:
A)
B)
C)
D)
26) Describe the three forms of organizations and how they differ.
27) A debt due to be paid within one year or one operating cycle, if the cycle is longer
than one year
28) Explain the characteristics and internal control features of an imprest fund.
29) Table 11-8
BCN Bank agrees to lend Samson Company $80,000 on January 1 . Samson Company
signs an $80,000, 5%, 9-month note.
Refer to Table 11-8. Show how the note and any related interest will appear on the June
30 balance sheet of Samson Company. Be specific about the classification of the
amounts on the balance sheet.
30) Both accounting standards for private enterprises (ASPE) and international
financial reporting standards (IFRS) follow the lower-of-cost-and-net-realizable-value
rule to value inventory when market prices are changing. Explain how this relates to the
accounting guideline of conservatism.