Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
d.
$19,000
53. Which of the following errors will not cause the debit and credit columns of the trial balance to be
unequal?
a.
A debit entry was recorded in the wrong account.
b.
A debit was entered in an account as a credit.
c.
The account balance was carried to the wrong column of the trial balance.
d.
The balance of an account was incorrectly computed.
54. The primary purpose of the trial balance is to test the
a.
recording of transactions.
b.
analysis of transactions.
c.
equality of debit and credit balances in the ledger.
d.
equality of debit and credit entries in the journal.
55. A $190 credit item is posted as a debit. The trial balance column totals therefore will differ by
a.
$380.
b.
$760.
c.
$190.
d.
$0.
56. Which of the following errors will not cause the debit and credit columns of a trial balance to be
unequal?
a.
A debit was posted to an account as a credit.
b.
A journal entry was posted twice.
c.
The trial balance was incorrectly summed.
d.
Only part of a journal entry was posted.
57. Which of the following errors will cause a trial balance to be out of balance?
a.
The bookkeeper forgot to journalize a transaction.
b.
The bookkeeper forgot to post a journal entry to the ledger.
c.
A credit was posted to an account as a debit.
d.
A debit to Office Equipment was incorrectly debited to Office Supplies.
58. Which of the following errors will cause a trial balance to be out of balance?
a.
Posting a debit to Land as a debit to Machinery
b.
Placing a debit balance amount into the credit balance column of the ledger
c.
Omitting an entire transaction
d.
Incorrectly recording the purchase of land for cash as a debit to Cash and a credit to Land
59. Which of the following errors will cause the trial balance to be out of balance?
a.
An entire transaction was entered in the general journal as $27 instead of $72.
b.
An entire transaction was omitted from the general journal.
c.
The balance of an account was incorrectly computed.
d.
A debit entry was entered in the wrong debit account.
60. Which of the following accounts might be used when there is a time delay between a transaction and
its related cash flow?
a.
Accounts Payable
b.
Fees Earned
c.
Cash
d.
Prepaid Rent
61. Which of the following accounts will eventually be followed with an inflow of cash?
a.
Prepaid Insurance
b.
Unearned Revenue
c.
Dividends
d.
Accounts Receivable
62. Which of the following accounts will eventually be followed with an outflow of cash?
a.
Design Revenue
b.
Notes Receivable
c.
Accounts Payable
d.
Prepaid Rent
63. All of the following actions can help a business manage its cash flows except
a.
convince its creditors to allow payment over a period of time.
b.
pay for all expenditures immediately.
c.
be efficient in making collections from its customers.
d.
arrange for a line of credit at the bank, should the funds be needed.
64. The general journal does not have a column titled
a.
Description.
b.
Account Balance.
c.
Date.
d.
Post. Ref.
65. Which of the following terms does not mean the same as the others?
a.
Footing
b.
Folio
c.
LP
d.
Post. Ref.
66. To find an explanation of a transaction, one should look at the
a.
ledger.
b.
trial balance.
c.
journal.
d.
chart of accounts.
67. Which of the following accounts might be placed first in a journal entry?
a.
Bonds Payable, when it has been decreased
b.
Cash, when it has been decreased
c.
Unearned Revenue, when it has been increased
d.
Interest Income, when it has been increased
68. Which of the following statements is true about a journal entry?
a.
The Post. Ref. column is filled in prior to posting.
b.
All debits are listed before any credits.
c.
The name of the month should be repeated for each entry.
d.
An explanation must follow each debit and each credit.
69. Which of the following statements is false about a journal entry?
a.
It may have more than one debit or credit entry.
b.
Credits are always indented.
c.
Accounts that are increased are always listed first.
d.
A space should be skipped between journal entries.
70. Which of the following accounts should be credited in a journal entry?
a.
Dividends, when it has been increased
b.
Accounts Receivable, when it has been decreased
c.
Wages Expense, when it has been increased
d.
Wages Payable, when it has been decreased
71. Which of the following statements is true about a journal entry?
a.
Decreases in liabilities are indented.
b.
The Post. Ref. column is left blank until entries are posted.
c.
A line is skipped between each debit and each credit.
d.
Assets are entered before liabilities.
72. Which of the following statements is not necessarily true about a journal entry?
a.
Liabilities are indented.
b.
An explanation follows the journal entry.
c.
The Post. Ref. column is left blank until the entry is posted.
d.
All debits must be recorded before any credits.
73. The process of transferring journal entry information from the journal to the ledger is called
a.
journalizing.
b.
posting.
c.
footing.
d.
analyzing.
74. The Post. Ref. column in the general journal is used to show that an amount has been posted to the
ledger when which of the following is placed in it?
a.
An X
b.
Journal number
c.
Journal page number
d.
Account number
75. The principal purpose of posting is to
a.
enter transactions directly into the ledger.
b.
help identify errors made in the journal.
c.
obtain updated account balances.
d.
help determine if the financial statements are ready to be prepared.
76. The account most recently posted is determined most efficiently by referring to the
a.
Post. Ref. column of the ledger.
b.
balance column of the ledger.
c.
date column of the general journal.
d.
Post. Ref. column of the general journal.
77. Posting is performed by transferring information from the
a.
source documents to the journal.
b.
source documents to the ledger.
c.
journal to the ledger.
d.
ledger to the journal.
78. The Post. Ref. column in the general ledger shows that an amount has been posted when which of the
following is placed in it?
a.
The journal page number
b.
An X
c.
A check mark
d.
The account number
79. Which of the following bookkeeping techniques generally is not acceptable?
a.
Dollar signs on financial statements
b.
Commas and periods in ruled columns
c.
A double line after final totals
d.
A dash in the cents column to indicate zero cents
80. The chart of accounts is the starting point for a
a.
journal.
b.
trial balance.
c.
ledger.
d.
financial statement.
81. Typically, the chart of accounts begins with
a.
revenue accounts.
b.
asset accounts.
c.
liability accounts.
d.
expense accounts.
82. The purpose of the ledger is to
a.
keep a record of documentation to support each transaction.
b.
make sure that all assets, liabilities, etc., have credit balances at all times.
c.
record chronologically the day's transactions.
d.
maintain a separate account for each asset, liability, etc.
83. Which of the following accounts probably would be listed before the others in a chart of accounts?
a.
Insurance Expense
b.
Dividends
c.
Notes Payable
d.
Accumulated Depreciation, Buildings
84. Which of the following accounts probably would be listed after the others in a chart of accounts?
a.
Unearned Art Fees
b.
Prepaid Rent
c.
Retained Earnings
d.
Art Fees Earned
85. The Office Supplies account is classified as a(n)
a.
expense.
b.
stockholders' equity account.
c.
asset.
d.
liability, if the supplies have not yet been paid for.
86. The Unearned Fees account is classified as a(n)
a.
liability.
b.
revenue.
c.
asset.
d.
expense.
87. Which of the following accounts is an asset?
a.
Retained Earnings
b.
Notes Payable
c.
Prepaid Rent
d.
Supplies Expense
88. Which of the following accounts is not a stockholders' equity account?
a.
Common Stock
b.
Retained Earnings
c.
Notes Payable
d.
Dividends
89. Unearned revenues are recorded by companies that
a.
receive money in advance of the performance of a service.
b.
pay money at the time the performance of a service is complete.
c.
receive money at the time the performance of a service is complete.
d.
pay money in advance of the performance of a service.
90. Office supplies become expenses
a.
when they are consumed (used up).
b.
when they are paid for.
c.
at no time, since they are an asset.
d.
when they are purchased.
91. Which of the following accounts is classified differently from the others listed?
a.
Accounts Receivable
b.
Retained Earnings
c.
Prepaid Rent
d.
Cash
92. Which of the following accounts is classified differently from the others listed?
a.
Notes Payable
b.
Unearned Revenue
c.
Accounts Payable
d.
Fees Earned
93. For which of the following accounts would a related Accumulated Depreciation account be recorded?
a.
Office Equipment
b.
Land
c.
Office Supplies
d.
Prepaid Rent
SHORT ANSWER
1. Use this journal entry to answer the following question.
Nov.
16
Accounts Payable
685
Cash
685
Recorded payment of a liability
Explain how the above journal entry relates to the measurement issues of (a) recognition, (b) valuation,
and (c) classification.
2. Explain why the dollar amount of total stockholders' equity probably will not equal the dollar amount
that would remain if all the assets were sold and all the liabilities were then settled.
3. Amalgamated Campus Stores, Inc. (ACS) employed student representatives to market grooming aids,
casual clothes, and other such products on college campuses. The representatives organized parties at
which they displayed samples of all the products. Students who bought products paid the
representative, who in turn ordered the products and paid ACS for them. When the products arrived,
the student representatives delivered them to the buyers. The representatives paid ACS less than they
charged the buyers. The difference represented the earnings of the representatives, who were not
employees of ACS. Wall Street investors admired ACS because the company had enjoyed several
years of rapid growth in sales and earnings.
Last year, the president of ACS predicted further increases in sales of 30 percent. By December,
however, it was apparent that the forecasted sales goals would not be met. So during the last two
weeks of December, ACS shipped $23 million of merchandise to the sales representatives to be held
for future sales parties. The company billed the student representatives and recorded the shipments as
sales. In this way, ACS was able to meet its sales goal for the year.
Were these merchandise shipments properly recorded as sales?
4. Discuss the difference between business events that are transactions and those that are not. Why is the
distinction important?
5. For each item below, indicate whether a debit or a credit applies.
a. Decrease in Accounts Payable
b. Decrease in Land
c. Increase in Retained Earnings
d. Increase in Unearned Revenue
e. Decrease in Interest Payable
f. Increase in Prepaid Insurance
g. Increase in Wages Expense
h. Decrease in Art Supplies
i. Increase in Advertising Fees Earned
6. For each item below, indicate whether a debit or a credit applies.
a. Increase in Art Fees Earned
b. Decrease in Prepaid Rent
c. Decrease in Unearned Fees
d. Increase in Common Stock
e. Increase in Depreciation Expense, Buildings
f. Increase in Interest Receivable
g. Decrease in Retained Earnings
h. Increase in Dividends
i. Increase in Notes Payable
7. Why is the Dividends account increased by a debit? Explain in terms of its relationship to
stockholders' equity.
8. Indicate whether each account below has a normal debit or a normal credit balance.
a. Automobiles
g. Dividends
b. Accounts Payable
h. Retained Earnings
c. Common Stock
i. Land
d. Prepaid Rent
j. Interest Payable
e. Advertising Expense
k. Notes Receivable
f. Service Revenue
9. Indicate whether each account below has a normal debit or a normal credit balance.
a. Cash
g. Interest Receivable
b. Wages Payable
h. Store Equipment
c. Wages Expense
i. Legal Fees Earned
d. Unearned Fees
j. Common Stock
e. Prepaid Insurance
k. Depreciation Expense, Buildings
f. Notes Payable
10. Harris Corporation provided monthly waste-removal services for Goble Corporation, which resulted in
the following transactions in Harris's records:
Using T accounts, prepare the corresponding entries in Goble's records.
11. By what amount, if any, would each of the following errors cause a trial balance to be out of balance?
a. A purchase of supplies of $840 was recorded as a debit to Equipment and a credit to Cash for $840.
b. An $890 balance in Prepaid Insurance was copied to the trial balance as a debit of $980.
c. A $600 balance in Accounts Payable was copied to the trial balance as a debit of $600.
12. If a debit to Supplies were posted as a credit, and a credit of the same amount to Cash were posted as a
debit, what would be the effect, if any, on the two accounts and on the trial balance column totals?
13. Record the following transactions, using proper form, in the journal provided.
Mar.
2
Provided services in the amount of $2,000, receiving $600 in partial payment.
12
Received $800 of the amount owed from March 2.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
14. In the journal provided, prepare journal entries without explanations for the following transactions.
Write “no entry” if none is needed.
a. Received a $1,500 invoice for this month's rent. Payment will not be made right away.
b. Paid $1,600 for insurance premiums to cover the next six months.
c. A $350 dividend is declared and paid.
d. The rent of a is paid.
e. Purchased land for $60,000. The company paid half in cash and issued a promissory note for the
other half.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
15. Provide explanations for the following related journal entries:
a.
Cash
6,000
Common Stock
6,000
b.
Law Library
3,400
Accounts Payable
3,400
c.
Cash
600
Accounts Receivable
1,000
Legal Fees Earned
1,600
d.
Cash
500
Accounts Receivable
500
e.
Accounts Payable
3,400
Cash
3,400
16. Provide explanations for the following related journal entries:
a.
Prepaid Rent
4,000
Cash
4,000
b.
Trucks and Automobile
36,000
Notes Payable
36,000
c.
Cash
600
Accounts Receivable
600
d.
Notes Payable
18,000
Cash
18,000
e.
Cash
2,500
Unearned Fees
2,500
17. Given the following ledger account and postings, complete the Balance column. Assume no previous
postings in the account.
Unearned Art Fees
Account No. 213
Date
Item
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
2010
May
1
J1
2,500
7
J1
700
8
J2
500
12
J2
200
18. Given the following ledger account and postings, complete the Balance column. Assume no previous
postings in the account.
