December 31, 2010
Cash
$ 200
Accounts Receivable
500
Prepaid Insurance
50
Supplies
150
Office Equipment
400
Accumulated Depreciation–Office Equipment
$ 200
Accounts Payable
300
Common Stock
600
Service Revenue Earned
500
Salaries Expense
100
Rent Expense
200
______
$1,600
$1,600
If as of December 31, 2010, the rent of $100 for December had not been recorded or paid, the
adjusting entry would include a
a.
debit to Rent Expense for $100.
b.
debit to Rent Payable for $100.
c.
credit to Cash for $100.
d.
credit to Accumulated Rent for $100.
63. Use this information to answer the following question.
The trial balance for Tsung Corporation appears as follows:
Tsung Corporation
Trial Balance
December 31, 2010
Cash
$ 200
Accounts Receivable
500
Prepaid Insurance
50
Supplies
150
Office Equipment
400
Accumulated Depreciation–Office Equipment
$ 200
Accounts Payable
300
Common Stock
600
Service Revenue Earned
500
Salaries Expense
100
Rent Expense
200
______
$1,600
$1,600
If services totaling $125 had been performed but not billed, the adjusting entry to record this would
include a
a.
credit to Unearned Service Revenue for $125.
b.
debit to Service Revenue Earned for $125.
c.
credit to Service Revenue Earned for $125.
d.
credit to Service Revenue Earned for $625.
64. The Store Supplies account had a $360 debit balance at the end of the accounting period before
adjustment for supplies used, and an inventory of $80 worth of unused supplies was on hand. Which of
the following is the required adjusting entry?
a.
Debit Store Supplies Expense $80 and credit Store Supplies $80.
b.
Debit Store Supplies Expense $280 and credit Store Supplies $280.
c.
Debit Store Supplies $80 and credit Store Supplies Expense $80.
d.
Debit Store Supplies $280 and credit Store Supplies Expense $280.
65. Use this information pertaining to the Alvino Corporation to answer the following question.
1.
The corporation’s Store Supplies account showed a beginning debit balance of $200 and
supplies purchased of $800. There were $300 of supplies on hand at year end.
2.
Depreciation on a building is estimated to be $5,000.
3.
A one-year insurance policy was purchased for $2,000. Three months have passed since the
purchase.
4.
Accrued interest on a note receivable amounted to $100.
5.
The company received a $3,600 advance payment during the year on services to be performed.
By the end of the year, one-fourth of the services had been performed.
The adjusting entry for Store Supplies would be
a.
Store Supplies Expense 700
Store Supplies 700
b.
Store Supplies Expense 800
Store Supplies 800
c.
Store Supplies 700
Store Supplies Expense 700
d.
Store Supplies Expense 300
Store Supplies 300
66. Use this information pertaining to the Alvino Corporation to answer the following question.
1.
The corporation’s Store Supplies account showed a beginning debit balance of $200 and
supplies purchased of $800. There were $300 of supplies on hand at year end.
2.
Depreciation on a building is estimated to be $5,000.
3.
A one-year insurance policy was purchased for $2,000. Three months have passed since the
purchase.
4.
Accrued interest on a note receivable amounted to $100.
5.
The company received a $3,600 advance payment during the year on services to be
performed. By the end of the year, one-fourth of the services had been performed.
The adjusting entry for depreciation on the building is
a.
Depreciation Expense – Building 5,000
Accumulated Depreciation – Building 5,000
b.
Accumulated Depreciation – Building 5,000
Depreciation Expense – Building 5,000
c.
Building 5,000
Depreciation Expense – Building 5,000
d.
Accumulated Depreciation – Building 5,000
Building 5,000
67. Use this information pertaining to the Alvino Corporation to answer the following question.
1.
The corporation’s Store Supplies account showed a beginning debit balance of $200 and
supplies purchased of $800. There were $300 of supplies on hand at year end.
2.
Depreciation on a building is estimated to be $5,000.
3.
A one-year insurance policy was purchased for $2,000. Three months have passed since
the purchase.
4.
Accrued interest on a note receivable amounted to $100.
5.
The company received a $3,600 advance payment during the year on services to be
performed. By the end of the year, one-fourth of the services had been performed.
The adjusting entry for the insurance policy is
a.
Prepaid Insurance 500
Insurance Expense 500
b.
Insurance Expense 1,500
Prepaid Insurance 1,500
c.
Prepaid Insurance 1,500
Insurance Expense 1,500
d.
Insurance Expense 500
Prepaid Insurance 500
68. Use this information pertaining to the Alvino Corporation to answer the following question.
1.
The corporation’s Store Supplies account showed a beginning debit balance of $200 and
supplies purchased of $800. There were $300 of supplies on hand at year end.
2.
Depreciation on a building is estimated to be $5,000.
3.
A one-year insurance policy was purchased for $2,000. Three months have passed since the
purchase.
4.
Accrued interest on a note receivable amounted to $100.
5.
The company received a $3,600 advance payment during the year on services to be performed.
By the end of the year, one-fourth of the services had been performed.
The adjusting entry to record the accrued interest on the note is
a.
Interest Expense 100
Interest Receivable 100
b.
Interest Payable 100
Interest Expense 100
c.
Interest Receivable 100
Interest Income 100
d.
Interest Income 100
Interest Receivable 100
69. Use this information pertaining to the Alvino Corporation to answer the following question.
1.
The corporation’s Store Supplies account showed a beginning debit balance of $200 and
supplies purchased of $800. There were $300 of supplies on hand at year end.
2.
Depreciation on a building is estimated to be $5,000.
3.
A one-year insurance policy was purchased for $2,000. Three months have passed since the
purchase.
4.
Accrued interest on a note receivable amounted to $100.
5.
The company received a $3,600 advance payment during the year on services to be performed.
By the end of the year, one-fourth of the services had been performed.
The adjusting entry to record the amount of service revenue earned during the accounting period is
a.
Service Revenue 2,700
Unearned Revenue 2,700
b.
Unearned Revenue 2,700
Service Revenue 2,700
c.
Service Revenue 900
Unearned Revenue 900
d.
Unearned Revenue $ 900
Service Revenue $ 900
70. If an adjusting entry were not made at the end of an accounting period to remove the earned revenue
from the Unearned Revenue account,
a.
assets would be understated.
b.
stockholders’ equity would be overstated.
c.
liabilities would be understated.
d.
liabilities would be overstated.
71. A company recorded office supplies in an asset account when the supplies were purchased. Failure to
take inventory and make an adjusting entry will result in an
a.
understatement of liabilities.
b.
understatement of stockholders’ equity.
c.
understatement of assets.
d.
overstatement of stockholders’ equity.
72. A company’s five-day weekly payroll of $980 is paid on Fridays. Assume that the last day of the
month falls on Wednesday. Which of the following is the required adjusting entry for the month end?
a.
Debit Salaries Payable $588 and credit Salaries Expense $588.
b.
Debit Salaries Expense $588 and credit Salaries Payable $588.
c.
Debit Unpaid Salaries $588 and credit Salaries Payable $588.
d.
Debit Salaries Expense $392 and credit Salaries Payable $392.
73. The adjustment for estimated income taxes would include a
a.
credit to Income Taxes Payable.
b.
debit to Unearned Income Taxes.
c.
credit to Income Taxes Expense.
d.
credit to Cash.
74. Accumulated depreciation is classified as a(n)
a.
contra-expense account.
b.
expense account.
c.
contra-asset account.
d.
liability account.
75. The adjustment entry for the expiration of prepaid advertising, originally recorded as an asset, is
a.
Advertising Expense – Debit; Prepaid Advertising – Credit
b.
Prepaid Advertising – Debit; Cash – Credit
c.
Advertising Expense – Debit; Cash – Credit
d.
Prepaid Advertising – Debit; Advertising Expense – Credit
76. Which of the following accounts could not be credited in an adjusting entry?
a.
Earned Revenue
b.
Prepaid Rent
c.
Office Supplies
d.
Interest Receivable
77. Which of the following pairs of accounts could not be included in the same adjusting entry?
a.
Unearned Revenue and Revenue from Services
b.
Wages Expense and Wages Payable
c.
Interest Expense and Interest Receivable
d.
Rent Expense and Rent Payable
78. In November, cash is received in advance of rendering services. Assuming that the services have been
performed by December 31, the adjusting entry would be
a.
Unearned Service Revenue – Debit; Cash – Credit
b.
Cash – Debit; Service Revenue – Credit
c.
Unearned Service Revenue – Debit; Service Revenue – Credit
d.
Service Revenue – Debit; Prepaid Services – Credit
79. On December 9, A issues a 60-day promissory note to B. The December 31 adjusting entry for A is
a.
Interest Payable – Debit; Cash – Credit
b.
Interest Receivable – Debit; Interest Income – Credit
c.
Interest Expense – Debit; Cash – Credit
d.
Interest Expense – Debit; Interest Payable – Credit
80. The entry to record depreciation on a building is
a.
Accumulated Depreciation–Building – Debit; Building – Credit
b.
Depreciation Expense–Building – Debit; Building – Credit
c.
Depreciation Expense–Building – Debit; Cash – Credit
d.
Depreciation Expense–Building – Debit; Accumulated Depreciation–Building – Credit
81. In July, a company pays three years’ insurance in advance. The December 31 adjusting entry is
a.
Insurance Expense – Debit; Prepaid Insurance – Credit
b.
Prepaid Insurance – Debit; Insurance Expense – Credit
c.
Insurance Expense – Debit; Cash – Credit
d.
Prepaid Insurance – Debit; Cash – Credit
82. An adjusted trial balance is prepared to
a.
test that the ledger is in balance after the accounts have been adjusted.
b.
facilitate preparation of the adjusting entries.
c.
both test that the ledger is in balance after the accounts have been adjusted and facilitate
preparation of the financial statements.
d.
facilitate preparation of the financial statements.
83. Which of the following accounts would appear on an adjusted trial balance but probably would not
appear on a trial balance?
a.
Supplies Expense
b.
Accounts Payable
c.
Service Revenue
d.
Cash
84. Which of the following accounts probably would be greater in amount on an adjusted trial balance
than on a trial balance?
a.
Wages Payable
b.
Unearned Revenue
c.
Prepaid Advertising
d.
Painting Supplies
85. Which of the following accounts probably would contain a smaller dollar amount on the adjusted trial
balance than on the trial balance?
a.
Office Supplies
b.
Accumulated Depreciation–Equipment
c.
Cash
d.
Wages Expense
86. Which of the following accounts would be found on the credit side of the adjusted trial balance?
a.
Accumulated Depreciation–Equipment
b.
Prepaid Insurance
c.
Dividends
d.
Depreciation Expense
87. Which of the following accounts most likely would be found on both a trial balance and an adjusted
trial balance?
a.
Utilities Expense
b.
Insurance Expense
c.
Supplies Expense
d.
Depreciation Expense–Equipment
88. Which of the following accounts probably would not appear in a trial balance but probably would
appear in an adjusted trial balance?
a.
Accumulated Depreciation–Equipment
b.
Cash
c.
Depreciation Expense–Equipment
d.
Unearned Revenue
89. Which of the following sequences of actions describes a proper sequence in the accounting cycle?
a.
Analyze, record, post, adjust, prepare, close
b.
Post, close, prepare, adjust, analyze, record
c.
Record, post, close, prepare, adjust, analyze
d.
Prepare, record, post, adjust, analyze, close
90. Which of the following sequences of documents or records describes the proper sequence in the
accounting cycle?
a.
Journal, source documents, ledger, financial statements
b.
Source documents, journal, ledger, financial statements
c.
Source documents, ledger, journal, financial statements
d.
Ledger, source documents, journal, financial statements
91. The process of posting is associated most closely with the
a.
source documents.
b.
ledger.
c.
financial statements.
d.
trial balance.
92. Which of the following accounting cycle steps comes after the others?
a.
Journal entries are posted.
b.
The financial statements are prepared.
c.
Source documents are analyzed.
d.
Adjusting entries are recorded and posted.
93. Which of the following accounting cycle steps comes before the others?
a.
Adjusting entries are entered and posted.
b.
The financial statements are prepared.
c.
Closing entries are recorded and posted.
d.
Source documents are analyzed.
94. On which financial statement does Income Summary appear?
a.
Statement of retained earnings
b.
On no financial statement
c.
Income statement
d.
Balance sheet
95. Which of the following accounts is not closed during the closing procedure?
a.
Income Summary
b.
Commissions Earned
c.
Retained Earnings
d.
Dividends
96. Which of the following accounts is a real account?
a.
Interest Expense
b.
Building
c.
Service Revenue
d.
Depreciation Expense–Building
97. Which of the following is not a permanent account?
a.
Supplies
b.
Common Stock
c.
Depreciation Expense–Equipment
d.
Accounts Receivable
98. Which of the following is a nominal account?
a.
Retained Earnings
b.
Property Taxes Expense
c.
Cash
d.
Common Stock
99. Which of the following is not a temporary account?
a.
Interest Income
b.
Depreciation Expense–Vehicles
c.
Service Revenue
d.
Accumulated Depreciation–Vehicles
100. An important purpose of closing entries is to
a.
help in preparing financial statements.
b.
set real account balances to zero to begin the next period.
c.
set nominal account balances to zero to begin the next period.
d.
adjust the accounts in the ledger.
101. An important purpose of closing entries is to
a.
update the nominal accounts at year end.
b.
set permanent account balances to zero to begin the next period.
c.
help achieve the goals of the matching principle.
d.
transfer net income or loss to Retained Earnings.
102. Formal closing entries ultimately will affect
a.
Common Stock.
b.
total liabilities.
c.
Retained Earnings.
d.
total assets.
103. Failure to prepare formal closing entries will produce a misstated
a.
Income Summary account balance.
b.
Retained Earnings account balance.
c.
total asset figure on the balance sheet.
d.
total liability figure on the balance sheet.
104. Which of the following could not possibly be a closing entry?
a.
Debit Income Summary and credit Dividends.
b.
Debit Income Summary and credit Retained Earnings.
c.
Debit Retained Earnings and credit Dividends.
d.
Debit Retained Earnings and credit Income Summary.
105. The Income Summary account is credited in the entry that closes
a.
expense accounts.
b.
revenue accounts.
c.
the Dividends account.
d.
net income.
106. After all closing entries have been posted, which of the following accounts is most likely to have a
nonzero balance?
a.
Income Summary
b.
Wages Payable
c.
Interest Expense
d.
Service Revenue
107. Which of the following accounts is not found in closing entries?
a.
Dividends
b.
Income Summary
c.
Retained Earnings
d.
Accumulated Depreciation–Equipment
108. Under which circumstance would one less closing entry than usual be made?
a.
When the Retained Earnings account is zero prior to posting of closing entries
b.
When a net loss has been suffered
c.
When revenues have not yet been collected
d.
When net income is zero
109. Use this information to answer the following question.
The Retained Earnings, Dividends, and Income Summary accounts for Gula’s Repair Corporation for
the accounting period are presented below in T account form after the recording and posting of closing
entries:
The amount of revenue earned for the period is
a.
$600.
b.
$900.
c.
$700.
d.
$300.
110. Use this information to answer the following question.
The Retained Earnings, Dividends, and Income Summary accounts for Gula’s Repair Corporation for
the accounting period are presented below in T account form after the recording and posting of closing
entries:
The amount of net income (or net loss) for the period is
a.
$900 net income.
b.
$600 net income.
c.
$300 net loss.
d.
$300 net income.
111. Use this information to answer the following question.
The Retained Earnings, Dividends, and Income Summary accounts for Gula’s Repair Corporation for
the accounting period are presented below in T account form after the recording and posting of closing
entries:
The amount of dividends for the period is
a.
$400.
b.
$100.
c.
$500.
d.
$600.
112. Use this information to answer the following question.
The Retained Earnings, Dividends, and Income Summary accounts for Gula’s Repair Corporation for
the accounting period are presented below in T account form after the recording and posting of closing
entries:
Gula’s beginning Retained Earnings balance is
a.
$300.
b.
$700.
c.
$1,500.
d.
$800.
113. Use this information to answer the following question.
The Retained Earnings, Dividends, and Income Summary accounts for Gula’s Repair Corporation for
the accounting period are presented below in T account form after the recording and posting of closing
entries:
The ending balance of Retained Earnings is
a.
$100.
b.
$200.
c.
$700.
d.
$800.
114. Which of the following accounts is not closed?
a.
Dividends
b.
Common Stock
c.
Interest Income
d.
Income Summary
115. When there is a net loss, the entry to close the Income Summary account is debit
a.
Retained Earnings and credit Income Summary.
b.
Income Summary and credit Retained Earnings.
c.
Net Loss and credit Income Summary.
d.
Income Summary and credit Net Loss.
116. The entry to close the Dividends account is debit
a.
Income Summary and credit Dividends.
b.
Retained Earnings and credit Dividends.
c.
Dividends and credit Income Summary.
d.
Dividends and credit Retained Earnings.
117. Use this adjusted trial balance to answer the following question.
Dan’s Marina
Adjusted Trial Balance
December 31, 2010
Cash
$ 2,500
Accounts Receivable
3,500
Supplies
1,500
Prepaid Insurance
2,500
Dock
12,000
Accumulated Depreciation–Dock
$ 3,000
Accounts Payable
6,000
Common Stock
10,000
Dividends
4,000
Boat Rentals
17,000
Depreciation Expense–Dock
1,000
Wages Expense
6,500
Insurance Expense
2,000
Income Taxes Expense
500
_______
$36,000
$36,000
The entry to close the Dividends account includes a
a.
debit to Dividends for $4,000.
b.
debit to Retained Earnings for $4,000.
c.
credit to Retained Earnings for $4,000.
d.
credit to Income Summary for $4,000.
118. Use this adjusted trial balance to answer the following question.
Dan’s Marina
Adjusted Trial Balance
December 31, 2010
Cash
$ 2,500
Accounts Receivable
3,500
Supplies
1,500
Prepaid Insurance
2,500
Dock
12,000
Accumulated Depreciation–Dock
$ 3,000
Accounts Payable
6,000
Common Stock
10,000
Dividends
4,000
Boat Rentals
17,000
Depreciation Expense–Dock
1,000
Wages Expense
6,500
Insurance Expense
2,000
Income Taxes Expense
500
_______
$36,000
$36,000
The entry to close the Boat Rentals account includes a
a.
debit to Retained Earnings for $17,000.
b.
debit to Income Summary for $17,000.
c.
debit to Boat Rentals for $17,000.
d.
credit to Boat Rentals for $17,000.
119. Use this adjusted trial balance to answer the following question.
Dan’s Marina
Adjusted Trial Balance
December 31, 2010
Cash
$ 2,500
Accounts Receivable
3,500
Supplies
1,500
Prepaid Insurance
2,500
Dock
12,000
Accumulated Depreciation–Dock
$ 3,000
Accounts Payable
6,000
Common Stock
10,000
Dividends
4,000
Boat Rentals
17,000
Depreciation Expense–Dock
1,000
Wages Expense
6,500
Insurance Expense
2,000
Income Taxes Expense
500
_______
$36,000
$36,000
The entry to close the expense accounts includes a
a.
debit to Retained Earnings for $2,000.
b.
debit to Income Summary for $10,000.
c.
debit to Insurance Expense for $2,000.
d.
credit to Retained Earnings for $10,000.
120. Use this adjusted trial balance to answer the following question.
Dan’s Marina
Adjusted Trial Balance
December 31, 2010
Cash
$ 2,500
Accounts Receivable
3,500
Supplies
1,500
Prepaid Insurance
2,500
Dock
12,000
Accumulated Depreciation–Dock
$ 3,000
Accounts Payable
6,000
Common Stock
10,000
Dividends
4,000
Boat Rentals
17,000
Depreciation Expense–Dock
1,000
Wages Expense
6,500
Insurance Expense
2,000
Income Taxes Expense
500
_______
$36,000
$36,000
The amount of net income (or net loss) during the period is
a.
$16,000 net income.
b.
$4,500 net income.
c.
$5,000 net loss.
d.
$7,000 net income.
121. Use this adjusted trial balance to answer the following question.
Dan’s Marina
Adjusted Trial Balance
December 31, 2010
Cash
$ 2,500
Accounts Receivable
3,500
Supplies
1,500
Prepaid Insurance
2,500
Dock
12,000
Accumulated Depreciation–Dock
$ 3,000
Accounts Payable
6,000
Common Stock
10,000
Dividends
4,000
Boat Rentals
17,000
Depreciation Expense–Dock
1,000
Wages Expense
6,500
Insurance Expense
2,000
Income Taxes Expense
500
_______
$36,000
$36,000
The entry to close Income Summary includes a
a.
credit to Common Stock for $8,000.
b.
credit to Income Summary for $12,000.
c.
debit to Income Summary for $7,000.
d.
debit to Retained Earnings for $16,000.
122. Which account bypasses the Income Summary account in the closing process?
a.
Revenue from Services
b.
Depreciation Expense–Building
c.
Dividends
d.
Wages Expense
123. Closing entries will
a.
decrease the Retained Earnings balance.
b.
most likely either increase or decrease the Retained Earnings balance.
c.
not affect the Retained Earnings balance.
d.
increase the Retained Earnings balance.
124. The post-closing trial balance would not include which of the following accounts?
a.
Unearned Legal Fees
b.
Dividends
c.
Accumulated Depreciation–Office Equipment
d.
Retained Earnings
125. The post-closing trial balance differs from the adjusted trial balance in that it does not
a.
include balance sheet accounts.
b.
include income statement accounts.
c.
take into account adjusting entries.
d.
take into account closing entries.
126. The post-closing trial balance contains
a.
nominal accounts only.
b.
both real accounts and nominal accounts.
c.
real accounts only.
d.
neither real accounts nor nominal accounts.
127. Which of the following accounts might appear in the adjusted trial balance but not in the post-closing
trial balance?
a.
Depreciation Expense–Building
b.
Retained Earnings
c.
Unearned Revenue
d.
Income Summary
128. Probably the last account to be listed on a post-closing trial balance would be
a.
Income Summary.
b.
Retained Earnings.
c.
Wages Expense.
d.
Wages Payable.
129. If no adjustments are needed for a particular company, its
a.
trial balance will be identical to its adjusted trial balance.
b.
post-closing trial balance will be identical to its trial balance.
c.
trial balance, adjusted trial balance, and post-closing trial balance will be identical.
d.
adjusted trial balance will be identical to its post-closing trial balance.
130. Wages Payable were $350 at the end of October and $280 at the end of November. Wages Expense for
November was $1,800. How much cash was paid for wages during November?
a.
$1,730
b.
$2,430
c.
$1,870
d.
$1,170
131. Unearned Revenue was $2,400 at the end of May and $3,000 at the end of June. Service Revenue was
$10,600 for the month of June. How much cash was received for services provided during June?
a.
$10,000
b.
$5,200
c.
$11,200
d.
$16,000
132. Prepaid Rent was $400 at the end of May and $650 at the end of June. Rent Expense for June was
$260. How much cash was paid for rent during June?
a.
$310
b.
$410
c.
$510
d.
$610