Use the information above to answer the following question. What is the ending balance
of the Cash account?
Cash
Beg. Bal. 123,900
(a) 14,700 6,000 (c)
(b) 38,300 5,800 (d)
7,400 (e)
12,000 (f)
11,200 (g)
A) $219,300
B) $113,300
C) $28,500
D) $134,500
When a trial balance is prepared, a contra-account appears immediately:
A) before the account it offsets but in the opposite column.
B) after the account it offsets and in the same column.
C) after the account it offsets but in the opposite column.
D) before the account it offsets and in the same column.
When a company sells goods, it removes their cost from the balance sheet and reports
the cost on the income statement as:
A) Selling Expenses.
B) Cost of Goods Sold.
C) Finished Goods Inventory.
D) Inventory.
During January, services totaling $1,500 were performed on account for a customer.
The company collected that $1,500 from the customer in March. The journal entry to
record the receipt of cash from the customer is recorded with a debit to:
A) Cash and a credit to Accounts Receivable.
B) Cash and a credit to Accounts Payable.
C) Cash and a credit to Revenue.
D) Purchases and a credit to Cash.
Which of the following statements regarding the expanded accounting equation is
correct?
A) Debits reduce expenses.
B) The total credits recorded in revenue accounts must equal the total debits recorded in
expense accounts.
C) Across all revenue accounts, the total value of all debits must equal the total value of
all credits.
D) Credits increase revenues.
Worthington Co. issues $500,000 of 5-year, 6% bonds on January 1, 2016.
Required:
Prepare the journal entry to record the issuance of the bonds under each of the
following assumptions:
Part a. The bonds are sold at 100.
Part b. The bonds are sold at 102.
Part c. The bonds are sold at 96.
On September 1, a company purchased a vehicle for $23,000 with a residual value of
$3,000. The estimated useful life is 5 years and the company uses the straight-line
method. What is the depreciation expense for the year ended December 31?
A) $1,333
B) $1,000
C) $4,000
D) $1,533
An expense:
A) will decrease the amount of net income on the income statement.
B) will decrease the amount of Common Stock on the balance sheet.
C) will be increased with a credit to the account.
D) normally has a credit balance.
Choose the appropriate letter to match the term and the definition. There are more
definitions than terms.
Term
1) ____ Fraud
2)____ Imprest System
3) ____ Internal Control
4) ____ Loan Covenants
5)____ Sarbanes-Oxley Act (SOX)
6) ____ Segregation of Duties
7) ____ Voucher System
Definition
A. A process for approving and documenting all purchases and payments on account.
B. A process that controls the amount paid to others by limiting the total amount of
money available for making payments to others.
C. A set of regulations passed by Congress in 2002 in an attempt to improve financial
reporting and restore investor confidence.
D. Actions taken to promote efficient and effective operations, protect assets, enhance
accounting information, and adhere to laws and regulations.
E. An attempt to deceive others for personal gain.
F. An internal control designed into the accounting system to prevent an employee from
making a mistake or committing a dishonest act as part of one assigned duty and then
also covering it up through another assigned duty.
G. An internal report prepared to verify the accuracy of both the bank statement and the
cash accounts of a business or individual.
H. Another name for bounced checks. They arise when the check writer (your
customer) does not have sufficient funds to cover the amount of the check.
I. Money or any instrument that banks will accept for deposit and immediately credit to
a company’s account.
J. Not available for general use but rather restricted for a specific purpose.
K. Short-term, highly liquid investments purchased within three months of maturity.
L. Terms of a loan agreement that if broken, entitle the lender to renegotiate loan terms
or force repayment.
Sprinkler Blowout Company entered into the activities listed in the table below. The
company’s chart of accounts appears below the list of activities.
For each activity, decide whether a transaction has occurred, and, if so, indicate the
account(s) that should be debited and the account(s) that should be credited in the
related journal entry by entering the appropriate account number(s) in the “Debit” and
“Credit” columns in the table. If the activity is not a transaction, enter the word “None“
in the “Debit” column for that activity.
The account numbers to be used in the journal entry prepared for the first transaction
are provided as an example.
Activity Debit Credit
Example: Collected cash from customers paying off their accounts. 5 2
A. Performed services for customers this month for cash.
B. Purchased supplies on credit.
C. Purchased a building, paying part cash and signing a note for the rest.
D. Paid insurance premium for six months of coverage beginning next month.
E. Accepted customer orders for services to be performed next month; no cash
collected.
F. Made payment to suppliers on account.
G. Collected from customers for work to be performed next month.
H. Hired an employee.
I. Paid this month’s rent.
In January, the Caribbean Dream Resort books and accepts a cash payment for $32,000
for vacation services to be provided during spring break in March. The journal entry
recorded in January will include a debit to:
A) Cash and a credit to Unearned Revenue.
B) Accounts Payable and a credit to Service Revenue.
C) Accounts Receivable and a credit to Service Revenue.
D) Prepaid Expenses and a credit to Service Revenue.
The Allowance for Doubtful Accounts account is a contra-account that offsets:
A) Bad Debt Expense.
B) Cash.
C) Net Income.
D) Accounts Receivable.
Shockglass Company had a beginning inventory of $15,000. During the year, the
company recorded inventory purchases of $45,000 and cost of goods sold of $50,000.
The ending inventory must equal:
A) $10,000.
B) $25,000.
C) $26,000.
D) $27,000.