1) A petty cash fund was established with a $400 balance. It currently has cash of $10
and petty cash tickets as shown below.
The journal entry to replenish the account would be which of the following:
A) Debit various expenses $390, credit Cash $390
B) Debit various expenses $390, credit Petty Cash $390
C) Debit Cash $10, credit various expenses $10
D) Credit Petty Cash $390, debit Cash $390
2) The following data are available for Dragon Boat Company for March:
What is Dragon’s adjusted book balance on March 31 from the above data?
A) $4,405
B) $4,200
C) $3,150
D) $3,270
3) The matching objective is the basis for recording:
A) revenues
B) expenses
C) assets
D) liabilities
4) The time span during which cash is used to acquire goods and services, and these
goods and services are sold to customers, who in turn pay for their purchases with cash,
is called the:
A) accounting cycle
B) cash-to-cash cycle
C) liquidity cycle
D) operating cycle
5) Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory
system:
Refer to Table 5-4. The cost of goods sold for Atlantis Merchandising is:
A) $524,000
B) $489,000
C) $557,000
D) $395,000
6) Which of the following is recorded in the cash payments journal?
A) cash receipt for services performed on account in an earlier period
B) cash payment on an accounts payable
C) adjusting entry for amortization
D) adjusting entry for expired insurance
7) Based on liquidity, which item would appear after accounts receivable in the Current
Asset section of the Balance Sheet?
A) inventory
B) cash
C) short-term investments
D) Property, Plant, and Equipment
8) Adjusting entries are:
A) a key element of accrual accounting
B) required in both accrual and cash-basis accounting
C) recorded only on the worksheet
D) recorded in the general journal but not on the worksheet
9) Table 6-2
On December 31, a physical count reveals 80 units in ending inventory.
Referring to Table 6-2, the cost of ending inventory using the periodic
weighted-average-cost method rounded to the nearest whole number would be:
A) $1,910
B) $860
C) $834
D) $850
10) In a periodic inventory system, the entry to record the purchase of merchandise on
account would include a:
A) debit to Accounts Payable
B) debit to Inventory
C) credit to Cash
D) debit to Purchases
11) The bookkeeper for Duncan Company made an error in recording the year-end
inventory balance on December 31, 2013 . As a result, ending inventory was
understated by $37,000.
a) What effect will this error have on cost of goods sold, gross margin, net income, and
owner’s equity in 2013?
b) As of December 31, 2014, what will be the cumulative effect of this error on owner’s
equity?
12) Accrued revenue has:
A) not been earned nor received
B) been earned but not received
C) not been earned but has been received
D) been earned and received
13) An accountant records revenue when earned under which basis of accounting?
A) cash-basis
B) accrual
C) tax
D) financial
14) A business acquires a parcel of land by issuing a note payable for $50,000. This
transaction causes:
A) total assets to increase
B) owner’s equity to increase
C) assets to increase and equity to increase
D) liabilities to decrease
15) Earning a revenue on account would:
A) have no effect on owner’s equity
B) increase owner’s equity
C) decrease owner’s equity
D) decrease total assets
16) If the unearned service revenue account had an unadjusted normal balance of
$4,800, and an adjustment was made debiting the account for $1,500, the account
would appear on the adjusted trial balance of the worksheet as a:
A) $4,800 debit
B) $6,300 credit
C) $3,300 credit
D) $3,300 debit
17) Table 5-3
Refer to Table 5-3. Net income is:
A) $161,000
B) $214,000
C) $179,000
D) $176,000
18) On January 1, 2013, Bithe Smarney & Co. purchased $35,500 worth of office
equipment with an estimated useful life of seven years and an estimated residual value
of $4,000. Bithe Smarney uses the straight-line method of amortization for all office
equipment. At the beginning of 2016, Bithe Smarney revised its estimate of the useful
life of the office equipment to a total of nine years. The 2016 amortization expense is:
A) $2,000
B) $3,667
C) $2,444
D) $3,000
19) Performing a service on account would:
A) affect the accounting equation the same as if the service was performed for cash
B) increase assets more than if the service had been performed for cash
C) increase net income less than if the service had been performed for cash
D) decrease expenses more than if the service had been performed for cash
20) Table 6-6 Sam’s Wholesale Bikes
Refer to Table 6-6. What is the cost of goods sold for the two months assuming that
Sam’s uses the periodic FIFO inventory method?
A) $42,225
B) $56,400
C) $48,900
D) $38,900
21) For each of the following events, indicate the amount by which liabilities increased
or decreased.
a) Owner invested cash of $25,000 and equipment valued at $10,500 into the business.
b) Purchased $600 of supplies on account.
c) Borrowed $10,000 from the bank, issuing a note payable.
d) Performed a service for $1,500 and immediately collected the cash.
e) Paid the employee salaries of $1,200.
f) Purchased equipment for $550 cash.
g) Received monthly rent bill of $1,300, to be paid in the following period.
h) Performed a service on account for $2,300.
22) Multiplying the asset’s book value by a constant percentage is the computation of
amortization under:
A) the double-declining-balance method
B) the units-of-production method
C) the straight-line method
D) either double-declining-balance method or straight-line method
23) Match the following.
A) GST payable
B) GST recoverable
The GST account debited in the cash payments journal
24) Sales revenue minus sales returns and allowances and sales discounts equals:
A) gross margin
B) income from operations
C) cost of goods sold
D) net sales
25) Prepare adjusting entries for the following items on December 31, the end of the
fiscal year for Eddison Don Repairs. The company initially records cash received in
advance of performing the service as a liability, and prepaid expenses as current assets.
a) Amortization on truck, $500
b) Services performed but unbilled, $3,000
c) Salaries owed to employees at year end, $2,500
d) Unearned service revenue earned, $5,500
e) Supplies used during the year, $200
f) Prepaid rent expired during the year, $4,500
g) Prepaid insurance now expired $400
26) Determine cash withdrawals for the period if net income is $34,000, beginning
owner’s equity is $29,000, and ending owner’s equity is $45,000.
A) $74,000
B) $5,000
C) $11,000
D) $18,000
27) A credit balance in the Cash Short and Over account appears on the:
A) balance sheet as a current asset
B) income statement as other revenue
C) income statement as a miscellaneous expense
D) balance sheet as a current liability
28) Selected transactions for Sarah’s Kitchen are shown below. State the effect in
dollars on the accounting equation of each transaction.
a) Sarah Cook invests $20,000 cash into a business known as Sarah’s Kitchen.
b) Sarah purchases kitchen supplies on account for $500.
c) Sarah purchases a new oven for $6,500 cash.
d) Sarah receives and pays the kitchen’s utilities bill amounting to $425.
e) Kitchen revenue for the current period amounts to $2,500. (all revenue transactions
involved cash)
Item Assets Liabilities Owner’s Equity
a)
b)
c)
d)
e)
Totals
29) Match the following descriptions with the most appropriate caption:
A) tangible capital asset
B) depreciation
C) time-period assumption
D) recognition value
E) recognition criteria for revenues
F) intangible capital asset
G) accrued revenue
H) carrying value
I) matching objective
J) unearned revenue
K) adjusting entry
L) cash-basis accounting
1> Ensures that accounting information is reported at regular intervals
2> The basis for recording expenses
30) Under a periodic inventory system, the entry to record the return of inventory sold
on account for $360 with a cost of $210 would be recorded by the seller as a:
A) credit to Accounts Receivable for $210
B) debit to Sales Returns and Allowances for $360
C) debit to Sales Revenue for $360
D) debit to Inventory for $210
31) The set of programs that cause the computer to perform the work desired is called
the:
A) hardware
B) network
C) server
D) software
32) Table 8-1
The petty cash fund had the following petty cash ticket:
Toner for a printer$42
Freight to deliver goods sold39
Freight on inventory purchased.112
Miscellaneous expense10
Postage expense 25
$228
Refer to Table 8-1. Assume that the business has established a petty cash fund in the
amount of $250 and that the amount of cash in the fund at the time of replenishment is
$20. The business uses a perpetual inventory system.
Prepare the entry to replenish the fund on February 28 .
33) Table 9-9
The following information is available for Martin Services for the year for the year
ended December 31, 2014 .
Accounts receivable Bal. Jan. 1, 2014$20, 500
Allowance for doubtful accounts,
Jan 1, 2014 1,000Cr.
Sales Revenue for 2014 (40% on credit)600,000
Bad debt write-offs during 20141,500
Bad debt recoveries during 2014600
Collections on account during 2014 230,000
Refer to Table 9-9. Assume that Martin Services uses the percent-of-sales method of
estimating bad debts, at the rate of 0.8%. Calculate the balance of the allowance for
doubtful accounts at December 31, 2014, and provide the net amount of accounts
receivable to be reported on the balance sheet at December 31, 2014 .
34) Table 5-7
Marvelous Merchandising charges GST on all its sales at the rate of 5% and pays GST
on all its purchases at the rate of 5%. For purposes of this question, any applicable PST
is ignored. The following are transactions for the month of May.
May 8Purchased inventory, on account, FOB destination, from Stranhern Wholesale
$1,000 plus applicable GST.
10Returned defective merchandise to Stranhern, $300 plus applicable GST.
12Sold merchandise to Dainty Store on account for $3,000 plus applicable GST.
FOB shipping point. Cost of the merchandise sold was $2,500.
28Collected balance on account from Dainty Store.
30Paid balance on account to Stranhern.
Refer to Table 5-7. Prepare the journal entries for Marvelous Merchandising for the
month of May, assuming that Marvelous Merchandising uses a periodic inventory
system.
35) Damon Associates reported the following transactions during September:
Sept. 8Sold $3,000 of merchandise to Bruce Services for cash. The cost of the
merchandise was $1,250
10Owner invested $3,400 into the business.
15Collected $580 from Lucille Adams on account.
16Issued a credit memo for $650 to Susan Wilson for merchandise she
purchased on credit several days ago. The cost of the returned
merchandise was $250.
Record the above transactions in either the cash receipts journal or the general journal.
Damon Associates has a perpetual inventory system.
Cash Receipts Journal
| Debits |Credits|
General Journal
36) The following are the adjusting journal entries recorded by Manitouwan Services
for the year ended December 31, 2013 . Assuming that Manitouwan uses reversing
entries, prepare the reversing entries on January 1, 2014 . Explanations are not required.
General Journal
37) Sam Levine Merchandising had the following transactions during May:
May 1Beginning inventory was 20 units valued at $25 per unit.
May 5Purchased 80 units of merchandise on account for $2,160,
terms n/15, FOB shipping point.
May 9Paid transportation cost on the May 5 purchase, $240.
May 10Returned two units of defective merchandise purchased on May 5 .
May 11Sold 30 units for $50 per unit on account.
May 15Paid for the May 5 purchase, less the return .
May 20Sold 10 units for $50 per unit on account.
Required:
1>Assuming FIFO and that the perpetual inventory system is used, prepare the journal
entries to record the above transactions.
2>Assuming weighted-average and that the periodic inventory system is used, prepare
the journal entries to record the above transactions.
