If the company uses special journals, all payments should be recorded on a:
A) cash receipts journal.
B) cash payments journal.
C) purchases journal.
D) sales journal.
Other Expense is used to record:
A) selling expenses.
B) administrative expenses.
C) operating expenses.
D) None of the above
In what category in a classified balance sheet is Mortgage Payable found?
A) Plant and Equipment
B) Current Liabilities
C) Long-term Liabilities
D) Both B and C are correct.
The posting reference column in the journal is used for:
A) recording the source documents identification number.
B) recording the account number to which the entry was posted.
C) recording the balance when the entry was posted.
D) recording the initials of the person who did the posting.
The return of merchandise by a credit customer was recorded with a debit to Accounts
Payable and a credit to Accounts Receivable and the subsidiary ledger. This error will
cause:
A) the net income for the period to be overstated.
B) the net income for the period to be understated.
C) the control account to not agree with the subsidiary ledger.
D) the assets to be overstated.
On July 1, Ball Computer Corporation issued 10-year, 8%, $200,000 bonds for 96.
Interest is due June 30 and December 31. Prepare the journal entries to record:
a. Issuance of the bond.
b. First semiannual interest period payment including the amortization of the discount
using the straight-line method.
The photography department in a department store experienced the following revenue
and expenses during October:
The photography department’s contribution margin is:
A) $15,300.
B) $20,200.
C) $13,000.
D) $14,300.
Characteristics of a corporation include:
A) stockholders having limited liability.
B) direct management by the stockholders.
C) no mutual agency.
D) Both A and C are correct.
In which section does Interest Revenue appear in the Income Statement?
A) Other Income
B) Other Expense
C) Revenue
D) Administrative Expenses
The general ledger:
A) lists the customer names.
B) is the book of final entry.
C) lists the transactions in chronological order.
D) is before the general journal.
To compute federal income tax to be withheld:
A) use the net earnings and number of allowances and deduct over-time.
B) use gross earnings, number of allowances, and marital status.
C) use net earnings and Form W-4.
D) None of these answers is correct.
The entry to record payment of a voucher, for an invoice after the discount period,
under the net method and the periodic inventory system will include:
A) a debit to Purchase Discounts.
B) a credit to Purchase Discounts.
C) a credit to Discounts Lost.
D) None of these is correct.
Collins Corporation reported net income of $35,000; depreciation expenses of $20,000;
a decrease in Accounts Payable of $2,000; and an increase in Accounts Receivable of
$3,000. Net cash flow from operating activities using the indirect method is:
A) $55,000.
B) $54,000.
C) $50,000.
D) $56,000.
Which financial statement is prepared first?
A) Statement of Owner’s Equity
B) Balance Sheet
C) Income Statement
D) None of the above
Valerie Johnson works 42 hours as a coffee barista and earns $15 per hour. Compute her
weekly pay assuming an overtime rate of 1.5.
A) $552
B) $645
C) $480
D) $624
In the direct write-off method, writing off an account causes:
A) a decrease in expense.
B) an increase in expense.
C) a decrease in the Allowance account.
D) an increase in Accounts Receivable.
The difference between the direct and indirect methods of computing the cash flow
statement occurs in the:
A) financing activities section.
B) operating activities section.
C) investing activities section.
D) managing activities section.
An expense should be recorded when:
A) the bill is paid.
B) the expense is incurred.
C) a bill is received in the mail.
D) None of the above is correct.
On the Statement of Cash Flows, direct method, which of the following is a cash
outflow from an operating activity?
A) Payment to the bank for a loan
B) Payment to the government for taxes
C) Payment to buy a piece of equipment
D) Paying dividends to stockholders
Evans Golf Academy estimated depreciation on its building at $300. The adjusting
entry for depreciation of the building would include:
A) a debit to Accumulated Depreciation for $300.
B) a debit to Depreciation Expense for $300.
C) a credit to Building for $300.
D) a credit to Depreciation Expense for $300.
Which of the following is NOT an asset?
A) Cash
B) Accounts Receivable
C) Accounts Payable
D) Buildings
Davis Corporation sells $200,000, 12%, 10-year bonds for 103 on January 1. Compute
the semiannual interest expense recorded on July 1 using the interest method. The
market rate is 8%.
A) $12,000
B) $4,120
C) $8,240
D) $6,000
A deposit received by the bank will:
A) debit the company’s bank account.
B) credit the company’s bank account.
C) debit the cash account on the company’s books.
D) credit the cash account on the company’s books.
Which account is the controlling account for the amounts owed to individual creditors?
A) Accounts Payable in the general ledger
B) Accounts Receivable in the general ledger
C) Accounts Receivable in the subsidiary ledger
D) Accounts Payable in the subsidiary ledger
The journal entry for the receipt of a cash payment on common stock subscriptions
would include:
A) debiting Subscriptions ReceivableCommon Stock; crediting Common Stock.
B) debiting Common Stock; crediting Subscriptions ReceivableCommon Stock.
C) debiting Cash; crediting Subscriptions ReceivableCommon Stock.
D) debiting Cash; crediting Common Stock Subscribed.
Bailey’s Western Wear has 3,000 shares of $20 par value common stock outstanding.
During the current year, the company distributed a 5% stock dividend. The market
value of the stock at that time was $15 per share. Bailey’s total stockholders’ equity
should increase or decrease by:
A) $0.
B) $1,200.
C) $2,000.
D) ($3,200).
To close the Withdrawals account:
A) debit Withdrawals; credit Revenue.
B) debit Capital; credit Withdrawals.
C) debit Withdrawals; credit Income Summary.
D) debit Income Summary; credit Withdrawals.
When a partner withdraws from a partnership, the company can:
A) audit the accounting records and adjust assets to fair market value.
B) credit the account of the partner that withdrew and debit Cash.
C) share any loss or profit from the historical value of assets.
D) None of the above answers is correct.
As a result of overstating ending inventory by $10,000 at the end of Year 1:
A) net income for Year 2 will be understated.
B) net income for Year 2 will be overstated.
C) ending inventory for Year 2 will be overstated.
D) There will be no effect on net income for Year 2.
Lois’s Furniture uses a periodic inventory system. Lois sold 60 tables during August.
Other data for August includes:
Cost of Goods Sold under the LIFO method is:
A) $1,200.
B) $336.
C) $1,130.
D) $400.
In a manufacturing company, the purchase of raw materials on account should be
recorded as follows:
A)
B)
C)
D)
Which of the following dividend dates does NOT get a formal journal entry?
A) Date of payment
B) Date of declaration
C) Date of record
D) All receive formal journal entries.
Given the following accounts:
[1] Expense accounts.
[2] Accounts receivable
[3] Finished goods inventory.
[4] Work in process inventory.
[5] Raw materials inventory.
[6] Factory supplies inventory.
[7] Manufacturing overhead applied
[8] Depreciation expense
[9] Accounts payable.
[10] Payroll
[11] Utilities expense
[12] Sales.
[13] Raw materials purchases.
[14] Manufacturing overhead-control.
[15] Cost of goods sold.
Indicate the account(s) to be debited and credited to record the following transactions.
Applied overhead to production.
Debit ________ Credit ________
Given the following accounts:
[1] Cash in bank
[2] Petty cash
[3] Supplies
[4] Equipment
[5] Notes payable
[6] Vouchers payable
[7] FICA payable
[8] Wages payable
[9] Purchases
[10] Purchase discounts
[11] Discounts lost
[12] Repairs expense
[13] Interest expense
[14] Delivery expense
Indicate the account(s) to be debited and credited to record the following transactions.
The company uses the periodic inventory method.
Received an invoice in the amount of $80 for repairs to the store equipment, voucher
#423 was prepared.
Debit ________ Credit ________
On the basis of the following data taken from the adjusted trial balance columns of the
worksheet for the year ended December 31 for Painting the Perfect Picture, journalize
the four closing entries in the proper order.
Identify whether the entries below are an adjusting entry (AE) or a closing entry (CE).
________
For each of the following, identify in Column 1 the balance the account will have in the
adjusted trial balance columns (debit or credit), in Column 2 the financial statement
column(s) in which the account balance will be found (income statement or balance
sheet), and in Column 3 the effect the account will have on the determination of net
income (increase, decrease, or none).
In the first space below, indicate whether each account is a real or nominal account
using (R) Real Account and (N) Nominal Account. In the second space below, indicate
by an (X) if the account should be closed.
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
Determine the reconciled bank balance given the following:
The balance per bank statement is $ 110.
The balance per general ledger is $107.
There is a credit memo for a note collected, $408.
There is a credit memo for interest earned, $25.
There is a debit memo for a customer’s NSF check $350.
Deposits in transit, $850.
Outstanding checks amount to $845.
This month’s service charge amounts to $50.
There is a debit memo for check printing fees, $25.
$ ________
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 15.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
The Coral Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to credit terms
of 1/10, n/30.
July 16 Sold merchandise on account with an invoice price of $4,500 to Carter and Co.
July 16 Sold merchandise on account with an invoice price of $5,000 to the Taylor Co.
July 20 Taylor Co. returned merchandise with an invoice price of $1,000.
July 25 Received full payment from Carter and Co.
July 28 Received full payment from Taylor Co.
Prepare the necessary general journal entry for July 16. Sold merchandise on account
with an invoice price of $5,000 to the Taylor Co.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
Discuss the purpose of a statement of cash flows, and describe its components.
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Allowance for doubtful accounts
[4] Merchandise inventory
[5] Store supplies
[6] Store equipment
[7] Accumulated depreciation
[8] Notes payable
[9] Accounts payable
[10] Able Partner’s, Capital
[11] Baker Partner’s, Capital
[12] Able Partner’s, withdrawals
[13] Baker Partner’s, withdrawals
[14] Income summary
[15] Service revenue
[16] Gain on realization
[17] Loss on realization
Indicate the account(s) to be debited and credited to record the following transaction.
The business paid an account.
Debit ________ Credit ________
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 25.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
For each of the following items, indicate (by placing an X) whether the item would be
found on the statement of cash flows in column 1, the direct approach for determining
the cash flows from operating activities, column 2, the indirect approach for
determining the cash flows from operating activities, column 3, cash flows from
investing activities, column 4, cash flows from financing activities. If you identify that
an item affects the cash flows from operation, indirect method, also indicate whether it
will be increasing (+) or decreasing (-) the cash flows.
Prepare general journal entries for the Knapp Computers Company for the following
transactions:
Aug. 31 Received a $20,000, 2 month, 9% note from Barber’s Accounting
Service in settlement of its account.
Sept. 30 Recorded the adjustment for interest.
Oct. 31 Barber paid the note and interest at maturity.
Prepare the general journal entry to record the employer’s payroll tax expense.
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).
Example: