From the following items, which would most likely cause the recording of unearned
revenue?
A) Potential sale of merchandise
B) Purchase of merchandise on account
C) Legal fees collected after work is performed
D) Subscriptions collected in advance for a magazine
Tina’s Event Planning bought a computer worth $4,000 with an expected life of 4 years
and a residual value of $800. What is the adjusting journal entry after the first year?
A)
B)
C)
D)
Before a voucher is approved for payment, all documents must be in agreement, except
for the:
A) accounts receivable ledger.
B) invoice.
C) purchase order.
D) receiving report.
Cash generated from operating activities may be computed by using:
A) the indirect method.
B) the direct method.
C) the estimating method.
D) Both A and B
A $10,000, 7% note is dated June 18 and is due in 45 days. The due date would be:
A) Aug 1.
B) Aug 2.
C) Aug 3.
D) Aug 4.
Gross Accounts Receivable is $15,000. Allowance for Doubtful Accounts has a credit
balance of $300. Net credit sales for the year are $140,000. In the past, 1% of credit
sales had proved uncollectible. What would be the adjusted balance of the Allowance
account under the income statement approach?
A) $2,400
B) $1,700
C) $1,400
D) $1,100
The journal entry to record the return of a purchase of inventory under the periodic
system includes a:
A) debit to Merchandise Inventory.
B) credit to Purchases Returns and Allowances.
C) credit to Merchandise Inventory.
D) credit to Purchases.
The general journal:
A) is the book of original entry.
B) is the book of final entry.
C) contains account balances.
D) is completed after the trial balance.
The entry to record the payment of taxes withheld from employees and FICA taxes
would be to:
A) credit Cash; debit FICA-OASDI Payable, FICA-Medicare Payable, and Federal
Income Tax Payable.
B) debit Cash; credit FICA-OASDI Payable, FICA-Medicare Payable, and Federal
Income Tax Payable.
C) credit Cash; credit FICA-OASDI Payable, FICA-Medicare Payable, and Federal
Income Tax Payable.
D) None of these answers is correct.
Sam’s Tutoring Service’s $500 petty cash fund has a shortage of $4. The facts are: $180
in valid receipts for expenses; $316 in coins and currency. The journal entry to
replenish the petty cash fund would include a:
A) credit to Cash for $180.
B) credit to Petty Cash for $184.
C) credit to Cash Short and Over for $4.
D) debit to Cash Short and Over for $4.
The adjustment for unearned rent revenue is recorded when:
A) cash is received.
B) rent is earned.
C) revenue is received.
D) closing entries are prepared.
A report issued by the payroll department to categorize all the types of labor incurred
during the week is a:
A) labor distribution report.
B) receiving report.
C) flow chart.
D) None of these answers is correct.
Paul received $1,900 for working 40 hours. What was Paul’s rate of pay per hour?
A) $47.50
B) $44.00
C) $45.00
D) $50.00
A company writes off a specific account as uncollectible, but later the customer pays.
The journal entry to record the reinstatement under the allowance method includes a(n):
A) decrease to Cash.
B) decrease to Sales.
C) increase to Allowance for Doubtful Accounts.
D) decrease to Bad Debts Expense.
A document that is prepared to show how items have been shipped to customers is a:
A) receiving report.
B) bill of lading.
C) lot tickets.
D) clock card.
Bringing account balances up to date before preparing financial reports is called:
A) posting.
B) adjusting.
C) journalizing.
D) analyzing.
Selected accounts from the ledger of Thomas Company appear below. For each
account, indicate the following:
a. In the first column at right, indicate the type of each account using the following
abbreviations:
Asset – A Revenue – R None of the above – N Liability – L Expense – E
b. In the second column, indicate the normal balance of the account by inserting a Dr. or
Cr.
During the preparation of the worksheet, the $1,000 balance of the Sam, Withdrawal
account was extended as a debit to the income statement columns. This error will:
A) overstate net income $1000.
B) understate net income $1000.
C) overstate net income $2000.
D) understate net income $2000.
Net pay is the same as:
A) gross pay.
B) take-home pay.
C) before taxes pay.
D) pay before deductions.
Monarch Company reported Subscriptions Receivable-Common Stock of $1,500 and
Common Stock Subscribed of $3,200 on its balance sheet. All the following are true
except:
A) the amount previously collected on the stock subscriptions is $1,700.
B) the original stock subscribed totaled $3,200.
C) Monarch previously issued $1,700 of the subscribed stock.
D) the remaining amount to be collected from subscribers before the shares will be
issued is $1,500.
Windermere Corporation has 55,000 square feet in department A; 20,000 square feet in
department B; and 25,000 square feet in department C. Janitorial services are based on
square footages in each department. How will the $35,000 of janitorial services be
allocated?
A) $19,250 to C; $7,000 to B; and $8,750 to A.
B) $19,250 to A; $7,000 to B; and $8,750 to C.
C) Split evenly ($11,666.67) to each department.
D) Cannot be determined by given information.
If current assets are $80,000 and current liabilities are $45,000, the current ratio is:
A) 1:1.
B) 0.77:1.
C) 1.78:1.
D) 1.2:1
Clip Company bought $7,500 of merchandise from Tarpon Corporation, terms 1/10,
n/45. Clip Company uses the voucher system and the periodic inventory method.The
journal entry to record the payment under the gross method after the discount period
would be to:
A) debit Vouchers Payable $7,500; credit Cash $7,500.
B) debit Vouchers Payable $7,500; credit Purchases Discount $75; credit Cash $7,425.
C) debit Vouchers Payable $7,425; credit Cash $7,425.
D) debit Vouchers Payable $7,425; debit Purchases Discount $75; credit Cash $7,500.
If gross sales for the tools department are $500,000 and gross sales for the appliances
department are $300,000, what is the fraction used to apportion the indirect advertising
for the appliances department if it is based on gross sales?
A) 1/2
B) 1/3
C) 3/8
D) 2/3
Employers pay the following payroll taxes, except:
A) FICA-OASDI.
B) Federal income tax.
C) State income tax.
D) B and C.
Which of the following would result if the business purchased supplies for cash?
A) Supplies would increase and Cash would decrease.
B) Supplies would increase and Capital would increase.
C) Supplies would increase and Accounts Payable would increase.
D) The purchase of supplies is not a business transaction.
On November 1, Duane paid $24,000 in advance for a year’s rent. The November 30
adjusting entry for rent expense should include a:
A) debit Rent Expense, $24,000.
B) credit Prepaid Rent Expense, $24,000.
C) debit Rent Expense, $2,000.
D) credit Cash, $2,000.
Preferred stock is considered to be non-participating when:
A) preferred stockholders get their yearly dividend and the reminder goes to common
stockholders.
B) preferred stockholders have a right to the current year’s dividend, but do not receive
holdovers from past years when dividends were not paid.
C) preferred stockholders have a right to a certain dividend every year.
D) None of these answers is correct.
The person or company to whom a check is payable is called the:
A) payer.
B) drawer.
C) drawee.
D) payee.
Which of the following would cause a liability to be credited and an expense to be
debited?
A) Recording the adjustment for the expiration of rent
B) Recording the depreciation of equipment
C) Recording the accrual of salaries incurred
D) Purchasing equipment
Cash has a normal balance of $1,100. After collecting $800, the balance in the account
is:
A) debit $300.
B) debit $1,900.
C) credit $300.
D) credit $1,900.
What inventory method is used when the inventory balance is updated only at the end
of the accounting period?
A) Periodic
B) Perpetual
C) Income Summary
D) Cost of Goods Sold
Calculate the cost of goods sold when beginning finished goods inventory equals
$80,000, ending finished goods inventory $65,000, and cost of goods manufactured
$600,000.
A) $615,000
B) $445,000
C) $685,000
D) $585,000
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 in which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
On December 31, 2015, Landscape Pros had a balance in Accounts Receivable of
$25,000. Net credit sales for the year were $400,000. The Allowance for Doubtful
Accounts has a credit balance of $500. Journalize the recording of the bad debt expense
under the income statement approach if 3% of net credit sales is deemed uncollectible.
Button Corporation uses a voucher system and the periodic inventory method. Record
the following transactions in general journal format. Omit the explanations.
Nov. 8 Purchased office equipment from Tram Company, $1,000; voucher no. 200 was
prepared.
Nov. 12 Established a petty cash fund of $150; voucher no. 201 was prepared.
Nov. 14 Purchased merchandise from Carr Corporation, $1,800; voucher no. 202 was
prepared.
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Accrued interest on bonds which sold above face value.
Debit ________ & ________ Credit ________
S. Ferrari, an employee of Plum Hollow Country Club, earned $1,100 during the first
week of January. His withholding included: federal income tax, 15%; state income tax,
5%; FICA-OASDI, 6.2%; FICA-Medicare, 1.45%; and union dues $25. Determine the
tax for OASDI, Medicare, Federal Income Tax, and State Income Tax.
Prepare the general journal entry to record the payment to the Federal Treasury.
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
CJM Sales uses the direct write-off method in accounting for uncollectible accounts.
Record the following transactions in general journal form. Use the periodic method.
May 28 Sold merchandise on account to North End Motors for $18,000.
Jul 11 Received $13,000 from North End Motors on their account.
Jul 30 Wrote off the balance due as uncollectible.
Journalize the following transactions. All purchases are on account and subject to terms
of 2/10, n/30. The periodic inventory method is used.
Nov. 3 Purchased merchandise with a price of $2,000 from the Bartkowski Inc.
Nov. 5 Purchased merchandise from the Thiesman and Co. with a price of $4,000.
Nov. 7 Purchased merchandise with a price of $2,000 from the Montana Supply Co.
Nov. 10 Paid the amount due to Bartkowski Inc.
Nov. 12 Paid the amount due to Thiesman and Co.
Nov. 23 Paid the amount due to Montana Supply Co.
Journalize the Nov. 3 transaction.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
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 that the account in which the account balance is reported, and in column 4 the
account’s nature.
Meranda Flower Corporation needs to develop a trend analysis for its sales and gross
profit for the past three years to make decisions for the future. Compute the trend
percentages with the information below and place your answers in the spaces provided.
Year 3 Year 2
Year 1
Net sales $2,000 $1,800
$1,200
Gross profit 900 700
400
Net sales trend percentages ________ ________ ________
Gross profit trend percentages ________ ________ ________
Determine the amount of cash collected on a credit sale in the amount of $5,000,
subject to a 5% sales tax when $500 worth of merchandise has already been returned
for credit. Assume cash is collected after the discount period.
$ ________
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.
Closed Baker Partner’s withdrawals.
Debit ________ Credit ________
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 that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).
Journalize the following transactions. All purchases are on account and subject to terms
of 2/10, n/30. The periodic inventory method is used.
Nov. 3 Purchased merchandise with a price of $2,000 from the Bartkowski Inc.
Nov. 5 Purchased merchandise from the Thiesman and Co. with a price of $4,000.
Nov. 7 Purchased merchandise with a price of $2,000 from the Montana Supply Co.
Nov. 10 Paid the amount due to Bartkowski Inc.
Nov. 12 Paid the amount due to Thiesman and Co.
Nov. 23 Paid the amount due to Montana Supply Co.
Journalize the Nov. 23 transaction.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
