10th Edition | Test Bank - Accounting System

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Student name:__________

TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Business transactions and events are the starting points of financial statements.

⊚ true
⊚ false

2) Preparation of a trial balance is the first step in processing a financial transaction.

⊚ true
⊚ false

3) Source documents identify and describe transactions and events entering the accounting system.

⊚ true
⊚ false

4) Items such as sales receipts, checks, purchase orders, bills from suppliers, payroll records, and bank statements are examples of source documents.

⊚ true
⊚ false

5) An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

⊚ true
⊚ false

6) A customer's promise to pay on credit is classified as an account payable by the seller.

⊚ true
⊚ false

7) Dividends are subtracted on the income statement as a business expense.

⊚ true
⊚ false

8) The purchase of land and buildings will generally be recorded in the same ledger account.

⊚ true
⊚ false

9) Unearned revenues are classified as liabilities.

⊚ true
⊚ false

10) Dividends are not expenses of a business, they are simply the opposite of owner investments.

⊚ true
⊚ false

11) When a company provides services on credit, the amount billed should be recorded as an account receivable.

⊚ true
⊚ false

12) Dividends always decrease equity.

⊚ true
⊚ false

13) Expenses always decrease equity.

⊚ true
⊚ false

14) Revenues always increase equity.

⊚ true
⊚ false

15) The issuance of common stock always decreases equity.

⊚ true
⊚ false

16) Unearned revenue is a liability that is recorded when customers pay in advance for products or services.

⊚ true
⊚ false

17) A company’s chart of accounts is a list of all ledger accounts and has an identification number assigned to each account.

⊚ true
⊚ false

18) An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

⊚ true
⊚ false

19) The right side of an account is called the debit side.

⊚ true
⊚ false

20) In a double-entry accounting system, for each transaction at least two accounts are involved, with at least one debit and one credit, and the total amount debited must equal the total amount credited.

⊚ true
⊚ false

21) Increases in liability accounts are recorded as debits.

⊚ true
⊚ false

22) Debits increase asset and expense accounts.

⊚ true
⊚ false

23) Credits always increase account balances.

⊚ true
⊚ false

24) An expense account normally has a credit balance.

⊚ true
⊚ false

25) A revenue account normally has a debit balance.

⊚ true
⊚ false

26) Asset accounts are decreased by debits.

⊚ true
⊚ false

27) Debit means increase and credit means decrease for all accounts.

⊚ true
⊚ false

28) Asset accounts normally have debit balances and revenue accounts normally have credit balances.

⊚ true
⊚ false

29) The Dividends account normally has a debit balance.

⊚ true
⊚ false

30) A debit entry always increases an account.

⊚ true
⊚ false

31) A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

⊚ true
⊚ false

32) A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

⊚ true
⊚ false

33) If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

⊚ true
⊚ false

34) The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

⊚ true
⊚ false

35) If a company purchases equipment paying cash, the journal entry to record this transaction will include a debit to Cash.

⊚ true
⊚ false

36) If a company provides services to a customer on credit, the company providing the service should credit Accounts Receivable.

⊚ true
⊚ false

37) When a company bills a customer for $700 for services performed, the journal entry to record this transaction will include a $700 debit to Services Revenue.

⊚ true
⊚ false

38) The debt ratio helps to assess a company’s risk of failing to pay its debts.

⊚ true
⊚ false

39) A company that finances a relatively large portion of its assets with equity is said to have higher financial leverage.

⊚ true
⊚ false

40) The debt ratio is calculated by dividing total assets by total liabilities.

⊚ true
⊚ false

41) A company that finances a relatively large portion of its assets with liabilities is said to have higher financial leverage.

⊚ true
⊚ false

42) Higher financial leverage means greater risk because liabilities must be repaid and often require regular interest payments.

⊚ true
⊚ false

43) Stark Company has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

⊚ true
⊚ false

44) A journal entry that affects only two accounts is called a compound entry.

⊚ true
⊚ false

45) Posting is the transfer of journal entry information to the ledger.

⊚ true
⊚ false

46) Transactions are recorded first in the ledger and are then transferred to the journal.

⊚ true
⊚ false

47) A journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

⊚ true
⊚ false

48) Debtors are individuals and organizations that have rights to receive payments from a company.

⊚ true
⊚ false

49) A trial balance is a list of all ledger accounts and their balances at a point in time.

⊚ true
⊚ false

50) Errors made in journalizing transactions, posting to the ledger, and preparing the trial balance can still result in producing a balanced trial balance.

⊚ true
⊚ false

51) The income statement, statement of retained earnings, and statement of cash flows report financial performance over a period of time.

⊚ true
⊚ false

52) A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

⊚ true
⊚ false

53) If Cash was incorrectly debited for $100 instead of correctly debiting Accounts Receivable for $100, assuming no other errors, the trial balance will still balance.

⊚ true
⊚ false

54) The balance sheet summarizes how equity changes over the reporting period.

⊚ true
⊚ false

55) An income statement reports revenues earned minus expenses incurred over a period of time.

⊚ true
⊚ false

56) The detail of individual revenue and expense accounts is reported on the balance sheet.

⊚ true
⊚ false

57) A statement’s heading lists the three W’s: Who – the name of the organization; What – the name of the statement; and Where – the organization’s address.

⊚ true
⊚ false

58) If the Common stock account had a $10,000 credit balance at the beginning of the period, and during the period, an additional $5,000 of common stock is issued, the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.

⊚ true
⊚ false

59) Dividends paid to stockholders are reported on the statement of retained earnings.

⊚ true
⊚ false

60) The income statement reports net income for a business over a period of time.

⊚ true
⊚ false

61) The balance sheet reports the financial position of a company at a point in time.

⊚ true
⊚ false

62) A fiscal year is a one-year reporting period.

⊚ true
⊚ false

63) Businesses whose accounting year begins on February 1 and ends on January 31 are called calendar-year companies.

⊚ true
⊚ false

64) The amount of net income is added on the statement of retained earnings.

⊚ true
⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.
65) The process to go from transactions and events to financial statements begins with:

A) Identifying each transaction and event from source documents.
B) Preparing financial statements and other reports.
C) Analysis of prepared financial statements.
D) Presentation of financial information to decision-makers.
E) Preparation of the trial balance.

66) Which of the following statements is false:

A) Accounts receivable are held by a seller.
B) Accounts receivable arise from credit sales.
C) Accounts receivable are increased by customer payments.
D) Accounts receivable are classified as assets.
E) Accounts receivable are increased by billings to customers.

67) Which of the following is not a source document?

A) Sales receipts.
B) Ledgers.
C) Bills from suppliers.
D) Purchase orders.
E) Bank statements.

68) A business's source documents:

A) Include the ledger.
B) Identify and describe transactions and events entering the accounting system.
C) Must be in electronic form.
D) Are records of all increases and decreases in specific asset.
E) Include the chart of accounts.

69) A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

A) Journal.
B) Posting.
C) Trial balance.
D) Account.
E) Chart of accounts.

70) When cash is received from a stockholder in exchange for common stock, the transaction is recorded by debiting Cash and crediting a(n):

A) Asset account.
B) Equity account.
C) Revenue account.
D) Expense account.
E) Liability account.

71) The account used by businesses to record the distribution of assets from a business to its owners is:

A) A revenue account.
B) The Dividends account.
C) The Common stock account.
D) An expense account.
E) A liability account.

72) Identify the statement below that is correct.

A) When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
B) Accounts receivable are held by a seller and are promises of payment from customers to sellers.
C) Increases and decreases in cash are always recorded in the common stock account.
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business.
E) Accrued liabilities include accounts receivable.

73) Unearned revenues are:

A) Revenues that have been earned and received in cash.
B) Revenues that have been earned but not yet collected in cash.
C) Liabilities recorded when a customer pays in advance for products or services.
D) Recorded as an asset in the accounting records.
E) Increases to common stock.

74) Unearned revenues are:

A) Assets that will be used over time.
B) Expenses incurred because a customer has paid in advance.
C) Transferred to revenue when products and services are delivered.
D) Increases in assets as a result of delivering products or services to a customer.
E) Decreases in an asset.

75) Prepaid accounts (also called prepaid expenses) are:

A) Payments made for products and services that never expire.
B) Classified as liabilities on the balance sheet.
C) Classified as equity on the balance sheet.
D) Assets from prepayments of future expenses.
E) Promises of payments by customers.

76) A company’s written promissory note to pay a future amount is a(n):

A) Unearned revenue.
B) Prepaid expense.
C) Credit account.
D) Note payable.
E) Account receivable.

77) The collection of all accounts and their balances used by a business is called a(n):

A) Journal.
B) Income statement.
C) General Journal.
D) Balance column journal.
E) Ledger (or General Ledger).

78) A company’s ledger (or general ledger) is:

A) A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item.
B) A journal in which transactions are first recorded.
C) A collection of documents that describe transactions and events entering the accounting process.
D) A list of all identification numbers used by the company.
E) The collection of all accounts and their balances used by the company.

79) A company’s list of all ledger accounts and the identification numbers assigned to each account is called a:

A) Source document.
B) Journal.
C) Trial balance.
D) Chart of accounts.
E) General Journal.

80) A credit:

A) Always decreases an account.
B) Is the right side of a T-account.
C) Always increases an account.
D) Is the left side of a T-account.
E) Always increases asset accounts.

81) A debit:

A) Always increases an account.
B) Is the right side of a T-account.
C) Always decreases an account.
D) Is the left side of a T-account.
E) Always increases liability accounts.

82) The right side of a T-account is a(n):

A) Debit.
B) Increase.
C) Credit.
D) Decrease.
E) Account balance.

83) Identify the statement below that is incorrect.

A) The normal balance of accounts receivable is a debit.
B) The normal balance of dividends is a debit.
C) The normal balance of unearned revenues is a credit.
D) The normal balance of an expense account is a credit.
E) The normal balance of the common stock account is a credit.

84) A credit is used to record a decrease in which of the following accounts?

A) Accounts Payable
B) Service Revenue
C) Unearned Revenue
D) Accounts Receivable
E) Common Stock

85) A credit is used to record an increase in which of the following accounts?

A) Supplies
B) Cash
C) Accounts Payable
D) Dividends
E) Prepaid Insurance

86) Identify the account below that is classified as a liability in a company's chart of accounts:

A) Cash
B) Unearned Revenue
C) Salaries Expense
D) Accounts Receivable
E) Supplies

87) Identify the account below that is classified as an asset in a company's chart of accounts:

A) Accounts Receivable
B) Accounts Payable
C) Common Stock
D) Unearned Revenue
E) Service Revenue

88) Identify the account below that is classified as an asset account:

A) Unearned Revenue
B) Accounts Payable
C) Supplies
D) Retained Earnings
E) Service Revenue

89) Identify the account below that is classified as a liability account:

A) Cash
B) Accounts Payable
C) Salaries Expense
D) Retained Earnings
E) Equipment

90) Identify the account below that always decreases the equity of a business:

A) Utilities Expense
B) Accounts Payable
C) Accounts Receivable
D) Cash
E) Unearned Revenue

91) Which of the following is NOT an equity account:

A) Unearned Revenue
B) Retained Earnings
C) Services Revenue
D) Wages Expense
E) Dividends

92) Which of the following is NOT an asset account:

A) Cash
B) Land
C) Services Revenue
D) Buildings
E) Equipment

93) A business uses a credit to record:

A) An increase in an expense account.
B) A decrease in an asset account.
C) A decrease in an unearned revenue account.
D) A decrease in a revenue account.
E) A decrease in a common stock account.

94) A tool that represents a ledger account and is used to show the effects of transactions is called a:

A) Dividends account.
B) Retained earnings account.
C) Trial balance.
D) T-account.
E) Balance column sheet.

95) Identify the statement below that is correct:

A) The left side of a T-account is the credit side.
B) Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts.
C) The left side of a T-account is the debit side.
D) Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts.
E) The total amount debited need not equal the total amount credited for a particular transaction.

96) An account balance is:

A) The total of the credit side of the account.
B) The total of the debit side of the account.
C) The difference between the total debits and total credits for an account including the beginning balance.
D) Used to identify source documents.
E) Always a credit.

97) Select the account below that normally has a credit balance.

A) Cash.
B) Office Equipment.
C) Wages Payable.
D) Dividends.
E) Sales Salaries Expense.

98) A debit is used to record which of the following:

A) A decrease in an asset account.
B) A decrease in an expense account.
C) An increase in a revenue account.
D) An increase in the common stock account.
E) An increase in the dividends account.

99) A credit entry:

A) Increases asset and expense accounts, and decreases liability, common stock, and revenue accounts.
B) Always decreases an account.
C) Decreases asset and expense accounts, and increases liability, common stock, and revenue accounts.
D) Is recorded on the left side of a T-account.
E) Always increases an account.

100) A double-entry accounting system is an accounting system:

A) That records each transaction twice.
B) That records the effect of each transaction in at least two accounts, with at least one debit and one credit.
C) In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D) That allows total credits to be greater than total debits.
E) That allows total debits to be greater than total credits.

101) Edison Consulting received a $450 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:

A) Debit to Utilities Expense for $450.
B) Credit to Accounts Payable for $450.
C) Debit to Cash for $450.
D) Credit to Utilities Expense for $450.
E) Debit to Accounts Payable for $450.

102) Edison Consulting received a $300 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:

A) Debit to Utilities Expense for $300.
B) Credit to Accounts Payable for $300.
C) Debit to Cash for $300.
D) Credit to Utilities Expense for $300.
E) Debit to Accounts Payable for $300.

103) GreenLawn Company provides landscaping services to clients. On May 1, a customer paid GreenLawn $71,000 for 6-months services in advance. GreenLawn’s general journal entry to record this transaction will include a:

A) Debit to Unearned Revenue for $71,000.
B) Credit to Accounts Receivable for $71,000.
C) Credit to Cash for $71,000.
D) Credit to Unearned Revenue for $71,000.
E) Debit to Accounts Receivable for $71,000.

104) GreenLawn Company provides landscaping services to clients. On May 1, a customer paid GreenLawn $60,000 for 6-months services in advance. GreenLawn’s general journal entry to record this transaction will include a:

A) Debit to Unearned Revenue for $60,000.
B) Credit to Accounts Receivable for $60,000.
C) Credit to Cash for $60,000.
D) Credit to Unearned Revenue for $60,000.
E) Debit to Accounts Receivable for $60,000.

105) Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

A) Debit to Accounts Payable.
B) Debit to Accounts Receivable.
C) Credit to Cash.
D) Credit to Accounts Payable.
E) Credit to Common Stock.

106) An asset created by prepayment of an insurance premium is:

A) Recorded as a debit to Unearned Revenue.
B) Recorded as a debit to Prepaid Insurance.
C) Recorded as a credit to Unearned Revenue.
D) Recorded as a credit to Prepaid Insurance.
E) Not recorded in the accounting records until the insurance period expires.

107) Victor Cruz contributed $81,000 in cash and land worth $152,000 to open a new business, VC Consulting, in exchange for common stock. Which of the following general journal entries will VC Consulting make to record this transaction?

A) Debit Accounts Payable $233,000; Credit Common Stock, $233,000.
B) Credit Cash and Land, $233,000; Credit Common Stock, $233,000.
C) Debit Cash $81,000; Debit Land $152,000; Credit Common Stock, $233,000.
D) Debit Common Stock, $233,000; Credit Cash $81,000; Credit Land, $152,000.
E) Debit Common Stock, $233,000; Credit Assets, $233,000.

108) Victor Cruz contributed $70,000 in cash and land worth $130,000 to open a new business, VC Consulting, in exchange for common stock. Which of the following general journal entries will VC Consulting make to record this transaction?

A) Debit Accounts Payable $200,000; Credit Common Stock, $200,000.
B) Credit Cash and Land, $200,000; Credit Common Stock, $200,000.
C) Debit Cash $70,000; Debit Land $130,000; Credit Common Stock, $200,000.
D) Debit Common Stock, $200,000; Credit Cash $70,000, Credit Land, $130,000.
E) Debit Common Stock, $200,000; Credit Assets, $200,000.

109) Green Cleaning purchased $590 of office supplies on credit. The company’s policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?

A) Debit Office supplies expense, $590; credit Cash, $590.
B) Debit Cash, $590; credit Office supplies, $590.
C) Debit Office supplies, $590; credit Cash, $590.
D) Debit Office supplies, $590; credit Accounts payable, $590.
E) Debit Accounts payable, $590; credit Office supplies, $590.

110) Green Cleaning purchased $500 of office supplies on credit. The company’s policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?

A) Debit Office supplies expense, $500; credit Cash, $500.
B) Debit Cash, $500; credit Office supplies, $500.
C) Debit Office supplies, $500; credit Cash, $500.
D) Debit Office supplies, $500; credit Accounts payable, $500.
E) Debit Accounts payable, $500; credit Office supplies, $500.

111) Alicia Tax Services paid $700 to settle an account payable. Which of the following general journal entries will Alicia Tax Services make to record this transaction?

A) Debit Office supplies expense, $700; credit Cash, $700.
B) Debit Cash, $700; credit Office supplies, $700.
C) Debit Office supplies, $700; credit Cash, $700.
D) Debit Office supplies, $700; credit Accounts payable, $700.
E) Debit Accounts payable, $700; credit Cash, $700.

112) Alicia Tax Services paid $500 to settle an account payable. Which of the following general journal entries will Alicia Tax Services make to record this transaction?

A) Debit Office supplies expense, $500; credit Cash, $500.
B) Debit Cash, $500; credit Office supplies, $500.
C) Debit Office supplies, $500; credit Cash, $500.
D) Debit Office supplies, $500; credit Accounts payable, $500.
E) Debit Accounts payable, $500; credit Cash, $500.

113) A law firm billed a client $3,300 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?

A) Debit Accounts Receivable, $3,300; credit Unearned Legal Fees Revenue, $3,300.
B) Debit Cash, $3,300; credit Unearned Legal Fees Revenue, $3,300.
C) Debit Legal Fees Revenue, $3,300; credit Accounts Receivable, $3,300.
D) Debit Accounts Receivable, $3,300; credit Legal Fees Revenue, $3,300.
E) Debit Cash, $3,300; credit Accounts Receivable, $3,300.

114) A law firm billed a client $1,800 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?

A) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
C) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
D) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
E) Debit Cash, $1,800; credit Accounts Receivable, $1,800.

115) A law firm collected $3,600 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash?

A) Debit Accounts Receivable, $3,600; credit Unearned Legal Fees Revenue, $3,600.
B) Debit Cash, $3,600; credit Unearned Legal Fees Revenue, $3,600.
C) Debit Legal Fees Revenue, $3,600; credit Accounts Receivable, $3,600.
D) Debit Accounts Receivable, $3,600; credit Legal Fees Revenue, $3,600.
E) Debit Cash, $3,600; credit Accounts Receivable, $3,600.

116) A law firm collected $1,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash?

A) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
C) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
D) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
E) Debit Cash, $1,800; credit Accounts Receivable, $1,800.

117) A law firm collected $2,300 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?

A) Debit Accounts Receivable, $2,300; credit Unearned Legal Fees Revenue, $2,300.
B) Debit Cash, $2,300; credit Unearned Legal Fees Revenue, $2,300.
C) Debit Legal Fees Revenue, $2,300; credit Accounts Receivable, $2,300.
D) Debit Accounts Receivable, $2,300; credit Legal Fees Revenue, $2,300.
E) Debit Cash, $2,300; credit Accounts Receivable, $2,300.

118) A law firm collected $1,800 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?

A) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
C) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
D) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
E) Debit Cash, $1,800; credit Accounts Receivable, $1,800.

119) Specter Consulting purchased $8,700 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

A)

B)

C)

D)

E)

120) Specter Consulting purchased $7,000 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

A)

B)

C)

D)

E)

121) Jose Consulting paid $900 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.

A)

B)

C)

D)

E)

122) Jose Consulting paid $500 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.

A)

B)

C)

D)

E)

123) On February 1^st, Alejandro Consulting paid $2,500 cash for a 5-month insurance policy that begins that day. Given the choices below, determine the general journal entry that Alejandro Consulting will make to record the cash payment. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

A)

B)

C)

D)

E)

124) Ted Catering received $820 cash in advance from a customer for catering services to be provided in three months. Determine the general journal entry that Ted Catering will make to record the cash receipt. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

A)

B)

C)

D)

E)

125) Ted Catering received $800 cash in advance from a customer for catering services to be provided in three months. Determine the general journal entry that Ted Catering will make to record the cash receipt. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

A)

B)

C)

D)

E)

126) Gloria Catering provided $1,000 of catering services and billed its client for the amount owed. Determine the general journal entry that Gloria Catering will make to record this transaction.

A)

B)

C)

D)

E)

127) Adriana Graphic Design receives $2,100 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?

A)

B)

C)

D)

E)

128) Adriana Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?

A)

B)

C)

D)

E)

129) Jay’s Limo Services paid cash dividends of $100. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

A)

B)

C)

D)

E)

130) Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

A)

B)

C)

D)

E)

131) Russell Company collected cash of $820 immediately after providing consulting services to a client. Which of the following general journal entries will Russell Company make to record this transaction?

A)

B)

C)

D)

E) No journal entry is required.

132) Russell Company collected cash of $400 immediately after providing consulting services to a client. Which of the following general journal entries will Russell Company make to record this transaction?

A)

B)

C)

D)

E) No journal entry is required.

133) Sharp Services provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries did Sharp Services make to record the billing of the customer?

A)

B)

C)

D)

E)

134) Silvia's Studio provided $250 of dance instruction and rented out its dance studio to the same client for another $150. The client paid cash immediately. Identify the general journal entry below that Silvia’s Studio will make to record the transaction.

A)

B)

C)

D)

E)

135) Silvia's Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100. The client paid cash immediately. Identify the general journal entry below that Silvia’s Studio will make to record the transaction.

A)

B)

C)

D)

E)

136) Geoff Parker, the sole owner of Parker Tax Services, started the business by investing $10,000 cash and a building worth $20,000 in exchange for common stock. Identify the general journal entry below that Parker Tax Services will make to record the transaction.

A)

B)

C)

D)

E)

137) A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.

A)

B)

C)

D)

E)

138) A company provided $12,000 of consulting services and was immediately paid in cash by the customer. Identify the journal entry below that properly records this transaction.

A)

B)

C)

D)

E)

139) Smart Consulting, paid cash dividends of $2,000 to its owners. Identify the general journal entry below that Smart Consulting will make to record the transaction.

A)

B)

C)

D)

E)

140) Matthew Martin, the owner of Innovation Consulting, started the business by investing $58,000 cash in exchange for common stock. Identify the general journal entry below that Innovation Consulting will make to record the transaction.

A)

B)

C)

D)

E)

141) Matthew Martin, the owner of Innovation Consulting, started the business by investing $40,000 cash in exchange for common stock. Identify the general journal entry below that Innovation Consulting will make to record the transaction.

A)

B)

C)

D)

E)

142) If cash is received from customers in payment for services that have not yet been performed, the business would record the cash receipt as:

A) A debit to an unearned revenue account.
B) A debit to a prepaid expense account.
C) A credit to an unearned revenue account.
D) A credit to a prepaid expense account.
E) A credit to accounts payable.

143) On May 31, the Cash account of Tesla had a normal balance of $5,700. During May, the account was debited for a total of $12,900 and credited for a total of $12,200. What was the balance in the Cash account at the beginning of May?

A) A $0 balance.
B) A $5,000 debit balance.
C) A $6,400 debit balance.
D) A $6,400 credit balance.
E) A $5,000 credit balance.

144) On May 31, the Cash account of Tesla had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May?

A) A $0 balance.
B) A $4,300 debit balance.
C) A $4,300 credit balance.
D) A $5,700 debit balance.
E) A $5,700 credit balance.

145) On April 30, Gomez Services had an Accounts Receivable balance of $26,800. During the month of May, total credits to Accounts Receivable were $61,600 from customer payments. The May 31 Accounts Receivable balance was $21,000. What was the amount of credit sales during May?

A) $5,800.
B) $55,800.
C) $61,600.
D) $67,400.
E) $38,400.

146) On April 30, Gomez Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

A) $5,000.
B) $47,000.
C) $52,000.
D) $57,000.
E) $32,000.

147) During the month of February, Rubio Services had cash receipts of $9,500 and cash disbursements of $12,600. The February 28 cash balance was $5,800. What was the February 1 beginning cash balance?

A) $2,700.
B) $3,100.
C) $8,900.
D) $0.
E) $14,300.

148) During the month of February, Rubio Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?

A) $700.
B) $1,100.
C) $2,900.
D) $0.
E) $4,300.

149) The following transactions occurred during July:Received $1,020 cash for services provided to a customer during July.Issued common stock for $4,400 cash.Received $870 from a customer in partial payment of his account receivable which arose from sales in June.Provided services to a customer on credit, $495.Borrowed $7,200 from the bank by signing a promissory note.Received $1,370 cash from a customer for services to be performed next year.What was the amount of revenue for July?

A) $1,020.
B) $1,515.
C) $2,885.
D) $3,755.
E) $14,860.

150) The following transactions occurred during July:Received $900 cash for services provided to a customer during July.Issued common stock for $2,200 cash.Received $750 from a customer in partial payment of his account receivable which arose from sales in June.Provided services to a customer on credit, $375.Borrowed $6,000 from the bank by signing a promissory note.Received $1,250 cash from a customer for services to be performed next year. What was the amount of revenue for July?

A) $900.
B) $1,275.
C) $2,525.
D) $3,275.
E) $11,100.

151) If Tyrol Willow, the sole owner of Willow Hardware, withdraws cash of the business to purchase a family car, the business should record this use of cash with an entry to:

A) Debit Accounts Payable and credit Cash.
B) Debit Cash and credit Salary Expense.
C) Debit Cash and credit Dividends.
D) Debit Dividends and credit Cash.
E) Debit Cash and credit Cash.

152) Marco Nelson opened a frame shop and completed these transactions:Marco started the shop by investing $40,500 cash and equipment valued at $18,500 in exchange for common stock.Purchased $120 of office supplies on credit.Paid $1,700 cash for the receptionist's salary.Sold a custom frame service and collected $5,000 cash on the sale.Completed framing services and billed the client $250.What was the balance of the cash account after these transactions were posted?

A) $11,680.
B) $11,930.
C) $43,800.
D) $43,930.
E) $44,050.

153) Marco Nelson opened a frame shop and completed these transactions:Marco started the shop by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock.Purchased $70 of office supplies on credit.Paid $1,200 cash for the receptionist's salary.Sold a custom frame service and collected $1,500 cash on the sale.Completed framing services and billed the client $200.What was the balance of the cash account after these transactions were posted?

A) $300.
B) $41,500.
C) $40,300.
D) $38,500.
E) $38,700.

154) At the beginning of January of the current year, Sorrel Company’s ledger reflected a normal balance of $64,000 for accounts receivable. During January, the company collected $17,200 from customers on account and provided additional services to customers on account totaling $13,700. Additionally, during January one customer paid Mikey $6,200 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

A) $60,500.
B) $66,700.
C) $3,500.
D) $67,500.
E) $61,300.

155) At the beginning of January of the current year, Sorrel Company’s ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

A) $54,700.
B) $49,700.
C) $2,300.
D) $54,300.
E) $49,300.

156) During the month of March, Harley's Computer Services made purchases on account totaling $44,100. Also during the month of March, Harley was paid $8,900 by a customer for services to be provided in the future and paid $37,200 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,600, what is the balance in accounts payable at the end of March?

A) $84,500.
B) $93,400.
C) $6,900.
D) $75,600.
E) $5,200.

157) During the month of March, Harley's Computer Services made purchases on account totaling $43,500. Also during the month of March, Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?

A) $83,900.
B) $91,900.
C) $6,600.
D) $75,900.
E) $4,900.

158) On January 1 of the current year, Jimmy's Sandwich Company reported total equity of $129,000. During the current year, total revenues were $108,000 while total expenses were $97,500. Also, during the current year the company paid $32,000 in dividends. No other changes in equity occurred during the year. The change in total equity during the year was:

A) A decrease of $21,500.
B) An increase of $21,500.
C) An increase of $42,500.
D) A decrease of $42,500.
E) An increase of $79,000

159) On January 1 of the current year, Jimmy’s Sandwich Company reported total equity of $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the company paid $20,000 in dividends. No other changes in equity occurred during the year. The change in total equity during the year was:

A) A decrease of $9,500.
B) An increase of $9,500.
C) An increase of $30,500.
D) A decrease of $30,500.
E) An increase of $73,500.

160) Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:Andrea invested $13,600 cash in the business in exchange for common stock.Andrea contributed $21,000 of photography equipment to the business.The company paid $2,200 cash for an insurance policy covering the next 24 months.The company received $5,800 cash for services provided during January.The company purchased $6,300 of office equipment on credit.The company provided $2,850 of services to customers on account.The company paid cash of $1,600 for monthly rent.The company paid $3,200 on the office equipment purchased in transaction #5 above.Paid $285 cash for January utilities.
Based on this information, the balance in the cash account at the end of January would be:

A) $42,750.
B) $12,115.
C) $19,000.
D) $15,450.
E) $14,965.

161) Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:Andrea invested $13,500 cash in the business in exchange for common stock.Andrea contributed $20,000 of photography equipment to the business.The company paid $2,100 cash for an insurance policy covering the next 24 months.The company received $5,700 cash for services provided during January.The company purchased $6,200 of office equipment on credit.The company provided $2,750 of services to customers on account.The company paid cash of $1,500 for monthly rent.The company paid $3,100 on the office equipment purchased in transaction #5 above.Paid $275 cash for January utilities.Based on this information, the balance in the cash account at the end of January would be:

A) $41,450.
B) $12,225.
C) $18,700.
D) $15,250.
E) $13,500.

162) Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:Andrea invested $15,500 cash in the business in exchange for common stock.Andrea contributed $40,000 of photography equipment to the business in exchange for common stock.The company paid $4,100 cash for office furniture.The company received $7,700 cash for services provided during January.The company purchased $8,200 of office equipment on credit.The company provided $4,750 of services to customers on account.The company paid cash of $3,500 for monthly rent.The company paid $5,100 on the office equipment purchased in transaction #5 above.Paid $475 cash for January utilities.
Based on this information, the amount reported as total stockholders’ equity on the balance sheet at month-end would be:

A) $59,400.
B) $63,200.
C) $55,150.
D) $63,975.
E) $50,675.

163) Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:Andrea invested $13,500 cash in the business in exchange for common stock.Andrea contributed $20,000 of photography equipment to the business in exchange for common stock.The company paid $2,100 cash for office furniture.The company received $5,700 cash for services provided during January.The company purchased $6,200 of office equipment on credit.The company provided $2,750 of services to customers on account.The company paid cash of $1,500 for monthly rent.The company paid $3,100 on the office equipment purchased in transaction #5 above.Paid $275 cash for January utilities.Based on this information, the amount reported as total stockholders’ equity on the balance sheet at month-end would be:

A) $31,400.
B) $39,200.
C) $31,150.
D) $40,175.
E) $30,875.

164) The debt ratio is used:

A) To measure the ratio of equity to expenses.
B) To assess the risk associated with a company's use of liabilities.
C) To assess market expectations for future growth.
D) To determine how efficient the company is using its assets.
E) To determine the profitability of a company.

165) Identify the correct formula below used to calculate the debt ratio.

A) Total Equity/Total Liabilities.
B) Total Liabilities/Total Equity.
C) Total Liabilities/Total Assets.
D) Total Assets/Total Liabilities.
E) Total Equity/Total Assets.

166) Langley has a debt ratio of 0.3 and its competitor, Appleton, has a debt ratio equal to 0.7. Determine the statement below that is correct.

A) Appleton finances a smaller percentage of its assets with liabilities as compared to Langley.
B) Appleton’s financial leverage is less than Langley’s financial leverage.
C) Appleton’s financial leverage is greater than Langley’s financial leverage.
D) Langley has a higher risk from its financial leverage.
E) Higher financial leverage involves lower risk.

167) Identify the statement that is incorrect.

A) Higher financial leverage involves higher risk.
B) Risk is higher if a company has more liabilities.
C) Risk is higher if a company has more assets.
D) The debt ratio is one measure of financial risk.
E) Lower financial leverage involves lower risk.

168) The debt ratio of Company A is 0.31 and the debt ratio of Company B is 0.21. Based on this information, an investor can conclude:

A) Company B has more debt than Company A.
B) Company B has less financial leverage.
C) Company A has less financial leverage.
D) Company A has 10% more assets than Company B.
E) Both companies have too much debt.

169) The debt ratio of Braun is 0.9 and the debt ratio of Kemp is 1.0. Based on this information, an investor can conclude:

A) Kemp finances a relatively lower portion of its assets with liabilities than Braun.
B) Kemp has less financial leverage.
C) Braun has higher financial leverage.
D) Kemp has the same dollar amount of total liabilities and total assets.
E) Braun has less equity per dollar of assets than Kemp.

170) Jennings Company has total assets of $431.0 million. Its total liabilities are $113.5 million. Its equity is $318 million. Calculate the debt ratio. (Round your answer to 1 decimal place.)

A) 37.8%.
B) 13.7%.
C) 35.7%.
D) 26.3%.
E) 15.2%.

171) Jennings Company has total assets of $425 million. Its total liabilities are $110.5 million. Its equity is $314.5 million. Calculate the debt ratio.

A) 38%.
B) 13%.
C) 34%.
D) 26%.
E) 14%.

172) Sanders Company has total assets of $397.0 million. Its total liabilities are $106.1 million and its equity is $291 million. Calculate its debt ratio. (Round your answer to 1 decimal place.)

A) 36.5%.
B) 26.7%.
C) 27.4%.
D) 57.8%.
E) 37.1%.

173) Sanders Company has total assets of $385 million. Its total liabilities are $100.1 million and its equity is $284.9 million. Calculate its debt ratio.

A) 35%.
B) 26%.
C) 38%.
D) 28%.
E) 58%.

174) Which of the following statements about the debt ratio is false?

A) It a measure of the risk associated with liabilities.
B) A relatively low ratio signifies lower risk.
C) The ratio is computed by dividing total liabilities by total assets.
D) Higher financial leverage means greater risk.
E) The ratio is computed by dividing total equity by total liabilities.

175) At the end of the current year, James Company reported total liabilities of $312,000 and total equity of $112,000. The company's debt ratio was:

A) 279%.
B) 35.9%.
C) 73.6%.
D) 3.79%.
E) $424,000

176) At the end of the current year, James Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio was:

A) 300%.
B) 33%.
C) 75%.
D) 67%.
E) $400,000.

177) At the beginning of the current year, Snell Company total assets were $266,000 and its total liabilities were $183,200. During the year, the company reported total revenues of $111,000, total expenses of $85,000 and dividends of $14,000. There were no other changes in equity during the year and total assets at the end of the year were $278,000. The company's debt ratio at the end of the current year is:

A) 68.9%.
B) 65.9%.
C) 34.1%.
D) 51.8%.
E) 145.00%.

178) At the beginning of the current year, Snell Company total assets were $248,000 and its total liabilities were $174,200. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in equity during the year and total assets at the end of the year were $260,000. The company’s debt ratio at the end of the current year is:

A) 70%.
B) 67%.
C) 32%.
D) 48%.
E) 142%.

179) The process of transferring journal entry information to the ledger is called:

A) Double-entry accounting.
B) Posting.
C) Balancing an account.
D) Journalizing.
E) Not required unless debits do not equal credits.

180) When posting journal entries to the ledger, the identification numbers of the individual ledger accounts are entered in the:

A) Account balance column.
B) Debit column.
C) Posting reference (PR) column.
D) Credit column.
E) Description column.

181) A complete record of each transaction in one place is called a(n):

A) Account balance.
B) Ledger.
C) Journal.
D) Trial balance.
E) Cash account.

182) Which of the following is not recorded in a general journal?

A) The transaction date.
B) The names of the accounts involved.
C) The amount of each debit and credit.
D) An explanation of the transaction.
E) The ending balance of each account.

183) The balance column in a ledger account is:

A) An account entered on the balance sheet.
B) A column for showing the balance of the account after each entry is recorded.
C) Another name for the dividends account.
D) An account used to record the transfers of assets from a business to its stockholders.
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

184) Slam Supplies pays a cash dividend to its owner, Joe Slam. The general journal entry made by Slam Supplies will include a:

A) Debit to Cash.
B) Debit to Dividends.
C) Credit to Dividends.
D) Credit to Revenue.
E) Debit to Common Stock.

185) A complete record of each transaction in one place from which transaction amounts are posted to the ledger is a(n):

A) Account.
B) Trial balance.
C) Journal.
D) T-account.
E) Balance column account.

186) Centurion Company had the following accounts and balances at December 31:

Using the information in the table, calculate the company's reported net income for the period.

A) $1,240.
B) $4,210.
C) $4,780.
D) $11,240.
E) $5,990.

187) Centurion Company had the following accounts and balances at December 31:

Using the information in the table, calculate the company’s reported net income for the period.

A) $1,100.
B) $4,000.
C) $8,500
D) $10,400.
E) $5,500.

188) Jackson Services had the following accounts and balances at December 31:

Using the information in the table, calculate the company’s reported net income for the period.

A) $16,800.
B) $15,800.
C) $15,300.
D) $10,300.
E) $23,200.

189) Cloud Solutions had the following accounts and balances as of December 31:

Using the information in the table, calculate the total assets reported on the balance sheet for the period.

A) $24,900.
B) $25,400.
C) $22,500.
D) $25,900.
E) $23,400.

190) At the end of its first month of operations, JMP Consulting reported Revenue of $42,500. It also reported Wages Expense, $6,000; Rent Expense, $5,550; and Utilities Expense, $1,110.

Calculate net income reported on the income statement at month-end.

A) $35,390
B) $29,840
C) $24,290
D) $5,550
E) $7,110

191) At the end of its first month of operations, JMP Consulting reported Revenue of $37,000. It also reported Wages Expense, $6,000; Rent Expense, $5,000; and Utilities Expense, $1,000.

Calculate net income reported on the income statement at month-end.

A) $30,000
B) $25,000
C) $20,000
D) $5,000
E) $7,000

192) Identify the accounts that would normally have balances in the debit column of a business's trial balance.

A) Assets and expenses.
B) Assets and revenues.
C) Revenues and expenses.
D) Liabilities and expenses.
E) Liabilities and dividends.

193) Identify the accounts that would normally have balances in the credit column of a business's trial balance.

A) Liabilities and expenses.
B) Assets and revenues.
C) Revenues and expenses.
D) Revenues and liabilities.
E) Dividends and liabilities.

194) Which of the following is not a step in the process to go from transactions and events to the financial statements?

A) Analyze each transaction and event using the accounting equation.
B) Identify each transaction and event from source documents.
C) Record relevant transactions and events in a journal.
D) Post journal information to ledger accounts.
E) Ensure all cash is distributed to stockholders at the end of each period.

195) A bookkeeper has debited an asset account for $6,100 and credited a liability account for $3,300. Which of the following would be an incorrect way to complete the recording of this transaction:

A) Credit another asset account for $2,800.
B) Credit another liability account for $2,800.
C) Credit a revenue account for $2,800.
D) Credit the common stock account for $2,800.
E) Debit another asset account for $2,800.

196) A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000. Which of the following would be an incorrect way to complete the recording of this transaction:

A) Credit another asset account for $1,500.
B) Credit another liability account for $1,500.
C) Credit a revenue account for $1,500.
D) Credit the common stock account for $1,500.
E) Debit another asset account for $1,500.

197) A list of all ledger accounts and their balances at a point in time is called a(n):

A) Account balance.
B) Trial balance.
C) Ledger.
D) Chart of accounts.
E) General Journal.

198) Identify the statement below that is true.

A) A trial balance can replace the need for financial statements.
B) If the debit and credit columns of a trial balance are equal, one can be assured that there were no recording errors during the period.
C) Another name for the trial balance is the chart of accounts.
D) The trial balance is a list of all ledger accounts and their balances at a point in time.
E) The trial balance is another name for the balance sheet as long as debits balance with credits.

199) While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

A) The Equipment account balance will be overstated.
B) The trial balance will not balance.
C) The error will overstate the debits listed in the journal.
D) The total debits in the trial balance will be larger than the total credits.
E) The error will overstate the credits listed in the journal.

200) A $17 credit to Sales was posted as a $170 credit. By what amount is the Sales account in error?

A) $170 understated.
B) $153 overstated.
C) $170 overstated.
D) $17 understated.
E) $153 understated.

201) A $15 credit to Sales was posted as a $150 credit. By what amount is the Sales account in error?

A) $150 understated.
B) $135 overstated.
C) $150 overstated.
D) $15 understated.
E) $135 understated.

202) At year-end, a trial balance showed total credits exceeding total debits by $6,000. This difference could have been caused by:

A) An error in the general journal where a $6,000 increase in Accounts Receivable was mistakenly recorded as an increase in Cash.
B) A net income of $6,000.
C) The balance of $60,000 in Accounts Payable being mistakenly entered in the trial balance as $6,000.
D) The balance of $6,760 in the Office Equipment account being mistakenly entered on the trial balance as a debit of $760.
E) An error in the general journal where a $6,000 increase in Accounts Payable was mistakenly recorded as a decrease in Accounts Payable.

203) At year-end, a trial balance showed total credits exceeding total debits by $4,950. This difference could have been caused by:

A) An error in the general journal where a $4,950 increase in Accounts Receivable was mistakenly recorded as an increase in Cash.
B) A net income of $4,950.
C) The balance of $49,500 in Accounts Payable being mistakenly entered in the trial balance as $4,950.
D) The balance of $5,500 in the Office Equipment account being mistakenly entered on the trial balance as a debit of $550.
E) An error in the general journal where a $4,950 increase in Accounts Payable was mistakenly recorded as a decrease in Accounts Payable.

204) Identify the item below that would cause the trial balance to not balance?

A) A $1,240 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash.
B) The purchase of office supplies on account for $3,255 was erroneously recorded in the journal as $2,355 debit to Office Supplies and $2,355 credit to Accounts Payable.
C) A $170 cash receipt for the performance of a service was not recorded at all.
D) The purchase of office equipment for $1,800 was posted as a debit to Office Supplies and a credit to Cash for $1,800.
E) The cash payment of a $990 account payable was posted as a debit to Accounts Payable and a debit to Cash for $990.

205) Identify the item below that would cause the trial balance to not balance?

A) A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash.
B) The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and $2,350 credit to Accounts Payable.
C) A $50 cash receipt for the performance of a service was not recorded at all.
D) The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200.
E) The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

206) The credit purchase of a new oven for $6,600 was posted to Kitchen Equipment as a $6,600 debit and to Accounts Payable as a $6,600 debit. What effect would this error have on the trial balance?

A) The total of the Debit column of the trial balance will exceed the total of the Credit column by $6,600.
B) The total of the Credit column of the trial balance will exceed the total of the Debit column by $6,600.
C) The total of the Debit column of the trial balance will exceed the total of the Credit column by $13,200.
D) The total of the Credit column of the trial balance will exceed the total of the Debit column by $13,200.
E) The total of the Debit column of the trial balance will equal the total of the Credit column.

207) The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

A) The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700.
B) The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700.
C) The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.
D) The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400.
E) The total of the Debit column of the trial balance will equal the total of the Credit column.

208) On a trial balance, if the Debit and Credit column totals are equal, then:

A) All transactions have been recorded correctly.
B) All entries from the journal have been posted to the ledger correctly.
C) All ledger account balances are correct.
D) Equal debits and credits have been recorded for transactions.
E) The balance sheet would be correct.

209) Identify which error will cause the trial balance to be out of balance.

A) A $440 cash salary payment posted as a $440 debit to Cash and a $440 credit to Salaries Expense.
B) A $340 cash receipt from a customer in payment of her account posted as a $340 debit to Cash and a $34 credit to Accounts Receivable.
C) A $195 cash receipt from a customer in payment of her account posted as a $195 debit to Cash and a $195 credit to Cash.
D) A $122 cash purchase of office supplies posted as a $122 debit to Office Equipment and a $122 credit to Cash.
E) An $2,000 prepayment from a customer for services to be rendered in the future was posted as an $2,000 debit to Unearned Revenue and an $2,000 credit to Cash.

210) Identify which error will cause the trial balance to be out of balance.

A) A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.
B) A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.
C) A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash.
D) A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.
E) An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash.

211) A $260 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

A) Supplies, understated $260; Fees Earned, overstated $260.
B) Supplies, understated $520; Fees Earned, overstated $260.
C) Supplies, overstated $260; Fees Earned, overstated $260.
D) Supplies, overstated $260; Fees Earned, understated $260.
E) Supplies, overstated $520; Fees Earned, understated $260.

212) A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

A) Supplies, understated $130; Fees Earned, overstated $130.
B) Supplies, understated $260; Fees Earned, overstated $130.
C) Supplies, overstated $130; Fees Earned, overstated $130.
D) Supplies, overstated $130; Fees Earned, understated $130.
E) Supplies, overstated $260; Fees Earned, understated $130.

213) Which of the following is not an asset account?

A) Accounts receivable.
B) Buildings.
C) Supplies expense.
D) Equipment.
E) Prepaid insurance.

214) Compare the list of accounts below and choose the list that contains only accounts that would be classified as asset accounts on the Chart of Accounts.

A) Accounts Payable; Cash; Supplies.
B) Unearned Revenue; Accounts Payable; Dividends.
C) Building; Prepaid Insurance; Supplies Expense.
D) Cash; Prepaid Insurance; Equipment.
E) Notes Payable; Cash; Dividends.

215) Which financial statement reports an organization's financial position at a single point in time?

A) Income statement.
B) Balance sheet.
C) Statement of retained earnings.
D) Cash flow statement.
E) Trial balance.

216) Jeff Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred:Jackson invested $33,000 cash in the business in exchange for common stock.Jackson contributed $108,000 of equipment to the business.The company paid $2,800 cash to rent office space for the month of March.The company received $24,000 cash for repair services provided during March.The company paid $7,000 for salaries for the month of March.The company provided $3,800 of services to customers on account.The company paid cash of $1,300 for utilities for the month of March.The company received $3,900 cash in advance from a customer for repair services to be provided in April.The company paid $5,800 in cash dividends.
Based on this information, net income for March would be:

A) $16,700.
B) $21,400.
C) $6,100.
D) $7,600.
E) $21,500.

217) Jeff Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred:Jackson invested $25,000 cash in the business in exchange for common stock.Jackson contributed $100,000 of equipment to the business.The company paid $2,000 cash to rent office space for the month of March.The company received $16,000 cash for repair services provided during March.The company paid $6,200 for salaries for the month of March.The company provided $3,000 of services to customers on account.The company paid cash of $500 for utilities for the month of March.The company received $3,100 cash in advance from a customer for repair services to be provided in April.The company paid $5,000 in cash dividends.Based on this information, net income for March would be:

A) $10,300.
B) $13,400.
C) $5,300.
D) $8,400.
E) $13,500.

218) Web Consulting received $3,000 from a customer for services provided. The general journal entry to record this transaction will be:

A) Debit Services Revenue, credit Accounts Receivable.
B) Debit Cash, credit Accounts Payable.
C) Debit Cash, credit Accounts Receivable.
D) Debit Cash, credit Services Revenue.
E) Debit Accounts Payable, credit Services Revenue.

219) Wiley Hill opened Hill's Repairs on March 1 of the current year. During March, the following transactions occurred:Wiley invested $32,000 cash in the business in exchange for common stock.Wiley contributed $107,000 of equipment to the business in exchange for common stock.The company paid $2,700 cash to rent office space for the month of March.The company received $23,000 cash for repair services provided during March.The company paid $6,900 for salaries for the month of March.The company provided $3,700 of services to customers on account.The company paid cash of $1,200 for utilities for the month of March.The company received $3,800 cash in advance from a customer for repair services to be provided in April.The company paid $5,700 in cash dividends.Based on this information, the total amount of stockholders’ equity reported on the balance sheet at the end of March would be:

A) $153,000.
B) $149,200.
C) $142,800.
D) $7,700.
E) $20,500.

220) Wiley Hill opened Hill's Repairs on March 1 of the current year. During March, the following transactions occurred:Wiley invested $25,000 cash in the business in exchange for common stock.Wiley contributed $100,000 of equipment to the business in exchange for common stock.The company paid $2,000 cash to rent office space for the month of March.The company received $16,000 cash for repair services provided during March.The company paid $6,200 for salaries for the month of March.The company provided $3,000 of services to customers on account.The company paid cash of $500 for utilities for the month of March.The company received $3,100 cash in advance from a customer for repair services to be provided in April.The company paid $5,000 in cash dividends.Based on this information, the total amount of stockholders’ equity reported on the balance sheet at the end of March would be:

A) $133,400.
B) $130,300.
C) $125,300.
D) $8,400.
E) $13,500.

Answer Key

Test name: John Wild Ch02 Algorithmic and Static

1) TRUE

2) FALSE

3) TRUE

4) TRUE

5) TRUE

6) FALSE

7) FALSE

8) FALSE

9) TRUE

10) TRUE

11) TRUE

12) TRUE

13) TRUE

14) TRUE

15) FALSE

16) TRUE

17) TRUE

18) TRUE

19) FALSE

20) TRUE

21) FALSE

22) TRUE

23) FALSE

24) FALSE

25) FALSE

26) FALSE

27) FALSE

28) TRUE

29) TRUE

30) FALSE

31) TRUE

32) TRUE

33) TRUE

34) TRUE

35) FALSE

36) FALSE

37) FALSE

38) TRUE

39) FALSE

40) FALSE

41) TRUE

42) TRUE

43) FALSE

44) FALSE

45) TRUE

46) FALSE

47) TRUE

48) FALSE

49) TRUE

50) TRUE

51) TRUE

52) FALSE

53) TRUE

54) FALSE

55) TRUE

56) FALSE

57) FALSE

58) FALSE

59) TRUE

60) TRUE

61) TRUE

62) TRUE

63) FALSE

64) TRUE

65) A

66) C

67) B

68) B

69) D

70) B

71) B

72) B

73) C

74) C

75) D

76) D

77) E

78) E

79) D

80) B

81) D

82) C

83) D

84) D

85) C

86) B

87) A

88) C

89) B

90) A

91) A

92) C

93) B

94) D

95) C

96) C

97) C

98) E

99) C

100) B

101) A

102) A

103) D

104) D

105) D

106) B

107) C

108) C

109) D

110) D

111) E

112) E

113) D

114) D

115) E

116) E

117) B

118) B

119) C

120) C

121) A

122) A

123) D

124) C

125) C

126) D

127) A

128) A

129) A

130) E

131) B

132) B

133) E

134) C

135) C

136) C

137) E

138) B

139) A

140) A

141) A

142) C

143) B

144) B

145) B

146) B

147) C

148) C

149) B

150) B

151) D

152) C

153) C

154) A

155) B

156) A

157) A

158) A

159) A

160) B

161) B

162) D

163) D

164) B

165) C

166) C

167) C

168) B

169) D

170) D

171) D

172) B

173) B

174) E

175) C

176) C

177) B

178) B

179) B

180) C

181) C

182) E

183) B

184) B

185) C

186) E

187) E

188) A

189) A

190) B

191) B

192) A

193) D

194) E

195) E

196) E

197) B

198) D

199) B

200) B

201) B

202) D

203) D

204) E

205) E

206) C

207) C

208) D

209) B

210) B

211) C

212) C

213) C

214) D

215) B

216) A

217) A

218) D

219) B

220) B