1. Ramirez Company received their first electric bill in the amount of $60 which
ID: 2435241 • Letter: 1
Question
1. Ramirez Company received their first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation? (Points: 3)Increase Liabilities (Accounts Payable) and decrease Owner's Equity (Utilities Expense)
Increase Liabilities (Accounts Receivable) and decrease Owner's Equity (Utilities Expense)
Decrease Assets (Cash) and decrease Liabilities (Accounts Payable)
Decrease Assets (Cash) and decrease Owner's Equity (Utilities Expense)
2. How does the collection of cash from a customer who was previously put on account affect the accounting equation? (Points: 3)
assets decrease; owner's equity decreases
assets increase; owner's equity increases
assets increase; assets decrease
assets increase; liabilities increase
3. Earning revenue (Points: 3)
increases assets, increases owner's equity.
increases assets, decreases owner's equity
increases one asset, decreases another asset
decreases assets, increases liabilities
4. Which of the following are guidelines for behaving ethically? I. Identify the consequences of a decision and its effect on others. II. Consider your obligations and responsibilities to those affected by the decision. III. Identify your decision based on personal standards of honesty and fairness. (Points: 3)
I and II.
II and III.
I and III.
I, II, and III.
5. Which of the following is not true of accounting principles? (Points: 3)
Financial accountants follow generally accepted accounting principles (GAAP).
Following GAAP allows accounting information users to compare one company to another.
A new accounting principle can be adopted with stockholders approval.
The Financial Accounting Standards Board (FASB) has primary responsibility for developing accounting principles.
Accounting principles develop from research, accepted accounting practices, and pronouncements of authoritative bodies.
6. Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared? (Points: 3)
I,OE, B
B, I, OE
OE, I, B
B,OE, I
7. How does the rendering of services on account affect the accounting equation? (Points: 3)
assets increase; owner's equity increases
assets decrease; owner's equity decrease
assets increase; owner's equity decreases
liabilities increase; owner's equity decreases
8. The debit side of an account (Points: 3)
depends on whether the account is an asset, liability or owner's equity
can be either side of the account depending on how the accountant set up the system
is the right side of the account
is the left side of the account
9. March 10 Accounts Payable 3,300 Cash 3,300 Paid creditors on account What effect does this journal have on the accounts? (Points: 3)
Decrease accounts payable, increase cash
Increase cash, decrease accounts payable
Increase accounts payable, increase cash
Decrease accounts payable, decrease cash
10. Which of the following is not a short-cut in finding errors on the trial balance? (Points: 3)
Determine the difference between debits and credits and look for the amount.
Determine the amount and change any account to make the trial balance correct.
Determine the difference between debits and credits, divide the amount by 2, and look for the amount.
Determine the difference between debits and credits, divide the amount by 9, if it divides evenly, look for a transposition or slide error.
11. All of the following occur with a double-entry accounting system except: (Points: 3)
The accounting equation remains in balance.
The sum of all debits is always equal to the sum of all credits in each journal entry.
Each business transaction will have only two entries.
Every transaction affects at least two accounts.
12. Cash was paid by Ari's Alarm Service to creditors on account. Which of the following entries for Ari's Alarm Service records this transaction? (Points: 3)
Cash, debit; Ari Fleish, Capital, credit
Accounts Payable, debit; Cash, credit
Accounts Receivable, debit; Cash, credit
Accounts Payable, debit; Account Receivable, credit
13. Which of the following describes the classification and normal balance of the fees earned account? (Points: 3)
asset, credit
liability, credit
owner's equity, debit
revenue, credit
14. A debit signifies a decrease in (Points: 3)
assets
expenses
drawing
revenues
15. Prior to the adjusting process, accrued revenue has (Points: 3)
been earned and cash received
been earned and not recorded as revenue
not been earned but recorded as revenue
not been recorded as revenue but cash has been received
16. Which account would normally not require an adjusting entry? (Points: 3)
Wages Expense
Accounts Receivable
Accumulated Depreciation
Smith, Capital
17. The net income reported on the income statement is $85,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $800. Net income, as corrected, is (Points: 3)
$84,200
$85,000
$82,800
$82,000
18. Which of the following is an example of an accrued expense? (Points: 3)
Salary owed but not yet paid
Fees received but not yet earned
Supplies on hand
A two-year premium paid on a fire insurance policy
19. The unearned rent account has a balance of $36,000. If $4,000 of the $36,000 is unearned at the end of the accounting period, the amount of the adjusting entry is (Points: 3)
$4,000
$40,000
$32,000
$36,000
20. The adjusting entry to record the depreciation of equipment for the fiscal period is (Points: 3)
debit Depreciation Expense; credit Equipment
debit Depreciation Expense; credit Accumulated Depreciation
debit Accumulated Depreciation; credit Depreciation Expense
debit Equipment; credit Depreciation Expense
21. Adjusting entries affect at least one (Points: 3)
income statement account and one balance sheet account
revenue and the drawing account
asset and one owner's equity account
revenue and one capital account
22. The owner's equity is (Points: 3)
added to assets and the two are equal to liabilities
added to liabilities and the two are equal to assets
subtracted from liabilities and the net amount is equal to assets
subtracted from owner's equity and the net amount is equal to net income
23. Which of the following account groups are all considered nominal accounts? (Points: 3)
Cash, Fees Earned, Unearned Revenues
Prepaid Expenses, Unearned Revenues, Fees Earned
Capital Account, Drawing Account, Income Summary
Drawing Account, Fees Earned, Rent Expense
24. Which of the following is not true about closing entries? (Points: 3)
There are four closing entries that update the owner's equity account.
After the second closing entry, the income summary account is equal to the net income or (loss) for the period.
All real accounts are closed at the end of the period.
By closing nominal accounts at the end of the period to zero, it is possible to isolate next period's information correctly.
25. On which financial statement will Income Summary be shown? (Points: 3)
Statement of Owner's Equity
Balance Sheet
Income Statement
No financial statement
26. The entry to close the appropriate insurance account at the end of the accounting period is (Points: 3)
debit Income Summary; credit Prepaid Insurance
debit Prepaid Insurance; credit Income Summary
debit Insurance Expense; credit Income Summary
debit Income Summary; credit Insurance Expense
27. A summary of selected ledger accounts appear below for Alberto's Plumbing Services for the 2009 calendar year end.
Alberto, Capital
31-Dec DEBIT 8,500
1-Jan CREDIT 6,500
31-Dec CREDIT 18,500
Alberto, Drawing
30-Jun DEBIT 3,500
31-Dec CREDIT 8,500
30-Nov DEBIT 5,000
Income Summary
31-Dec DEBIT 15,000
31-Dec CREDIT 33,500
31-Dec DEBIT 18,500
Net income for the period is (Points: 3)
$16,500
$33,500
$18,500
$15,000
28.
Please review the list of the following accounts and determine total assets:
Cash $6,030
Accounts Receivable 2,100
Prepaid Expenses 700
Equipment 13,700
Accumulated Depreciation $1,100
Accounts Payable 1,900
Notes Payable 4,200
Bob Steely, Capital 12,940
Bob Steely, Withdrawals 790
Fees Earned 8,750
Wages Expense 2,500
Rent Expense 1,960
Utilities Expense 775
Depreciation Expense 250
Miscellaneous Expense 85
(Points: 3)
$23,630
$15,330
$21,430
$22,530
29. The income statement is prepared from: (Points: 3)
the adjusted trial balance.
the income statement columns of the work sheet.
either the adjusted trial balance or the income statement columns of the work sheet.
both the adjusted trial balance and the income statement columns of the work sheet.
30. After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are $77,500 and $85,300, respectively. What is the amount of the net income or net loss for the period? (Points: 3)
$7,800 net income
$7,800 net loss
$85,300 net income
$77,500 net loss
31. Which of the items below would appear in the Income Statement columns of the work sheet? (Points: 3)
Equipment
Unearned Fees
Prepaid Expense
Net Loss
32. Net income appears on the work sheet in the (Points: 3)
debit column of the Balance Sheet columns
debit column of the Adjustments columns
debit column of the Income Statement columns
credit column of the Income Statement columns
33. The accounting cycle requires three trial balances be done. In what order should they be prepared? (Points: 3)
Post-closing, unadjusted, adjusted
Unadjusted, post-closing, adjusted
Unadjusted, adjusted, post-closing
Post-closing, adjusted, unadjusted
34. The following are steps in the accounting cycle. Of the following, which would be prepared last? (Points: 3)
An adjusted trial balance is prepared.
Transactions are posted to the ledger.
An unadjusted trial balance is prepared.
Adjusting entries are journalized and posted to the ledger.
35. Use the following worksheet to answer the following questions.
Based on the preceding trial balance, the entry to close expenses would be: (Points: 3)
Debit Wages Expense 63,000
Debit Rent Expense 18,000
Debit Depreciation Expense 15,000
Debit Income Summary 96,000
Debit Expenses 96,000
Credit Income Summary 96,000
Debit Wages Expense 63,000
Debit Rent Expense 18,000
Debit Depreciation Expense 15,000
Credit C. Finley, Drawing 96,000
Debit Income Summary 96,000
Credit Wages Expense 63,000
Credit Rent Expense 18,000
Credit Depreciation Expense 15,000
36. Under the perpetual inventory system, all purchases of merchandise are debited to the account entitled (Points: 3)
Merchandise Inventory
Cost of Merchandise Sold
Cost of Merchandise Available for Sale
Purchases
37. Discounts taken by a buyer because of early payment are recorded on the seller’s accounting records as (Points: 3)
Purchases discount
Sales discount
Trade discount
Early payment discount
38. In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is (Points: 3)
debit Cost of Merchandise Sold; credit Sales
debit Cost of Merchandise Sold; credit Merchandise Inventory
debit Merchandise Inventory; credit Cost of Merchandise Sold
debit Accounts Receivable; credit Merchandise Inventory
39. Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a (Points: 3)
credit to Sales Returns and Allowances
debit to Merchandise Inventory
credit to Merchandise Inventory
debit to Cost of Merchandise Sold
40. When comparing a retail business to a service business, the financial statement that changes the most is the (Points: 3)
Balance Sheet
Income Statement
Statement of Owner's Equity
Statement of Cash Flow
41. Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as (Points: 3)
selling expenses
general expenses
other expenses
administrative expenses
42. A company, using the periodic inventory system, has merchandise inventory costing $175 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is (Points: 3)
$970
$650
$300
$620
43. The inventory system employing accounting records that continuously disclose the amount of inventory is called (Points: 3)
Retail
Periodic
Physical
Perpetual
44. The inventory costing method that reflects the cost flow in the reverse order and will report the earliest costs in ending inventory is (Points: 3)
First in first out
Last in first out
Average cost
Specific identification
45. The inventory method that assigns the most recent costs to cost of goods sold is (Points: 3)
FIFO
LIFO
average
specific identification
46. When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory method is called (Points: 3)
first-in, last-out
last-in, first-out
first-in, first-out
average cost
47. The inventory method that considers the inventory to be composed of the units of merchandise acquired earliest is called (Points: 3)
first-in, first-out
last-in, first-out
average cost
retail method
48. Taking a physical count of inventory (Points: 3)
is not necessary when a periodic inventory system is used
is a detective control
has no internal control relevance
is not necessary when a perpetual inventory system is used
49. Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the (Points: 3)
customer's ledger
creditor's ledger
inventory ledger
merchandise inventory account
50. Net realizable value is calculated by (Points: 3)
Direct Costs of Disposal – Estimated Selling Price
Estimated Selling Price – Direct Costs of Disposal
Estimated Selling Price – Indirect Costs of Disposal
Actual Selling Price – Direct Costs of Disposal
51. Too much inventory on hand (Points: 3)
reduces solvency
increases the cost to safeguard the assets
increases the losses due to price declines
all of the above
52. If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold? (Points: 3)
Understated
Overstated
Only inventory is affected.
No change.
53. If the cost of an item of inventory is $50 and the current replacement cost is $57, the amount included in inventory according to the lower of cost or market is (Points: 3)
$7
$50
$57
$107
54. Damaged merchandise that can be sold only at prices below cost should be valued at (Points: 3)
net realizable value
LIFO
FIFO
Average
55. The following lots of a particular commodity were available for sale during the year:
The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the last-in, first-out method?
(Points: 3)
$655
$620
$690
$659
Explanation / Answer
1.
Electrcity bill received is an accured expenses, so accounts payable increase and owner's equity decreases.
Therefore, the correct option is - A.
Note: Post one at a time.
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