Examination Booklet Version 1. Bookkeeping

Examination Booklet Version 1 Bookkeeping

The Accounting Equation When you feel confident that you have mastered the material in The Accounting Equation, go to and submit your answers online EXAMINATION NUMBER: 98609900 For the quickest test results, go to http://wwwtakeexamsonlinecom http://wwwtakeexamsonlinecom Questions 1 20: Select the one best answer to each question 1 Which of the following best describes an asset? A Anything of value owned by the business B Always equal to a liability C Listed on the right-hand side of a balance sheet D Something that a business owes 2 Which of the following best describes a liability? A Anything of value owned by the business B Something that a business owes C Listed on the left-hand side of a balance sheet D Always equal to an asset Examination 1

3 Which of the following best describes owner s equity? A Equal to the business liabilities less the business assets B The owner s interest or worth in the business C What the owner owes the business D What the business owes 4 All of the following describe a balance sheet except which one? A The balance sheet reflects the results of multiple transactions B The balance sheet contains assets, liabilities, and owner s equity sections C The balance sheet is a picture of a business in financial terms D The balance sheet contains only assets and liabilities sections Questions 5 10: For the Blue Top Taxi Company, owned by Tom Cotton, classify each of the following account descriptions in questions 5 10 by choosing the one best answer EXAMPLE: Has $630 in cash A Asset C Both B Liability D Neither 5 Owes First National Bank $350 (Accounts Payable) A Asset C Both B Liability D Neither 6 Owns taxi (automobile) worth $1,315 A Asset C Both B Liability D Neither 7 Supplies (on hand) worth $20 A Asset C Both B Liability D Neither 8 Owes Sam s Garage $50 (Accounts Payable) A Asset C Both B Liability D Neither 9 Owns equipment worth $35 A Asset C Both B Liability D Neither 2 The Accounting Equation

10 Owes Ace Auto Company $500 (Accounts Payable) A Asset C Both B Liability D Neither Questions 11 13: Using the seven account descriptions above for the Blue Top Taxi Company, determine this company s owner s equity (Don t forget to include in your calculation the $630 in cash from the EXAMPLE) Then answer questions 11 13 11 What is the amount of assets for Blue Top Taxi Company? A $900 C $2,000 B $1,100 D $2,900 12 What is the amount of liabilities for Blue Top Taxi Company? A $900 C $2,000 B $1,100 D $2,900 13 What is the amount of owner s equity for Tom Cotton in the Blue Top Taxi Company? A $900 C $2,000 B $1,100 D $2,900 Questions 14 20: Now you re ready to prepare your first balance sheet for the Blue Top Taxi Company Date the balance sheet June 1, to properly present the information from questions 5 10 Prepare your balance sheet on the form provided below Then answer questions 14 20 The Accounting Equation 3

14 Which of the following shows how the heading of the balance sheet should appear? A Blue Top Taxi Company C Blue Top Taxi Company Balance Sheet June 1, 31, Balance Sheet B Tom Cotton, Owner D Blue Top Taxi Company Balance Sheet Balance Sheet June 1, June 1, 15 The left-hand side of the balance sheet should include entries for A both the assets and the liabilities B only the assets C both the assets and the owner s equity D only the owner s equity 16 The right-hand side of the balance sheet should include entries for A only the liabilities C both the assets and liabilities B both the liabilities and the owner s equity D only the owner s equity 17 Which of the following shows how the descriptive entry under owner s equity should appear? A Tom Cotton, Owner C Tom Cotton, Capital B Blue Top Taxi Company D Ace Auto Company 18 A single ruled line should be drawn on the column line above the amount for all of the following except which one? A Total Assets B Total Liabilities C Total Liabilities and Owner s Equity D Owner s Equity 19 A double-ruled line should be drawn under the amount for A only total assets B both total assets and total liabilities and owner s equity C both total assets and total liabilities D only total liabilities and owner s equity 20 The owner s equity section of the balance sheet for the Blue Top Taxi Company shows that A the Blue Top Taxi Company owes more than it owns B Tom Cotton has an interest in the company C First National Bank is an owner of the company D Tom Cotton owes Sam s Garage 4 The Accounting Equation

The Books of Accounting When you feel confident that you have mastered the material in The Books of Accounting, go to and submit your answers online EXAMINATION NUMBER: 98610000 For the quickest test results, go to http://wwwtakeexamsonlinecom http://wwwtakeexamsonlinecom Questions 1 20: Select the one best answer to each question 1 Which of the following statements best describes journalizing transactions? A Journalizing occurs after posting to the ledger B Journalizing must be done daily C Journalizing is the process where events of business are recorded in the journal D Journalizing can t be completed until the ledger accounts have been opened 2 Which of the following describes the ledger? A The ledger is known as the book of original entry B The ledger contains the accounts of the business, categorized by account classification C The ledger will determine the accuracy of information recorded in the journal D The ledger contains a list of business transactions, arranged by date Examination 5

3 Opening a ledger account involves A recording the account title on the ledger page B recording the account title and account number on the ledger page C recording the account title, account number, and account balance on the ledger page D posting the debit amount, credit amount, and source explanation to the ledger page 4 The first and most important step in the posting procedure is A posting the amount B posting the date C posting the explanation D recording the posting reference information 5 Which of the following statements best describes a chart of accounts? A It can contain only 39 accounts B It assures the equality of debits and credits C It contains the beginning balance for each account in the ledger D It s a list of account titles in the order in which they can be found in the ledger 6 The source document should be written in the A Date column C Doc No column B Account Title column D Post Ref column Use the following information to answer questions 7 10 The following activity for J C Breneman Management Services took place on June 1, Record these transactions on the journal form provided on the next page Received $3,290 in cash from the owner as an investment (receipt no 1) Borrowed $900 cash from Inland Bank for business expenses (memo 1) Paid cash for supplies, $290 (check no 1) Paid cash for insurance, $1,000 (check no 2) Paid cash for equipment, $2,100 (memo 2) 6 The Books of Accounting

Journal Page J1 TITLE Doc No 7 The correct entry in the date column is for all the transactions is A June 1 C Jan 31 B Dec 31 D Dec 1 8 The entries for the debit account titles in the Account Title column are written A about one-half inch away from the left side B in pencil so they may be changed later C at the far left side D about one inch away from the left side 9 The amounts that increase the Cash account are entered in A the Debit column B the Credit column C both Debit and Credit columns D either Debits or Credit columns The Books of Accounting 7

10 The totals of the entries in the Debit and Credit columns are A 12,34500 in the Debit and 8,22000 in the Credit columns B 7,58000 in both the Debit and Credit columns C 8,22000 in the Debit and 6,29000 in the Credit columns D 6,290 in both the Debit and Credit columns Use the following information to answer questions 11 20 Using the form below, prepare a chart of accounts for J C Breneman Management Services Then post the journal entries from the general journal on page 7 to the ledger accounts provided on the following pages J C BRENEMAN MANAGEMENT SERVICES CHART OF S Division Division Division 1 2 3 Asset Accounts 11-19 Liability Accounts 21-29 Owner's Equity Accounts 31-39 1 ASSETS 2 LIABILITIE S 3 OWNER'S EQUITY C as h NO 11 8 The Books of Accounting

The Books of Accounting 9 CCOUNT A s upplie S s upplie S s upplie S s upplie S s Supplie NO CCOUNT A 2 12 12 12 12 1 ATE D M TE I R P T EBI D E AT D M TE I R P T CREDI CCOUNT A e Insuranc repaid P e Insuranc repaid P e Insuranc repaid P e Insuranc repaid P e Insuranc Prepaid NO CCOUNT A 3 13 13 13 13 1 ATE D M TE I R P T EBI D E AT D M TE I R P T CREDI CCOUNT A t auipmen E t auipmen E t auipmen E t auipmen E t Eauipmen NO CCOUNT A 4 14 14 14 14 1 ATE D M TE I R P T EBI D E AT D M TE I R P T CREDI

A CCOUNT A /P Inland Ban k NO 21 J C Breneman, Capit a J l NO 31 31 11 What is the first account number used in the Breneman Management Service Chart of Accounts? A 1 C 11 B 21 D 10 12 What is the first account number used in the liabilities division? A 20 C 2 B 21 D 02 13 What is the account title used for owner s equity? A J C Breneman, Capital B J C Breneman, Owner C Breneman Management Service, Capital D Capital 10 The Books of Accounting

14 The account number 13 tells you that the account A is the 13th account in the ledger B is the first account in the third division C is the third account in the first division D was posted on the 13th day of the month 15 The correct entry in the date column of each ledger account for the Breneman Management Service entries is A Dec 31 C June 1 B Jan 31 D Dec 1 16 The Item column of the ledger account for the opening first entry for the ledger accounts should contain the A word Cash C account title B words Opening Entry D word Balance 17 The Posting Reference entry in the ledger account for the Breneman Management Service entries is A J1 C 1 B J D 1J 18 The first step in posting either a debit or a credit entry from the journal to the ledger is to transfer the A amount C account number B explanation D date 19 After posting the entries from the journal, the Breneman Management Service Ledger should have at least one debit entry in how many accounts? A 4 C 6 B 5 D 9 20 After posting the entries from the journal, the Breneman Management Service Ledger should have at least one credit entry in how many accounts? A 2 C 4 B 3 D 5 The Books of Accounting 11

12 The Books of Accounting

Assets, Liabilities, and Owner s Equity When you feel confident that you have mastered the material in Assets, Liabilities, and Owner s Equity, go to and submit your answers online EXAMINATION NUMBER: 98610100 For the quickest test results, go to http://wwwtakeexamsonlinecom http://wwwtakeexamsonlinecom Questions 1 20: Select the one best answer to each question Use the following information to answer questions 1 3 Listed below are ledger account titles and account balances, as of 1, for the Platt Hardware Store Prepare a Chart of Accounts for the store using Exam Figure 1 Accounts Payable Bellhaven Bank $5,000 P Woodsley, Capital $5,25682 Cash $4,05682 Prepaid Insurance $500 Accounts Payable Taylor Investments $3,700 Equipment Store $4,500 Equipment Office $4,400 Supplies $500 Examination 13

Division 1 Division 2 Division 3 PLATT HARDWARE STORE CHART OF S Asset Accounts Liability Accounts Owner's Equity Accounts 11 19 21 29 31 39 (1) (2) (3) ASSETS 11 12 13 14 15 LIABILITIES 21 22 23 24 OWNER'S EQUITY 31 Using your completed Chart of Accounts, choose the one correct answer 1 The assets division should contain what accounts? A 11 P Woodsley, Capital 12 Equipment Store 13 Equipment Office 14 Cash 15 Accounts Payable Taylor Investments B 11 Accounts Payable Bellhaven Bank 12 Equipment Store 13 Equipment Office 14 P Woodsley, Capital 15 Cash C 11 Cash 12 Equipment Store 13 Equipment Office 14 Prepaid Insurance 15 Accounts Payable Taylor Investments D 11 Cash 12 Prepaid Insurance 13 Equipment Store 14 Equipment Office 15 Supplies EXAM FIGURE 1 14 Assets, Liabilities, and Owner s Equity

2 The liabilities division should contain what accounts? A 21 Accounts Payable Bellhaven Bank 22 P Woodsley Capital B 21 Accounts Payable Bellhaven Bank 22 Accounts Payable Taylor Investments C 21 22 D 21 Accounts Payable Bellhaven Bank 22 Merchant s Bank 3 The owner s equity division should contain what account(s)? A 31 P Woodsley Capital B 31 P Woodsley Capital 32 Merchant s Bank C 31 Merchant s Bank 32 P Woodsley Capital D 31 32 Use the following information to answer questions 4 11 Analyze and prepare journal entries for the following transactions on the form provided in Exam Figure 2 Pencil-foot the debit and credit columns (A) 5/1 Purchased a new calculator for the office for $690 on account from J C Hollings, Inc, memo 3 (B) 5/2 Purchased $3,500 of equipment for the store on account from Craft Bank, memo 4 (C) 5/4 Paid cash, $4292, for supplies, check 4 (D) 5/5 Paid cash, $1,000, to Bellhaven Bank for amount owed on account, (check 5) 4 You record the debit entry for transaction (A) 5/1 in the journal as Date Description Debit Credit A 1 Equipment Office 69000 B 1 Equipment Office 69000 C 1 Calculator 69000 D 1 A/P J C Hollings, Inc 69000 Assets, Liabilities, and Owner s Equity 15

5 You record the credit entry for transaction (A) 5/1 in the journal as Date Description Debit Credit A 31 J C Hollings, Inc 69000 B 1 J C Hollings, Inc 69000 C 1 A/P J C Hollings, Inc 69000 D 1 Creditor 69000 JOURNAL PAGE J1 TITLE DOC N O EXAM FIGURE 2 6 You record the debit entry for transaction (B) 5/2 in the journal as Date Description Debit Credit A 2 A/P Craft Bank 3,50000 B 2 A/P Craft Bank 3,50000 C 2 Equipment Store 3,50000 D 2 Merchandise 3,50000 16 Assets, Liabilities, and Owner s Equity

7 You record the credit entry for transaction (B) 5/2 in the journal as Date Description Debit Credit A 2 A/P Craft Bank 3,50000 B 2 A/P Craft Bank 3,50000 C 2 Merchandise 3,50000 D 2 Equipment Store 3,50000 8 The account titles for transaction (C) 5/4 should appear in the Account Title column of the journal entry as A Supplies Cash B Equipment Store P Woodsley Capital C Cash Equipment Store D P Woodsley, Capital Cash 9 The account titles for transaction (D) 5/5 should appear in the Account Title column of the journal entry as A Merchant s Bank Equipment Store B Cash Equipment Store C A/P Bellhaven Bank Cash D Inventory Merchandise P Woodsley Capital 10 Assuming that you re recording the transactions on the first page of the journal, the page entry at the top right side of the journal should be A One B J C J1 D 2 11 Posting references on the journal should be A made when journalizing B entered when the journal is totaled C entered when posting to the ledger D entered in alphabetical order Assets, Liabilities, and Owner s Equity 17

Use the following information to answer questions 12 20 First, add Accounts Payable J C Hollings and Accounts Payable Craft Bank from the transactions prepared in Exam Figure 2 to the chart of accounts in Exam Figure 1 Next, open all ledger accounts using the form in Exam Figure 3 Then, post the journal entries from Exam Figure 2 to the ledger accounts and balance each ledger account Be sure to post the balance of each account (from page 13 of the exam) before you post the transactions you just journalized 12 After posting the journal entries to the ledger, what is the balance of the Cash account? A Debit $4,05682 C Credit $1,04292 B Credit $3,01390 D Debit $3,01390 13 After posting the journal entries to the ledger, what is the balance of the Equipment Store account? A Debit $4,500 C Debit $8,000 B Credit $1,500 D Credit $4,500 14 On 3, what is the balance of the Equipment Office account? A Debit $5,090 C Debit $4,400 B Debit $690 D Credit $5,090 15 What is the balance of the Accounts Payable Bellhaven Bank account? A Debit $1,000 C Credit $5,000 B Debit $4,000 D Credit $4,000 16 After posting the journal entries to the ledger, what is the balance of the Supplies account? A Debit $500 C 0 B Debit $54292 D Credit $54292 17 After posting the journal entries to the ledger, what is the balance of the Accounts Payable Craft Bank account? A 0 C Debit $3,500 B Credit $3,500 D Credit 0 18 After posting the journal entries to the ledger, the opening balance of the P Woodsley Capital account was A increased C unchanged B decreased D deleted 18 Assets, Liabilities, and Owner s Equity

19 What entry do you make in the Post Ref column of the ledger to show that you posted the transactions from the journal? A 1 C Leave it blank B J1 D 11 20 Asset accounts are increased by A entries to the debit side of the account B crediting a liability account C entries to the right side of the account D adding a credit entry to the account s normal balance GENERAL LEDGER A CCOUNT NO 2 0 2 0 A CCOUNT NO 2 0 EXAM FIGURE 3 Assets, Liabilities, and Owner s Equity 19

GENERAL LEDGER A CCOUNT NO 2 0 2 0 A CCOUNT NO 2 0 A CCOUNT NO 2 0 A CCOUNT NO 2 0 EXAM FIGURE 3 Continued 20 Assets, Liabilities, and Owner s Equity

GENERAL LEDGER A CCOUNT NO 2 0 2 0 A CCOUNT NO 2 0 A CCOUNT NO 2 0 A CCOUNT NO 2 0 EXAM FIGURE 3 Continued Assets, Liabilities, and Owner s Equity 21

22 Assets, Liabilities, and Owner s Equity

Revenue, Expenses, and Trial Balance When you feel confident that you have mastered the material in Revenue, Expenses, and Trial Balance, go to and submit your answers online EXAMINATION NUMBER: 98610200 For the quickest test results, go to http://wwwtakeexamsonlinecom http://wwwtakeexamsonlinecom Questions 1 20: Select the one best answer to each question We based questions 1 8 on the following material and on the information you prepared for the Platt Hardware Store from the examination in Assets, Liabilities, and Owner s Equity Analyze the following transactions Determine the accounts, classifications, and changes involved in the transaction, as shown in the following example Paid $2000 in cash for office cleaning Account Classification Increase Decrease Debit Off Clean Expense Credit Cash Asset Examination 23

(A) 5/8 Paid telephone bill of $15432 with cash (check 106) Account Classification Increase Decrease Debit Credit (B) 5/9 Paid $1500 in cash for office cleaning (check 107) Account Classification Increase Decrease Debit Credit (C) 5/10 Received cash for weekly Fees Earned of $1,53294 (tape 1) Account Classification Increase Decrease Debit Credit (D) 5/11 Made $50000 payment to Bellhaven Bank, (check 108) Account Classification Increase Decrease Debit Credit (E) 5/14 Paid cash of $1,00000 for rent for month of (check 109) Account Classification Increase Decrease Debit Credit (F) 5/15 Received cash of $1,38503 for weekly Fees Earned (tape 2) Account Classification Increase Decrease Debit Credit (G) 5/16 Paid $1593 in cash for auto repairs (check 110) Account Classification Increase Decrease Debit Credit (H) 5/17 Paid $43000 cash to owner for personal use (check 111) Account Classification Increase Decrease Debit Credit 24 Revenue, Expenses, and Trial Balance

(I) 5/18 Paid cash of $10000 for cleaning the office (check 112) Account Classification Increase Decrease Debit Credit (J) 5/23 Paid $25300 cash to the Daily News newspaper for advertising (check 113) Account Classification Increase Decrease Debit Credit 1 In transaction (A) on 5/8, the Cash account is an A asset account, which increases B expense account, which decreases C expense account, which increases D asset account, which decreases 2 In transaction (C) on 5/10, the Fees Earned account is a(n) A expense account, which increases B revenue account, which increases C revenue account, which decreases D asset account, which decreases 3 The A/P Bellhaven Bank account and the Cash account in transaction (D) on 5/11 A both increase B decrease and increase respectively C increase and decrease respectively D both decrease 4 In transaction (E) on 5/14, the account that will increase is the A Cash account, which is an asset account B Rent Expense account, which is an expense account C Rent Expense account, which is an asset account D Cash account, which is an expense account 5 The two accounts that change because of transaction (G) on 5/16 are A Auto Expense and Cash B Equipment and Cash C Auto Expense and Auto Repair D Equipment and Owner s Equity Revenue, Expenses, and Trial Balance 25

6 In transaction (H) on 5/17, the account that increases is the A Cash account C Payroll Expense account B P Woodsley, Drawing account D Employee Asset account 7 You would classify the account debited in transaction (J) on 5/23, as a(n) A asset account C revenue account B liability account D expense account 8 The Advertising Expense account and the Cash account in transaction (J) on 5/23 A both increase B both decrease C increase and decrease respectively D decrease and increase respectively We based questions 9 15 on the following information Journalize the transactions listed on pages 24 and 25 using the journal on page 27 and assign the proper account numbers to the new accounts In answering questions 9 15, use only transactions (A) (J) Don t use the example given before (A) on page 23 Open new ledger sheets for the new accounts on pages 28 33, and post the journal entries to the general ledger Balance and foot the ledger accounts The balances in these ledger accounts were brought forward from the exam in Assets, Liabilities, and Owner s Equity PLATT HARDWARE STORE CHART OF S Division 1 Division 2 Division 3 Division 4 Division 5 Asset Accounts Liabilities Owner s Equity Accounts Revenue Accounts Expense Accounts 11 19 21 29 31 39 41 49 51 59 (1) (2) ASSETS 11 Cash 12 Prepaid Insurance 13 Equipment Store 14 Equipment Office 15 Supplies LIABILITIES 21 A/P Bellhaven Bank 22 A/P Taylor Investments 23 A/P J C Holling s, Inc 24 A/P Craft Bank (4) (5) REVENUE 41 EXPENSES 51 52 53 54 55 (3) OWNER'S EQUITY 31 P Woodsley, Capital 32 26 Revenue, Expenses, and Trial Balance

Journal PAGE Account Title Doc N o P R 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 34 34 35 35 Revenue, Expenses, and Trial Balance 27

C ash NO 11 PR PR 5 Balance J1 3 0 1 3 90 P repaid Insurance CCOUNT NO A 12 PR PR 5 Balance J1 5 0 0 00 E quipment Store CCOUNT NO A 13 PR PR 5 Balance J1 8 0 0 0 00 28 Revenue, Expenses, and Trial Balance

E quipment Offic e CCOUNT NO A 14 PR PR 5 Balance J1 5 0 9 0 00 S upplies CCOUNT NO A 15 PR PR 5 Balance J1 5 4 2 92 A /P Bellhaven Bank CCOUNT NO A 21 PR 20 PR 5 Balance J1 4 0 0 0 00 Revenue, Expenses, and Trial Balance 29

A /P Taylor Investments CCOUNT NO A 22 PR PR 5 Balance J1 3 7 0 0 00 A /P J C Holling's Inc NO 23 PR PR 5 Balance J1 6 9 0 00 A /P Craft Bank CCOUNT NO A 24 PR PR 5 Balance J1 3 5 0 0 00 30 Revenue, Expenses, and Trial Balance

P Woodsley, Capital CCOUNT NO A 31 PR PR 5 Balance 5 2 5 6 82 A CCOUNT NO PR PR A CCOUNT NO PR PR Revenue, Expenses, and Trial Balance 31

A CCOUNT NO PR PR A CCOUNT NO PR PR A CCOUNT NO PR PR 32 Revenue, Expenses, and Trial Balance

A CCOUNT NO PR PR A CCOUNT NO PR PR Now answer questions 9 15 9 What is the balance in the Cash account after you made all the entries? A $3,30930 C $3,46362 B $3,36362 D $3,64362 10 What is the balance in the Rent Expense account? A $10000 C $1,00000 B $25300 D $1,50000 11 The A/P Bellhaven Bank account has a debit entry for $50000 What is the account balance? A $3,50000 debit C $4,50000 credit B $3,50000 credit D $5,50000 debit 12 Which of the following statements is true about the Advertising Expense account? A It has a single $25300 credit entry C It has a $25300 debit balance B It has a $25300 credit balance D Its account balance is zero Revenue, Expenses, and Trial Balance 33

13 The P Woodsley, Capital account balance A increased $1,000 during the month of B has a $5,26582 debit balance C has a $4,25682 credit balance D didn t change during the month of and has a $5,25682 credit balance 14 What were the postings to the Fees Earned account during? A A credit of $1,53294 and a debit of $1,38503 B A credit of $1,53294 and a credit of $1,38503 C A debit of $1,53294 and a credit of $1,38503 D A debit of $1,53294 and a debit of $1,38503 15 The balance in the Office Cleaning Expense account is A $11500 credit C $11500 debit B $8500 debit D $1500 credit 34 Revenue, Expenses, and Trial Balance

We based questions 16 20 on the trial balance, which you ll prepare using the form on the previous page First, prepare a trial balance as of 31, Then answer questions 16 20 16 Which of the following is the correct heading for the trial balance? A Platt Hardware Store 31, Trial Balance B Trial Balance 31, Platt Hardware Store C Platt Hardware Store Trial Balance For the period ending 31, D Platt Hardware Store Trial Balance As of 31, 17 Which of the following best describes the trial balance? A It s a list of all the debit balances and credit balances in the ledger B It has the same information in it as the balance sheet C It s prepared after the balance sheet D It s the final statement prepared before closing the books 18 What is the balance of both the debit and the credit columns in the trial balance? A $19,56479 B $19,55479 C $18,35782 D $18,55282 19 The accounts listed on the trial balance with a credit balance include A liability, owner s capital, and revenue accounts B asset, liability, and owner s capital accounts C owner s capital, revenue, and expense accounts D liability, owner s capital, and expense accounts 20 Revenue and expense accounts are considered temporary accounts because they A are used only once in a while B are closed out periodically C represent the asset and liability accounts D are used when preparing the balance sheet Revenue, Expenses, and Trial Balance 35

36 Revenue, Expenses, and Trial Balance

Financial Reports When you feel confident that you have mastered the material in Financial Reports, go to and submit your answers online EXAMINATION NUMBER: 98610300 For the quickest test results, go to http://wwwtakeexamsonlinecom http://wwwtakeexamsonlinecom Questions 1 20: Select the one best answer to each question Before you answer any questions, prepare the following for the Platt Hardware Store using the forms provided I Worksheet (Use the information from the trial balance in Exam Figure 2 Write the worksheet information on the form in Exam Figure 1) You ll need the following adjustment information: a P Woodsley counted the supplies on 31 and found that the supplies on hand were $34292 b On 31, Mr Woodsley checked the insurance records and found that the value of insurance coverage remaining was $40000 II Income statement (Use the form in Exam Figure 3) III Balance sheet (Use the form in Exam Figure 4) IV Journalize adjusting and closing entries (Use the form in Exam Figure 5) V Post the adjusting and closing entries (Use the forms in Exam Figure 6) Examination VI Prepare a post closing trial balance (Use the form in Exam Figure 7) 37

Acct No Account EXAM FIGURE 1 Title Trial Balance Adjustment s Income Statemen t Balance Shee t 1 2 3 4 5 6 7 8 Debit Credi t Debi t Credi t Debi t Credi t Debi t Credi t 38 Financial Reports

Acct No Platt Hardware Store Trial Balance As of 31, Account Title Debit 11 Cash $ 3,46362 12 Prepaid Insuranc e $ 50000 Credit 13 Equipment Stor e $ 8,00000 14 Equipment Offic e $ 5,09000 15 Supplies $ 54292 21 A/P Bellhaven Bank $ 3,50000 22 A/P Taylor Investment s $ 3,70000 23 A/P J C Holling s $ 69000 24 A/P Craft Bank $ 3,50000 31 P Woodsley, Capital $ 5,25682 32 P Woodsley, Drawing $ 43000 41 Fees Earned $ 2,91797 51 Telephone Expense $ 15432 52 Office Cleaning Expense $ 11500 53 Rent Expense $ 1,00000 54 Auto Expense $ 1593 55 Advertising Expense $ 25300 Total $ 19,56479 $ 19,56479 EXAM FIGURE 2 Financial Reports 39

EXAM FIGURE 3 Income Statement Form 40 Financial Reports

Financial Reports 41 EXAM FIGURE 4 Balance Sheet Form

JOURNAL PAGE TITLE D OC N O P R 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 EXAM FIGURE 5 Adjusting and Closing Journal Entries 42 Financial Reports

A 11 C ash CCOUNT NO PR PR 5 J1 3 0 1 3 90 8 J2 1 5 4 32 10 J2 1 5 3 2 94 9 J2 1 5 00 15 J2 1 3 8 5 03 11 J2 5 0 0 00 5 9 3 1 87 14 J2 1 0 0 0 00 $ 3,46362 16 J2 1 5 93 17 J2 4 3 0 00 18 J2 1 0 0 00 23 J2 2 5 3 00 2 4 6 8 25 P repaid Insurance NO 12 PR 5 J1 5 0 0 00 PR E quipment Store NO 13 PR 5 J1 8 0 0 0 00 $8,00000 PR EXAM FIGURE 6 General Ledger Financial Reports 43

E quipment Offic e NO 14 PR 5 J1 5 0 9 0 00 $5,09000 PR PR S upplies CCOUNT NO 5 J1 5 4 2 92 PR A 15 A /P Bellhaven Bank CCOUNT NO PR PR A 21 11 J2 5 0 0 00 5 J1 4 0 0 0 00 $3,50000 A /P Taylor Investments CCOUNT NO PR PR A 22 5 J1 3 7 0 0 00 $3,70000 A CCOUNT A /P J C Holling's Inc NO 23 PR PR 5 J1 6 9 0 00 $69000 EXAM FIGURE 6 Continued 44 Financial Reports

A /P Craft Bank NO 24 PR PR 5 J1 3 5 0 0 00 $3,50000 P Woodsley, Capital NO 31 PR PR 5 J1 5 2 5 6 82 P Woodsley, Drawing NO 32 PR 17 J2 4 3 0 00 PR A CCOUNT NO PR PR EXAM FIGURE 6 Continued Financial Reports 45

F ees Earned NO 41 PR PR 10 1 5 3 2 94 15 1 3 8 5 03 2 9 1 7 97 T elephone Expense CCOUNT NO PR 5 J3 1 5 4 32 PR A 51 O ffice Cleaning Expense NO 52 PR 9 J2 1 5 00 18 J2 1 0 0 00 1 1 5 00 PR R ent Expense CCOUNT NO PR 14 1 0 0 0 00 PR A 53 EXAM FIGURE 6 Continued 46 Financial Reports

A uto Repair Expense CCOUNT NO PR 16 1 5 93 PR A 54 A dvertising Expense CCOUNT NO PR 23 J2 2 5 3 00 PR A 55 A CCOUNT NO PR PR A CCOUNT NO PR PR EXAM FIGURE 6 Continued Financial Reports 47

Acct No EXAM FIGURE 7 Post Closing Trial Balance 48 Financial Reports

1 The heading of the worksheet should appear as A Platt Hardware Store 31, Worksheet B Worksheet Platt Hardware Store For the period ending 31, C Platt Hardware Store Worksheet For the period ending 31, D Platt Hardware Store Worksheet 31, 2 What is the total liabilities and owner s equity in the balance sheet you prepared in Exam Figure 4? A $5,90654 C $17,29654 B $11,39000 D $18,37626 3 What is the total of the expenses in the income statement you prepared in Exam Figure 3? A $1,07972 C $2,79197 B $1,83825 D $2,91797 4 If Prepaid Insurance has a debit balance of $500 in the trial balance and the value of insurance coverage remaining is $400, what would be the amount of the adjustment? A $100 C $500 B $400 D $900 5 Which of the following best describes a worksheet? A It s a formal report used to summarize the journal B It reports the financial position of a business on a monthly basis C It s used to gather information to be used in preparing financial statements D It s an eight-column report that reports only the position of owner s equity 6 What adjusting entry did you make in the journal in Exam Figure 5 for the Supplies Expense? A Credit Supplies Expense $54292 and debit Supplies $54292 B Debit Supplies Expense $34292 and credit Supplies $34292 C Credit Supplies Expense $200 and debit Supplies $200 D Debit Supplies Expense $200 and credit Supplies $200 Financial Reports 49

7 Which of the following is the correct way to determine the net profit, and what is the net profit? A Subtract the total expenses from revenue; the net profit is $2,35850 B Add the total expenses to the revenue; the net profit is $2,35850 C Subtract the total expenses from revenue; the net profit is $1,07972 D Add the total expenses to the revenue; the net profit is $1,074090 8 What is the net profit you reported on the income statement in Exam Figure 3? A $2,91797 C $1,70972 B $1,83825 D $1,07972 9 The assets section of the balance sheet should include A Cash C Cash Equipment Store Equipment Office Equipment Office Equipment Store Prepaid Insurance P Woodsley, Capital Insurance Expense Net Profit B Cash D Cash Equipment Store Prepaid Insurance Equipment Office Equipment Store Supplies Expense Equipment Office P Woodsley, Capital Supplies 10 The owner s equity section of the balance sheet should appear as A Owner s Equity C Owner s Equity P Woodsley, Capital Woodsley, Capital Plus Net Profit Less Drawing Less P Woodsley, Drawing Plus Net Profit Total Owner s Equity Total Owner s Equity B Owner s Equity D Owner s Equity P Woodsley, Capital Less Drawing Less Drawing Plus Net Profit Net Profit Total Owner s Equity 11 Which of the following best describes a closing entry? A It s an entry made in the balance sheet to close out the assets B It s an entry made in the trial balance to show a final entry C It s an entry made in the general journal to close a temporary ledger account D It s an entry made in the general ledger to close a permanent ledger account 50 Financial Reports

12 What entry did you make to close the Fees Earned account? A A debit entry of $2,91797 to the Fees Earned account B A credit entry of $2,91797 to the Fees Earned account C A credit entry of $2,91797 to P Woodsley, Capital D A debit entry of $2,91797 to P Woodsley, Capital 13 What entry did you make to close all of the expense accounts? A A debit entry of $1,83825 to the Expense and Revenue Summary B A credit entry of $1,83825 to the Expense and Revenue Summary C A debit entry of $1,83825 to Sales D A credit entry of $1,83825 to Sales 14 The entry closing the Expense and Revenue Summary is a A debit of $1,07972 because there s net profit B debit of $1,07972 because there s a net loss C credit of $1,07972 because there s net profit D credit of $1,07972 because there s a net loss 15 You would transfer the net profit for a period to A an asset account C an owner s equity account B a liability account D to the general ledger 16 What will be the balance in the Expense and Revenue Summary on June 1,? A A credit of $1,07972 C A debit of $1,07972 B 0 D A credit of $1,83825 17 After you made the adjusting entry, what is the balance of the Supplies account? A $54292 debit balance C $34292 credit balance B $34292 debit balance D $200 credit balance 18 What is the balance of the Prepaid Insurance account after you made the adjusting entry? A $600 debit balance C $400 credit balance B $600 credit balance D $400 debit balance 19 What is the balance of the P Woodsley, Capital account as reported on the post closing trial balance? A $6,76654 C $5,25682 B $5,90654 D $4,60710 20 The total amount of the liability accounts reported on the post closing trial balance is A $11,39000 C $20,75772 B $17,29654 D $25,43600 Financial Reports 51