Accounting 2001 Midterm Exam For Review

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Transcription:

Accounting 2001 Midterm Exam For Review

PAGEl MULTIPLE CHOICE 1. Which of the following could not possibly be a closing entry? a. Debit Income Summary and credit Retained Earnings b. Debit Retained Earnings and credit Dividends c. Debit Retained Earnings and credit Income Summary <L Debit Income Summary and credit Dividends 2. Which of the following accounts probably would contain a larger dollar amount in the adjusted trial balance than in the trial balance? a. Prepaid Insurance b. Cash c. Unearned Revenue d. Accumulated Depreciation 3. The best definition of assets is the a. cash owned by the company. b. collection of resources belonging to the company and the claims on these resources. c. resources belonging to a company having future benefit to the company. d owners' investment in the business. 4. An overstatement ofbeginnjng inventory results in a. an overstatement of net income. b. no effect on the period's net income. c. an understatement of net income. d. a need to adjust purchases. 5. When a sale on credit takes place, a. liabilities will increase. b. assets will be unaffected c. one asset account will increase and another "Will decrease. d. a revenue account will increase. -( -

PAGE2 6. -i>ividends of a corj,oration are declared by its a. officers. b. board of directors. c. creditors. d. stockholders. 7. Which of the following events does not require a journal entry? a. Payment for a service performed previously b. Purchase of a one year insurance policy c. Performance of a service agreed to at a past date d Agreement to perform a service at a future date 8. The Unearned Fees account is classified as a(n) a. expense. b. asset. c. revenue. d. liability. 9. The entry to record a sale of $750 with terms of 2/10, n/30 would include a a. debit to Sales for $735. b. debit to Sales Discowtts for $15. c. credit to Accounts Receivable for $750. d credit to Sales for $750. 10. In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure? a LIFO b. A verage cost c. FIFO d. Cannot tell without more information -'1.--

PAGE3! 11. The separate entity concept requires that a. tax records be kept separate from financial reporting records. b. transa~ons that involve an exchange of value be kept separate from those that do not. c. a separate set of books be established for each segment of a business. d. the personal assets and liabilities of an owner not be shown on the business's fmancial statements. 12. A $20.000 machine is purchased by paying $5,000 cash and issuing a promissory note for the remainder. The journal entry should include a a. credit to Notes Payable. b. credit to Notes Receivable. c. credit to Machinery. d. debit to Cash. 13. The post-closing trial balance contains a. real accounts only. b. both real accounts and nominal accounts. c. neither real accounts nor nominal accounts. d. nominal accounts only. 14. When a magazine company receives advance payment for a subscription,. it a. debits Cash and credits Subscriptions Revenue. b. debits Prepaid Subscriptions and credits Cash. c. deb~ts Cash and credits Unearned Subscriptions Revenue. d deb1ts Unearned Subscriptions Revenue and credits Cash. 15. Which ofthe following accounts is increased with a credit? a. Supplies b. Sales c. Supplies Expense d. Dividends -~-

PAGE4 Accounting 1 - _... - 16. Which of the follo""wing accounts probably would need to be adjusted at year end? a. Land b. Dividends c. Supplies d. Notes Payable 17. Which of the following goods would not be included in merchandise inventory for a purchasing company? a. Goods on band in the showroom b. Goods ordered and received from the supplier c. Goods in transit shipped FOB shipping point d. Goods in transit shipped FOB destination 18. Goods held on consignment are a. included as part of no one's ending inventory. b. kept for sale on the premises of the consignor. c. never owned by the consignee. d. included in the consignee's ending inventory. 19. A retail company bas beginning inventory of$15,000, purchases of$110,000, sales of$100,000, and a normal gross profit percentage of 25 percent. What is estimated inventory based on these facts and the gross profit method? a. $50,000 b. $100,000 c. $25,000 d. $75,000 20. The Income Summary accowlt is credited in the entry that closes a. expense accounts. b. revenue accounts. c. the Dividends accowit. d. net income. -W- (

PAGES Accounting 1-21. An understatement of year 1 's ending inventory will a. cause year 2's cost of g<>ods sold to be overstated. b. not affect year 2's ending stockholders' equity. c. have no effect on year 2's net income. d. result in an overstatement of year 2's beginning inventory. 22. The entry to record the return of goods from a customer would include a a. debit to Sales Returns and Allowances. b. credit to Sales. c. credit to Sales Returns and Allowances. d. debit to Sales. 23. Which of the following accounts is not found in closing entries? a. Retained Earnings b. Accumulated Depreciation, Equipment c. Dividends d. Income Summary 24. A dividend that is declared and paid a. decreases assets and stockholders' equity. b. increases assets and decreases stockholders' equity. c. decreases assets and increases stockholders' equity. d. increases assets and stockholders' equity. 25. Which of the following is not considered in computing net cost of purchases? a. Purchases returns and allowances b. Purchases c. Freight paid on goods shipped to customers d. Freight paid on purchased goods -~-

'PAGE6 26. ~:~:n;~~bl~ w~re s 3so ~t the end of October and $280 at the end of November. Wages Expense for November was $1,800. How much cash was paid for wages during November? a. $1,870 b. $2,410 c. $1,170 d. $1,730 27. Revenues should be recorded when a. they are earned. b. cash is received from the customer. c. a contract is signed. d. work is begun on a job. 28. Under the perpetual inventory system, in addition to making the entry to record a sale, a company would a. debit Merchandise Inventory and credit Cost of Goods Sold. b. debit Cost of Goods Sold and credit Purchases. c. debit Cost of Goods Sold and credit Merchandise Inventory. d. make no additional entty until the end of the period. 29. Goods totaling $5,000 purchased February 2 on teims of2/10, n/30 and on which returns of$1,000 were made on February 10 would be subject to which of the following discounts if paid for on February 12? a. None b. $80 c. $100 d. $20-30. Which of the following gives the correct sequence of accounting procedures? a. Ledger, trial balance, journal, fioancial statements b_ Financial statements, journal, ledger, trial balance c. Journal, ledger, trial balance, financial statements d. Financial statements, trial balance, ledger, journal

PAGE7 Accounting l - Use the following information to answer the question(s) below. The following information pertains to The Dalton Corporation: 1. The corporation's Store Supplies account showed a beginning debit balance of $200 and supplies purchased of $800. There was $300 of supplies on band at year end 2. Depreciation on buildings is estimated to be $5,000. 3. A one-year insurance policy was purchased for $2,000. Three months have passed since the purchase. 4. Accrued interest on a note receivable amounted to $100. 5. The company received a $3,600 advance payment during the year on services to be performed By the end of the year, one-fourth of the services had been performed. 31. The adjusting entry for Store Supplies would include a a. debl.t to Store Supplies Expense for $800. b. credit to Store Supplies for $300. c. credit to Store Supplies Expense for $800. d. debit to Store Supplies EXpense for $700. 32. The adjusting ent.iy for depreciation on buildings would include a a. credit to Accumulated Depreciation for $5,000. b. credit to Depreciation Expense for $5,000. c. debit to Accumulated Depreciation for $5,000. d. credit to Buildings for $5,000. 33. The adjusting entry for the insurance policy would include a a. credit to Prepaid Insurance for $500. b. credit to Insurance Expense for $1,500. c. debit to Prepaid Insurance for $500. d. debit to Insurance Expense for $1,500. 34. The adjusting entry to record the accrued interest on the note would include a a. credit to Interest Receivable for $100. b. debit to Interest Expense for $100. c. credit to Interest Income for $100. d. debit to Interest Payable for $100. _,_

PAGES Accounting 1 - : 35. The adjusting entry to record the amount of service revenue earned during the period would include a a. debit to Unearned Revenue for $2,700. b. debit to Unearned Revenue for $900. c. debi~ to Earned Revenue for $2,700. d. credit to Unearned Revenue for $900. Us_~ the following information to answer the question(s) below. Account Name: Sales Sales Retums and.a1lowances Purchases Purch3ses Returns and Allowances Freight!a SeD:ing Expenses Genecal and 1\dministtative Expenses DE'tliT 10,000 68,000 1~000 30,000 110,000 CREDIT 300,000 8,000 ~ addition, beginning merchandise inventory was $22,000 and ending mventory was $14,000. 36. Net sales for the period were a. $300,000. b. $310,000. c. $294,000. d. $290,000. 37. Net cost of purchases for the period were a. $92,000. b. $60,000. c. $72,000. d. $84,000. 8-

PAGE9 Accounting 1 _ th n( ) b 1 Use the following inventory information for the month of JWle to answer e quesno s e ow. J\Ule 1 Beginning Inventory 10 units@ $30 5 Purchases 60 units @ $28 14 Sales 40 units 21 Purchases 30 units @ $29 30 Sales 28 units 38. Assuming that a periodic inventory system is used, what is cost of goods sold on a.ldf.q basis? a. $1,934 b. $916 c. $926 d. $1,924 39. Assuming that a perpetual inventory system is used, what is ending inventory on a FIFO basis? a $916 b. $1,934 C. $926 d. $1,924 40. Assuming that aperiodic inventory system is used, what is cost of goods sold under the average-cost method? a. $912 b. $1,972 c. $928 d. $1,938 41. When a company has performed a service but has not yet received payment, it a. debits Accounts Receivable and credits Revenue from Services. b. debits Revenue from Services and credits Accounts Payable. c. debits Revenue from Services and credits Accounts Receivable. d. makes no entry until the cash is received. 42. Which of the following errors will cause a trial balance to be out of balance? a. The bookkeeper forgot to journalize a transaction. b. The bookkeeper forgot to post a journal entry to the ledger. c. A debit to Office Equipment was incorrectly debited to Office Supplies. d. A credit was posted to an account as a debit. -9-

PAGE 10 Accounting 1 -.. 43_ When there is a net loss, the entry to close the Income Summary account 1s deb1t - a. Net Loss and credit Income Summary. b. Retained Eamings and credit Income Summary. c. Income Summary and credit Net Loss. d. Income Summary and credit Retained Earnings. 44. When collection is made on Accounts Receivable, a. total assets will increase. b. stockholders' equity will increase. c. total assets will decrease. d. total assets Will remain the same. 45. Which of the following adjustments most likely would be reversed if a company uses reversing en1ries? a. Adjustment to acctue salaries b. Adjusnnent to allocate prepaid insurance to the current period c. Adjustment to determine supplies expense for the period d. Adjusnnent to record depreciation expense 46. Which of the following accowtts is not closed during the closing procedure? a. Commissions Earned b. Retained Earnings c. Dividends d. Income Swnmary 47. The entry to record a purchase of$1,000 in merchandise assuming terms of2/10, n/30 and a periodic inventory system would include a a. debit to Purchases Discounts for $20. b. credit to AccoWlts Payable for $1,000. c. credit to Purchases for $1,000. d. debit to Accounts Payable for $980. -to-

PAGE 11 Accounting 1-48. Which of the following is not a satisfactory statement of the accounting equation? a. Assets = Liabilities - Owners' Equity b. Assets - Owners' Equity =Liabilities c. Assets = Liabilities + Owners' Equity d. Assets Liabilities = Owners' Equity 49. Which of the following financial statements is concerned with the enterprise at a point in time? a. Statement of retained earnings b. Balance sheet c. Income statement d. Statement of cash flows 50. Which of the following accounts is a contra account? a. Depreciation Expense. Office Furniture b. Accumulated Depreciation. Office Furniture c. Unearned Revenue d. Dividends - t t-

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