Practice Quiz 1 (Chapter 1-4)

The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns.

• True

• False

A T-account is

• a way of depicting the basic form of an account.

• what the computer uses to organize bytes of information

• a special account used instead of a trial balance.

• used for accounts that have both a debit and credit balance.

The economic entity assumption requires that the activities

• of different entities can be combined if all the entities are corporations.

• must be reported to the Securities and Exchange Commission.

• of a sole proprietorship cannot be distinguished from the personal economic events of its owners

• of an entity be kept separate from the activities of its owner.

At December 1, 2016, Dubois Company’s accounts receivable balance was $1,300. During December, Dubois had credit sales of $7,400 and collected accounts receivable of $6,000. At December 31, 2016, the accounts receivable balance is

• $100 debit

• $2,700 debit

• $100 credit

• $2,700 credit

During 2016, its first year of operations, Aida’s Bakery had revenues of $65,000 and expenses of $35,000. The business had owner’s drawings of $22,000. What is the amount of owner’s equity at December 31, 2016?

• $0

• $8,000 credit

• $30,000 credit

• $22,000 debit

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

• True

• False

Accounting communicates financial information about a business enterprise to both internal and external users.

• True

• False

Which one of the following is not an application of revenue recognition?

• Recording revenue as an adjusting entry on the last day of the accounting period.

• Accepting cash from an established customer for services to be performed over the next three months.

• Billing customers on June 30 for services completed during June.

• Receiving cash for services performed.

A law firm received $5,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

• expenses to be overstated.

• net income to be overstated.

• liabilities to be understated.

• revenues to be understated

Wallowa Company purchased supplies costing $6,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,800 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

• Debit Supplies Expense, $1,800; Credit Supplies, $1,800.

• Debit Supplies, $4,200; Credit Supplies Expense, $4,200.

• Debit Supplies Expense, $4,200; Credit Supplies, $4,200.

• Debit Supplies, $1,800; Credit Supplies Expense, $1,800