Mock Bookkeeping Replacement Activity

When should a company adjust its inventory balance?

• When the physical count does not match inventory balance on the books.

• During random checks of inventory.

• When the physical count matches inventory balance on the books.

• At the beginning of the accounting period.

Which two statements demonstrate an understanding of T-Accounts?

• Debits increase asset or expense accounts, while credits decrease them.

• Credits decrease liability, revenue or equity accounts, while debits increase them.

• Credits increase asset or expense accounts, while debits decrease them.

• Debits decrease liability, revenue or equity accounts, while credits increase them.

• Debits are on the right and Credits are on the left.

How can a company adjust its inventory balance?

• Inventory Adjustment Entries

• Income Statement Entries

• Changing Equity Statement

• Entries on the Balance Sheet

Which two accounts have debit balances as the 'natural account balance'?

• Equity

• Revenues

• Liabilities

• Assets

• Expenses

Which of these explains the effect of Equity on the Accounting Equation?

• Liabilities = Assets - Equity

• Equity = Assets - Liabilities

• Balance Sheet + Income Statement = Owner's Equity

• Assets = Liabilities - Equity

In addition to the bank statement, which other item do you need to prepare for a bank reconciliation?

• Cash Flow Statement

• General Ledger

• Balance Sheet

• Income Statement

Your company purchases $10,000 in new computer equipment and takes out a loan to pay for it. Which best describes the effect of this Equipment Entry on the accounting equation?

• Assets will increase, Liabilities will decrease

• Assets will decrease, Liabilities will decrease

• Assets will decrease, Liabilities will increase

• Assets will increase, Liabilities will increase

When you subtract Cost of Goods Sold from Sales Revenue what is the result?

• Cost of Revenue

• Net Income

• Cost of Sales

• Gross Profit

When Merchandise Inventory is bought on credit, which option explains the relationship of Merchandise Inventory to the Accounting Equation?

• An increase in Merchandise Inventory increases Equity.

• An decrease in Merchandise Inventory decreases Liabilities.

• An decrease in Merchandise Inventory increases Equity.

• An increase in Merchandise Inventory decreases Equity.

What is the Weighted Average Cost (WAC) throughout the year?

• 17,310/550 = $31.47

• 500/50 = $10.00

• 17,310/50 = $346.20

• 550/50 = $11.00