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WorksheetsBAC1064 Mid semester Online Test
Total questions: 30
Worksheet time: 1hrs 17mins
Accountants refer to an economic event as a
purchase.
sale.
transaction.
change in ownership.
The accounting process involves all of the following except
identifying economic transactions that are relevant to the business.
communicating financial information to users by preparing financial reports.
recording nonquantifiable economic events.
analyzing and interpreting financial reports.
The accounting process is correctly sequenced as
identification, communication, recording.
recording, communication, identification.
identification, recording, communication.
communication, recording, identification.
Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?
Identification
Communication
Recording
Analysis
The partnership form of business organization
is a separate legal entity.
is a common form of organization for service-type businesses.
enjoys an unlimited life.
enjoys a limited life.
Which of the following is not an advantage of the corporate form of business organization?
Limited liability of stockholders
Transferability of ownership
Unlimited personal liability for stockholders
Unlimited life
The common characteristic possessed by all assets is
long life.
great monetary value.
tangible nature.
future economic benefit.
Sources of increases to stockholders' equity are
sales of stock.
purchases of merchandise.
dividends.
expenses.
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
$20,000 increase
$10,000 decrease
$10,000 increase
$15,000 decrease
On January 1, 2008, Jackson Company reported stockholders' equity of $470,000. During the year, the company paid dividends of $20,000. At December 31, 2008, the balance in stockholders' equity was $500,000. What amount of net income or net loss would the company report for 2008?
Net income of $30,000
Net loss of $50,000
Net income of $10,000
Net income of $50,000
An account is a part of the financial information system and is described by all except which one of the following?
An account has a debit and credit side.
An account is a source document.
An account may be part of a manual or a computerized accounting system.
An account has a title.
An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?
Nothing further must be done.
Debit an owner's equity account for $500.
Debit another asset account for $500.
Credit a different asset account for $500.
An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?
A debit balance in the drawing account
A credit balance in an expense account
A credit balance in a liabilities account
A credit balance in a revenue account
Able Company pays its employees twice a month, on the 7th and the 21st. On June 21, Able Company paid employee salaries of $4,000. This transaction would
increase Stockholders' equity by $4,000.
decrease the balance in Salaries Expense by $4,000.
decrease net income for the month by $4,000.
be recorded by a $4,000 debit to Salaries Payable and a $4,000 credit to Salaries Expense.
Denton Company showed the following balances at the end of its first year:
Cash $ 7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Retained Earnings 1,000
Dividends 700
Common Stock 400
Revenues 21,000
Expenses 17,500
What did Denton Company show as total credits on its trial balance?
$30,100
$29,400
$28,700
$30,800
The final step in the recording process is to
analyze each transaction.
enter the transaction in a journal.
prepare a trial balance.
transfer journal information to ledger accounts.
Which of the following is incorrect regarding a trial balance?
It proves that the debits equal the credits after posting.
It proves that the company has recorded all transactions.
A trial balance uncovers errors in journalizing and posting.
A trial balance is useful in the preparation of financial statements.
Tritan Company received a cash advance of $500 from a customer. As a result of this event,
assets increased by $500.
stockholders' equity increased by $500.
liabilities decreased by $500.
both a and b.
At January 31, 2008, the balance in Prieto Inc.’s supplies account was $250. During February, Prieto purchased supplies of $300 and used supplies of $400. At the end of February, the balance in the supplies account should be
$250 debit.
$350 credit.
$950 debit.
$150 debit.
At September 1, 2008, Foli Co. reported retained earnings of $136,000. During the month, Foli generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the amount of retained earnings at September 30, 2008?
$136,000
$8,000
$137,000
$142,000
The time period assumption states that
a transaction can only affect one period of time.
estimates should not be made if a transaction affects more than one time period.
adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations.
the economic life of a business can be divided into artificial time periods.
If the adjusting entry for depreciation is not made,
assets will be understated.
stockholders' equity will be understated.
net income will be understated.
expenses will be understated.
Demaet Cruise Lines purchased a five-year insurance policy for its ships on April 1, 2008 for $100,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2008 is
Dr Prepaid Insurance 15,000
Cr Insurance Expense15,000
Dr Insurance Expense 15,000
Cr Prepaid Insurance 15,000
Dr Insurance Expense 20,000
Cr Prepaid Insurance 20,000
Dr Insurance Expense 5,000
Cr Prepaid Insurance 5,000
Which of the following statements concerning accrual-basis accounting is incorrect?
Accrual-basis accounting follows the revenue recognition principle.
Accrual-basis accounting is the method required by generally accepted accounting principles.
Accrual-basis accounting recognizes expenses when they are paid.
Accrual-basis accounting follows the matching principle.
Employees at B Corporation are paid $5,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?
$5,000
$3,000
None, matching requires the weekly salary to be accrued on December 31.
$2,000
Closing entries are made
in order to terminate the business as an operating entity.
so that all assets, liabilities, and Stockholders' equity accounts will have zero balances when the next accounting period starts.
in order to transfer net income (or loss) and dividends to the retained earnings account.
so that financial statements can be prepared.
On September 23, Pitts Company received a $350 cheque from Mike Moluf for services to be performed in the future. The bookkeeper for Pitts Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should
debit Cash $350 and credit Unearned Service Revenue $350.
debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
debit Accounts Receivable $350 and credit Cash $350.
debit Accounts Receivable $350 and credit Service Revenue $350.
Income Summary has a credit balance of $12,000 in J. Sawyer Co. after closing revenues and expenses. The entry to close Income Summary is
credit Income Summary $12,000, debit Retained Earnings $12,000.
credit Income Summary $12,000, debit Dividends $12,000.
debit Income Summary $12,000, credit Dividends $12,000.
debit Income Summary $12,000, credit Retained Earnings $12,000.
These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the total amount of property, plant, and equipment that will appear on the balance sheet?
$1,300,000
$1,100,000
$1,600,000
$950,000
On a classified balance sheet, current assets are customarily listed
in alphabetical order.
with the largest dollar amounts first.
in the order of liquidity.
in the order of acquisition.
