Question 1 of 37 On August 1, 2011, Xcel Auto Repair paid $6,000 for six months rent. After adjusting

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Question 1 of 37

On August 1, 2011, Xcel Auto Repair paid $6,000 for six months rent. After adjusting entries are made, what will be the balance of Prepaid Rent on December 31, 2011?

$4,000

$6,000

$2,000

$1,000 

 

Question 2 of 37

The adjusting entry to record unearned revenue that has now been earned accomplishes which of the following?

Increases an asset and increases an expense

Decreases a liability and increases an expense

Decreases an asset and increases an expense

Decreases a liability and increases a revenue

 

Question 3 of 37

A business pays salaries of $140,000 on the first and fifteenth days of every month. Which of the following is the adjusting entry required on December 31, 2008?

Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Payable

Debit $140,000 to Salaries Receivable, credit $140,000 to Salaries Payable

Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Receivable

No adjusting entry required

 

Question 4 of 37

A business pays salaries of $140,000 on the fifteenth and last days of every month. Which of the following is the adjusting entry required on December 31, 2008?

Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Receivable

Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Payable

Debit $140,000 to Salaries Receivable, credit $140,000 to Salaries Payable

No adjusting entry required

 

Question 5 of 37

What type of account is Accumulated Depreciation and what is its normal balance?

Expense, debit

Revenue, debit

Contra asset, credit

Liability, credit

 

Question 6 of 37

Which of the following reports a company's financial position?

Balance sheet

Income statement

Statement of owner's equity

Adjusted trial balance

Question 7 of 37

How do the adjusting entries differ from other journal entries?

Adjusting entries never affect cash.

Adjusting entries are made only at the end of the period.

Adjusting entries debit or credit at least one income statement account and at least one balance sheet account.

All of the above

Question 8 of 37

Which of the following is (are) inventory costing methods allowed by GAAP?

 

Last in first out

Average cost

Specific unit cost

All of the above

Question 9 of 37

Under which of the following inventory costing methods is the cost of goods sold based on the cost of the oldest purchases?

 

Specific unit cost

Average cost

Last in first out

First in first out

Question 10 of 37

Under which of the following inventory costing methods is the cost of goods sold based on the average cost of the purchases during the period?

 

Specific unit cost

Average cost

Last in first out

First in first out

Question 11 of 37

Under which of the following inventory costing methods is ending inventory based on the cost of the most recent purchases?

 

Specific unit cost

Average cost

Last in first out

First in first out

Question 12 of 37

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the FIFO inventory costing method, which of the following amounts will be the amount of inventory on the December 31 balance sheet?

 

$1,500

$1,000

$1,250

$2,250

 

Question 13 of 37

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the average cost inventory costing method, which of the following amounts will be the amount of inventory on the December 31 balance sheet?

 

$2,250

$1,250

$1,500

$1,000

Question 14 of 37

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the FIFO inventory costing method, which of the following amounts will be the amount of cost of goods sold on the December 31 income statement?

 

$6,750

$4,000

$3,750

$3,500 

 

Question 15 of 37

Which of the following inventory costing methods yields the highest ending inventory when prices increase during the accounting period?

 

Specific unit cost

Average cost

Last in first out

First in first out

 

Question 16 of 37

Which of the following inventory costing methods is often adopted when a company sells relatively few costly items?

 

Specific unit cost

Average cost

Last in first out

First in first out

Question 17 of 37

Which of the following assets is generally reported at the lower of cost or market?

Inventory

Cash

Accounts receivable

Prepaid insurance

Question 18 of 37

On December 31 of the current year, the trial balance for a company reports the following amounts: 

Cost of goods available for sale $1,074,450

Ending inventory (FIFO) 85,430

Replacement cost of ending inventory 91,730

What amount must be reported for cost of goods sold on the income statement?

 

$897,290

$1,074,450

$982,720

$989,020 

 

Question 19 of 37

Which of the following statements is a TRUE statement concerning the worksheet?

 

The worksheet helps accountants close the accounts.

The worksheet helps accountants make the adjusting entries.

The worksheet helps accountants prepare the financial statements.

The worksheet helps accountants do all of the above.

Question 20 of 37

Which of the following is the correct order of the steps for preparing the worksheet? 

I. Compute each account's adjusted balance by combining the trial balance and adjustment figures. Enter each account's adjusted amount in the Adjusted Trail Balance columns. 

II. Enter the account titles and their unadjusted balances in the Trial Balance columns of the worksheet and total the columns. 

III. Extend (copy) the asset, liability, and owner's equity amounts from the Adjusted Trial Balance to the Balance Sheet columns. Copy the revenue and expense amounts to the Income Statement columns. Total the statement columns. 

IV. Enter the adjusting entries in the Adjustments columns and total the amounts. 

V. On the income statement column, compute net income. Enter net income as the balancing amount on the income statement and balance sheet columns. Total the income statement and balance sheet columns.

 

II, IV, I, III, V

IV, I, III, V, II

III, V, IV, I, II

I, II, III, IV, V

Question 21 of 37

Which of the following statements is a TRUE statement about the worksheet?

 

Net income appears in the Income Statement debit column.

Net income appears in the Adjusted Trial Balance debit column.

Net income appears in the Income Statement credit column.

Net income appears in the Balance Sheet debit column.

Question 22 of 37

Which of the following columns are generally found on a worksheet?

 

Pre-adjusted trial balance

Adjusted balance sheet

Post-closing trial balance

Adjustments

Question 23 of 37

Where does net income appear on a worksheet?

 

Net income appears only in the Balance Sheet credit column.

Net income appears in the Income Statement credit column and in the Balance Sheet debit column.

Net income appears only in the Income Statement debit column.

Net income appears in the Balance Sheet credit column and in the Income Statement debit column.

 

Question 24 of 37

Totals of various columns from the worksheet are shown below. What is net income or loss? 

Income Statement Balance Sheet

Debit

$6,800 Credit

$9,500 Debit

$7,400 Credit 

$4,700

Net loss of $6,800

Net loss of $2,700

Net income of $4,700

Net income of $2,700

Question 25 of 37

In which of the columns of the worksheet would the owner's capital account be found?

In the Trial Balance debit column, the Adjusted Trial Balance debit column and the Balance Sheet debit column

In the Trial Balance credit column, the Adjusted Trial Balance credit column and the Balance Sheet credit column

In the Balance Sheet debit column and the Income Statement credit column

In the Balance Sheet credit column and the Income Statement debit column

 

Question 26 of 37

Which of the following accounts will be closed by debiting the Income Summary?

 

Accounts Payable

Accumulated Depreciation

Service Revenue

Depreciation Expense

 

Question 27 of 37

To what account is the balance in the Income Summary closed?

 

The Income Summary is closed to the owner's withdrawals account.

The Income Summary is closed to the owner's capital or Retained Earnings account.

The Income Summary is closed to the net income account.

None of the above.

Question 28 of 37

Net income for the year is $25,000. The owner withdrew $3,000 per month for personal living expenses. Which of the following occurs?

 

The Owner's Capital account increases by $22,000.

The Owner's Capital account increases by $11,000.

The Owner's Capital account decreases by $11,000.

The Owner's Capital account decreases by $22,000.

 

Question 29 of 37

A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10 net/30. Which of the following entries would be made to record the payment for the inventory if the payment is made within 10 days?

 

The accounting entry would be a $1,000 debit to Accounts Payable and a $1,000 credit to Cash.

The accounting entry would be a $1,000 debit to Accounts Payable, a $20 credit to Inventory and a $980 credit to Cash.

The accounting entry would be a $980 debit to Accounts Payable, a $20 debit to Inventory and a $1,000 credit to Cash.

The accounting entry would be a $20 debit to Inventory, a $1,000 debit to Accounts Payable and a $1,020 credit to Cash.

 

Question 30 of 37

Table 5.1 

Sales revenue $460,000

Costs of goods sold 300,000

Operating expenses 85,000

Sales discounts 20,000

Sales returns and allowances 15,000

Interest Revenue 5,000

Refer to Table 5.1. What is gross profit?

 

$160,000

$140,000

$90,000

$125,000

 

Question 31 of 37

Which of the following is subtracted from gross profit to arrive at operating income?

 

Operating expenses

Cost of goods sold

Sales discounts and sales returns and allowances

Cost of goods available for sale

 

Question 32 of 37

A company's cost of goods sold is $1,000,000. Its average inventory is $100,000. Which of the following is its rate of inventory turnover?

 

100

10

.1

.01

 

Question 33 of 37

Which of the following is represented by the inventory account on the balance sheet?

 

Ending inventory

Cost of merchandise available for sale

Cost of goods sold

Beginning inventory

 

Question 34 of 37

A business receives cash in payment of accounts receivable. Which of the following occurs?

 

An asset is debited and a liability is credited.

A liability is debited and a liability is credited.

An asset is credited and a liability is debited.

An asset is debited and an asset is credited.

 

Question 35 of 37

An owner withdraws cash from his business. The cash will be used for personal purposes. Which of the following occurs?

 

An asset is debited and an owner's equity account is credited.

An asset is credited and an owner's equity account is debited.

An asset is debited and a liability is credited.

An asset is credited and a liability is debited.

 

Question 36 of 37

Which of the following journal entries would be recorded if a business purchased equipment for $2, 500 cash and supplies for $450 cash?

 

Cash 2,500 

Equipment 450 

Accounts Receivable 2,950

 

Equipment 2,950 

Cash 2,500 

Supplies 450

 

Cash 2,950 

Equipment 2,500 

Supplies 450

 

Equipment 2,500 

Supplies 450 

Cash 2,950

 

Question 37 of 37

Which of the following journal entries would be recorded if a business performed services for $400 cash and $1,000 on account?

 

Service Revenue 1,000 

Cash 400 

Accounts Receivable 1,400

 

Cash 400 

Accounts Receivable 1,000 

Service Revenue 1,400

 

Cash 1,400 

Accounts Receivable 1,000 

Service Revenue 400

 

Service revenue 1,400 

Cash 1,000 

Accounts Payable 400

 

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