Question 1

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

Accepted Answer

A) Recorded as a debit to an unearned revenue account. 
B) Recorded as a debit to a prepaid expense account. 
C) Recorded as a credit to an unearned revenue account. 
D) Recorded as a credit to a prepaid expense account. 
E) Not recorded in the accounting records until the earnings process is complete. 
A) Recorded as a debit to an unearned revenue account. 
B) Recorded as a debit to a prepaid expense account. 
C) Recorded as a credit to an unearned revenue account. 
D) Recorded as a credit to a prepaid expense account. 
E) Not recorded in the accounting records until the earnings process is complete.

Question 2

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

Accepted Answer

A) True 
 B)False

Question 3

A general journal is:

Accepted Answer

A) A ledger in which amounts are posted from a balance column account. 
B) Not required if T-accounts are used. 
C) A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts. 
D) Not necessary in electronic accounting systems. 
E) A book of final entry because financial statements are prepared from it. 
A) A ledger in which amounts are posted from a balance column account. 
B) Not required if T-accounts are used. 
C) A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts. 
D) Not necessary in electronic accounting systems. 
E) A book of final entry because financial statements are prepared from it.

Question 4

Stride Rite has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

Accepted Answer

A) 38.6% 
B) 13.4% 
C) 34.9% 
D) 25.9% 
E) 14.9% 
A) 38.6% 
B) 13.4% 
C) 34.9% 
D) 25.9% 
E) 14.9%

Question 5

A $15 credit to Sales was posted as a $150 credit.By what amount is Sales in error?

Accepted Answer

A) $150 understated 
B) $135 overstated 
C) $150 overstated 
D) $15 understated 
E) $135 understated 
A) $150 understated 
B) $135 overstated 
C) $150 overstated 
D) $15 understated 
E) $135 understated

Question 6

The balances for the accounts of Mike's Maintenance,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance.
   Calculate the correct balance for Cash and prepare a trial balance.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 7

During the month of February,Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600.The February 28 cash balance was $1,800.What was the January 31 beginning cash balance?

Accepted Answer

A) $700 
B) $1,100 
C) $2,900 
D) $0 
E) $4,300 
A) $700 
B) $1,100 
C) $2,900 
D) $0 
E) $4,300

Question 8

The following transactions occurred during July: a.Received $900 cash for services provided to a customer during July.
b.Received $2,200 cash investment from Barbara Hanson,the owner of the business.
c.Received $750 from a customer in partial payment of his account receivable,which arose from sales in June.
d.Provided services to a customer on credit,$375.
e.Signed a promissory note for a $6,000 bank loan.
f.Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

Accepted Answer

A) $900 
B) $1,275 
C) $2,525 
D) $3,275 
E) $11,100 
A) $900 
B) $1,275 
C) $2,525 
D) $3,275 
E) $11,100

Question 9

The following are all of the accounts of Flaherty Company that have a balance at the end of August.All accounts have normal balances:
   a.Calculate net income
b.Determine the amount of retained earnings to be shown on the August 31 balance sheet.

Accepted Answer

a. @#IMG-DLM&_TB6947_00_TB6947

Question 10

Which of the following items would appear on the balance sheet?

Accepted Answer

A) Common stock,service revenue,retained earnings,accounts payable,and unearned revenue. 
B) Cash,supplies,prepaid rent,accounts receivable,office equipment,utilities expense,and shaving equipment. 
C) Common stock,cash,supplies,prepaid rent,retained earnings,accounts payable,accounts receivable,office equipment,unearned revenue,and shaving equipment. 
D) Service revenue and utilities expense. 
E) Service revenue,unearned revenue,and utilities expense. 
A) Common stock,service revenue,retained earnings,accounts payable,and unearned revenue. 
B) Cash,supplies,prepaid rent,accounts receivable,office equipment,utilities expense,and shaving equipment. 
C) Common stock,cash,supplies,prepaid rent,retained earnings,accounts payable,accounts receivable,office equipment,unearned revenue,and shaving equipment. 
D) Service revenue and utilities expense. 
E) Service revenue,unearned revenue,and utilities expense.

Question 11

Wisconsin Rentals purchased office supplies on credit.The journal entry made by Wisconsin Rentals to record this transaction will include a:

Accepted Answer

A) Debit to Accounts Payable. 
B) Debit to Accounts Receivable. 
C) Credit to Cash. 
D) Credit to Accounts Payable. 
E) Credit to Retained Earnings. 
A) Debit to Accounts Payable. 
B) Debit to Accounts Receivable. 
C) Credit to Cash. 
D) Credit to Accounts Payable. 
E) Credit to Retained Earnings.

Question 12

Posting is the transfer of the information from each journal entry to the ledger.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements about the Cash account are true?

Accepted Answer

A) Because most companies earn their fees in cash,the Cash account is categorized as revenue. 
B) For any given transaction,Accounts Receivable and Cash can be used interchangeably because both accounts are measured in terms of cash. 
C) The Cash account includes the value of any medium of exchange that a bank accepts for deposit. 
D) Cash is the same thing as Retained Earnings. 
E) Cash is a liability account. 
A) Because most companies earn their fees in cash,the Cash account is categorized as revenue. 
B) For any given transaction,Accounts Receivable and Cash can be used interchangeably because both accounts are measured in terms of cash. 
C) The Cash account includes the value of any medium of exchange that a bank accepts for deposit. 
D) Cash is the same thing as Retained Earnings. 
E) Cash is a liability account.

Question 14

The debt ratio is used:

Accepted Answer

A) To measure the amount of equity relative to the expenses. 
B) To reflect the risk associated with a company's debts. 
C) Only by banks when a business applies for a loan. 
D) To determine how much debt a firm should pay off. 
E) To determine who a company owes. 
A) To measure the amount of equity relative to the expenses. 
B) To reflect the risk associated with a company's debts. 
C) Only by banks when a business applies for a loan. 
D) To determine how much debt a firm should pay off. 
E) To determine who a company owes.

Question 15

If insurance coverage for the next three years is paid for in advance,the amount of the payment is debited to an asset account called Prepaid Insurance.

Accepted Answer

A) True 
 B)False

Question 16

Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.

Accepted Answer

A) True 
 B)False

Question 17

Identify which of the following items would likely serve as a source document by marking an X in the appropriate column.The first one is done as an example.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 18

Which of the following statements is correct?

Accepted Answer

A) When a future expense is paid in advance,the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment are called accounts payable. 
C) Increases and decreases in cash are always recorded in the retained earnings account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Liabilities include accounts receivable. 
A) When a future expense is paid in advance,the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment are called accounts payable. 
C) Increases and decreases in cash are always recorded in the retained earnings account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Liabilities include accounts receivable.

Question 19

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
   If the owners invested an additional $12,000 in the business during the year,but no dividends were paid,what was the amount of net income earned by Josephine's Bakery during the current year?

Accepted Answer

Beginning owner's equity = $114,000 - $6

Question 20

A report that lists accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Accepted Answer

A) Account balance 
B) Trial balance 
C) Ledger 
D) Chart of accounts 
E) General journal 
A) Account balance 
B) Trial balance 
C) Ledger 
D) Chart of accounts 
E) General journal

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

A general journal is:

Stride Rite has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

A $15 credit to Sales was posted as a $150 credit.By what amount is Sales in error?

The balances for the accounts of Mike's Maintenance,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

During the month of February,Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600.The February 28 cash balance was $1,800.What was the January 31 beginning cash balance?

The following are all of the accounts of Flaherty Company that have a balance at the end of August.All accounts have normal balances: a.Calculate net income b.Determine the amount of retained earnings to be shown on the August 31 balance sheet.

Which of the following items would appear on the balance sheet?

Wisconsin Rentals purchased office supplies on credit.The journal entry made by Wisconsin Rentals to record this transaction will include a:

Posting is the transfer of the information from each journal entry to the ledger.

Which of the following statements about the Cash account are true?

The debt ratio is used:

If insurance coverage for the next three years is paid for in advance,the amount of the payment is debited to an asset account called Prepaid Insurance.

Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.

Identify which of the following items would likely serve as a source document by marking an X in the appropriate column.The first one is done as an example.

Which of the following statements is correct?

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: If the owners invested an additional $12,000 in the business during the year,but no dividends were paid,what was the amount of net income earned by Josephine's Bakery during the current year?

A report that lists accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Introducing Financial Accounting

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 2: Accounting System and Financial Statements

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

A general journal is:

Stride Rite has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

A $15 credit to Sales was posted as a $150 credit.By what amount is Sales in error?

The balances for the accounts of Mike's Maintenance,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

During the month of February,Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600.The February 28 cash balance was $1,800.What was the January 31 beginning cash balance?

The following are all of the accounts of Flaherty Company that have a balance at the end of August.All accounts have normal balances: a.Calculate net income b.Determine the amount of retained earnings to be shown on the August 31 balance sheet.

Which of the following items would appear on the balance sheet?

Wisconsin Rentals purchased office supplies on credit.The journal entry made by Wisconsin Rentals to record this transaction will include a:

Posting is the transfer of the information from each journal entry to the ledger.

Which of the following statements about the Cash account are true?

The debt ratio is used:

If insurance coverage for the next three years is paid for in advance,the amount of the payment is debited to an asset account called Prepaid Insurance.

Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.

Identify which of the following items would likely serve as a source document by marking an X in the appropriate column.The first one is done as an example.

Which of the following statements is correct?

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: If the owners invested an additional $12,000 in the business during the year,but no dividends were paid,what was the amount of net income earned by Josephine's Bakery during the current year?

A report that lists accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Introducing Financial Accounting

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters