Question 1

In a trial balance prepared at December 31, 2010 the total of the debit column is:

Accepted Answer

A)  $1,540,000. 
B)  $780,000. 
C)  $1,020,000. 
D)  $700,000. 
A)  $1,540,000. 
B)  $780,000. 
C)  $1,020,000. 
D)  $700,000.

Question 2

The collection of an account receivable is recorded by a debit to Cash and a credit to Accounts Payable. If this error is not corrected:

Accepted Answer

A)  Total liabilities are understated. 
B)  Total assets are understated. 
C)  Total liabilities are overstated. 
D)  Owners' equity is overstated. 
A)  Total liabilities are understated. 
B)  Total assets are understated. 
C)  Total liabilities are overstated. 
D)  Owners' equity is overstated.

Question 3

Clinton prepares monthly financial statements. Which of the following violates the matching principle?

Accepted Answer

A)  A portion of the salary payments made this month are not recognized as expense because some of the work was done by employees last month. 
B)  The premium on a six-month insurance policy is charged immediately to expense. 
C)  Expenses for the period exceed revenues. 
D)  The cost of advertising done during the month is charged to expense even though no payment is due for 60 days. 
A)  A portion of the salary payments made this month are not recognized as expense because some of the work was done by employees last month. 
B)  The premium on a six-month insurance policy is charged immediately to expense. 
C)  Expenses for the period exceed revenues. 
D)  The cost of advertising done during the month is charged to expense even though no payment is due for 60 days.

Question 4

Recording transactions in general journal
Enter the following transactions in the two-column journal of Baumann Bathrooms. Include a brief explanation of the transaction as part of each journal entry.

Accepted Answer

The answer of Recording transactions in general journal
Enter the following...

Question 5

In a trial balance prepared at January 3, 2011, the total of the debit column is:

Accepted Answer

A)  $760,000. 
B)  $1,570,000. 
C)  $740,000. 
D)  $370,000. 
A)  $760,000. 
B)  $1,570,000. 
C)  $740,000. 
D)  $370,000.

Question 6

An increase in a liability is recorded by a credit; an increase in owners' equity by a debit.

Accepted Answer

A) True 
 B)False

Question 7

The agreement of the debit and credit totals of the trial balance gives assurance that:

Accepted Answer

A)  All transactions were posted correctly. 
B)  No transactions were omitted. 
C)  The number of accounts with debit balances equals the number of accounts with credit balances. 
D)  The total debits equal the total credits. 
A)  All transactions were posted correctly. 
B)  No transactions were omitted. 
C)  The number of accounts with debit balances equals the number of accounts with credit balances. 
D)  The total debits equal the total credits.

Question 8

According to the rules of debit and credit for balance sheet accounts:

Accepted Answer

A)  Increases in asset, liability, and owners' equity accounts are recorded by debits. 
B)  Decreases in asset and liability accounts are recorded by credits. 
C)  Increases in asset and owners' equity accounts are recorded by debits. 
D)  Decreases in liability and owners' equity accounts are recorded by debits. 
A)  Increases in asset, liability, and owners' equity accounts are recorded by debits. 
B)  Decreases in asset and liability accounts are recorded by credits. 
C)  Increases in asset and owners' equity accounts are recorded by debits. 
D)  Decreases in liability and owners' equity accounts are recorded by debits.

Question 9

Recognizing revenue when it is earned and not when cash is received and recognizing expenses when the related goods or services are used rather than when they are paid for is called:

Accepted Answer

A)  Revenue recognition. 
B)  Accrual accounting. 
C)  Conservatism. 
D)  Matching. 
A)  Revenue recognition. 
B)  Accrual accounting. 
C)  Conservatism. 
D)  Matching.

Question 10

Land is purchased by making a cash down payment of $40,000 and signing a note payable for the balance of $130,000. The journal entry to record this transaction in the accounting records of the purchaser includes:

Accepted Answer

A)  A credit to Land for $40,000. 
B)  A debit to Cash for $40,000. 
C)  A debit to Land for $170,000. 
D)  A debit to Note Payable for $130,000. 
A)  A credit to Land for $40,000. 
B)  A debit to Cash for $40,000. 
C)  A debit to Land for $170,000. 
D)  A debit to Note Payable for $130,000.

Question 11

In a trial balance prepared on January 5, 2012, the total of the credit column is:

Accepted Answer

A)  $1,350,000. 
B)  $1,399,000. 
C)  $1,560,000. 
D)  $1,721,000. 
A)  $1,350,000. 
B)  $1,399,000. 
C)  $1,560,000. 
D)  $1,721,000.

Question 12

The journal entry to record a particular business transaction includes a credit to a liability account. This transaction is most likely also to include:

Accepted Answer

A)  Issuance of new capital stock. 
B)  The purchase of an asset on account. 
C)  A cash payment. 
D)  A credit to Accounts Receivable. 
A)  Issuance of new capital stock. 
B)  The purchase of an asset on account. 
C)  A cash payment. 
D)  A credit to Accounts Receivable.

Question 13

Which of the following is provided by a trial balance in which total debits equal total credits?

Accepted Answer

A)  Proof that no transaction was completely omitted from the ledger during the posting process. 
B)  Proof that the correct debit or credit balance has been computed for each account. 
C)  Proof that the ledger is in balance. 
D)  Proof that transactions have been correctly analyzed and recorded in the proper accounts. 
A)  Proof that no transaction was completely omitted from the ledger during the posting process. 
B)  Proof that the correct debit or credit balance has been computed for each account. 
C)  Proof that the ledger is in balance. 
D)  Proof that transactions have been correctly analyzed and recorded in the proper accounts.

Question 14

Indicate all correct answers. In the accounting cycle:

Accepted Answer

A)  Transactions are posted before they are journalized. 
B)  A trial balance is prepared after journal entries have been posted. 
C)  The Retained Earnings account is not shown as an up-to-date figure in the trial balance. 
D)  Journal entries are posted to appropriate ledger accounts. 
A)  Transactions are posted before they are journalized. 
B)  A trial balance is prepared after journal entries have been posted. 
C)  The Retained Earnings account is not shown as an up-to-date figure in the trial balance. 
D)  Journal entries are posted to appropriate ledger accounts.

Question 15

A business that is profitable and liquid will have more accounts with credit balances than with debit balances.

Accepted Answer

A) True 
 B)False

Question 16

In a computerized accounting system, posting may be done automatically but journalizing must be done by someone with an understanding of recording transactions.

Accepted Answer

A) True 
 B)False

Question 17

Recording transactions in general journal
Enter the following transactions in the two-column journal of Festive Parties, Inc. Include a brief explanation of the transaction as part of each journal entry.

Accepted Answer

The answer of Recording transactions in general journal
Enter the following...

Question 18

Every transaction which affects an income statement account also affects a balance sheet account.

Accepted Answer

A) True 
 B)False

Question 19

The left-hand side of an account is used for recording debits and the right-hand side for recording credits.

Accepted Answer

A) True 
 B)False

Question 20

On June 4, the balance in the Cash account is:

Accepted Answer

A)  $17,600. 
B)  $5,000. 
C)  $10,600. 
D)  Some other amount. 
A)  $17,600. 
B)  $5,000. 
C)  $10,600. 
D)  Some other amount.

Exam 3: The Accounting Cycle: Capturing Economic Events

In a trial balance prepared at December 31, 2010 the total of the debit column is:

The collection of an account receivable is recorded by a debit to Cash and a credit to Accounts Payable. If this error is not corrected:

Clinton prepares monthly financial statements. Which of the following violates the matching principle?

Recording transactions in general journal Enter the following transactions in the two-column journal of Baumann Bathrooms. Include a brief explanation of the transaction as part of each journal entry.

In a trial balance prepared at January 3, 2011, the total of the debit column is:

An increase in a liability is recorded by a credit; an increase in owners' equity by a debit.

The agreement of the debit and credit totals of the trial balance gives assurance that:

According to the rules of debit and credit for balance sheet accounts:

Recognizing revenue when it is earned and not when cash is received and recognizing expenses when the related goods or services are used rather than when they are paid for is called:

Land is purchased by making a cash down payment of $40,000 and signing a note payable for the balance of $130,000. The journal entry to record this transaction in the accounting records of the purchaser includes:

In a trial balance prepared on January 5, 2012, the total of the credit column is:

The journal entry to record a particular business transaction includes a credit to a liability account. This transaction is most likely also to include:

Which of the following is provided by a trial balance in which total debits equal total credits?

Indicate all correct answers. In the accounting cycle:

A business that is profitable and liquid will have more accounts with credit balances than with debit balances.

In a computerized accounting system, posting may be done automatically but journalizing must be done by someone with an understanding of recording transactions.

Recording transactions in general journal Enter the following transactions in the two-column journal of Festive Parties, Inc. Include a brief explanation of the transaction as part of each journal entry.

Every transaction which affects an income statement account also affects a balance sheet account.

The left-hand side of an account is used for recording debits and the right-hand side for recording credits.

On June 4, the balance in the Cash account is:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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