Question 1

The adjusting entry to record expense related to the use of a delivery van would involve which of the following?

Accepted Answer

A) A credit to Accumulated Depreciation 
B) A credit to Delivery Van 
C) A credit to Depreciation Expense 
D) A debit to Retained Earnings 
A) A credit to Accumulated Depreciation 
B) A credit to Delivery Van 
C) A credit to Depreciation Expense 
D) A debit to Retained Earnings

Question 2

Domino Co. purchased land and paid the full purchase price in cash. The journal entry necessary to record this event includes a:

Accepted Answer

A) debit to Land and a credit to Cash. 
B) debit to Cash and a credit to Land. 
C) credit to Land and a credit to Cash. 
D) debit to Land and a debit to Cash. 
A) debit to Land and a credit to Cash. 
B) debit to Cash and a credit to Land. 
C) credit to Land and a credit to Cash. 
D) debit to Land and a debit to Cash.

Question 3

Which of the following is decreased with a credit?

Accepted Answer

A) Unearned Service Revenue 
B) Consulting Revenue 
C) Accounts Payable 
D) Prepaid Rent 
A) Unearned Service Revenue 
B) Consulting Revenue 
C) Accounts Payable 
D) Prepaid Rent

Question 4

Explain how the following general journal entry affects the accounting equation.

Accepted Answer

A) Both assets and equity increase. 
B) Both liabilities and assets increase. 
C) Assets increase and liabilities decrease. 
D) Liabilities increase and equity decreases. 
A) Both assets and equity increase. 
B) Both liabilities and assets increase. 
C) Assets increase and liabilities decrease. 
D) Liabilities increase and equity decreases.

Question 5

Explain the significance of the return on equity ratio. Who (what category or type of financial statement users) would normally be most interested in this ratio?

Accepted Answer

The return on equity ratio measures the

Question 6

Newcomb Company began operations on December 1, 2013. The following transactions were recorded in December: 1) The business received $3,000 cash from the issuance of common stock to its stockholders.
2) Provided services on account for $2,500.
3) Paid $1,500 cash for land.
4) Accrued $1,000 of salaries expenses.
5) Purchased $300 of supplies on account to be used in January.
6) Collected $1,300 from customers.
At December 31, 2011, the total debits in the company's adjusted trial balance would be

Accepted Answer

A) $6,800. 
B) $5,300. 
C) $2,700. 
D) None of these. 
A) $6,800. 
B) $5,300. 
C) $2,700. 
D) None of these.

Question 7

Adjusting entries are made at the end of the period because of the need to

Accepted Answer

A) adjust the balance in the cash account for the effects of all daily transactions with customers and creditors. 
B) assure that all revenues and expenses are recognized in the period in which they are earned or incurred. 
C) assure that debits are equal to credits prior to preparing the trial balance. 
D) prepare revenue and expense accounts for recording transactions in the next accounting period by bringing the balances to zero. 
A) adjust the balance in the cash account for the effects of all daily transactions with customers and creditors. 
B) assure that all revenues and expenses are recognized in the period in which they are earned or incurred. 
C) assure that debits are equal to credits prior to preparing the trial balance. 
D) prepare revenue and expense accounts for recording transactions in the next accounting period by bringing the balances to zero.

Question 8

Indicate whether each of the following statements is true or false
_____ a) The general journal is often called the book of original entry.
_____ b) Transactions are first recorded in the ledger and then transferred to the journal.
_____ c) The process of making entries into a journal is called posting.
_____ d) The ledger is an example of a source document.
_____ e) The list of a business's account titles and account numbers is called a chart of accounts.

Accepted Answer

a) True b) False c) False d) False e) Tr

Question 9

What transaction does the following general journal entry represent?

Accepted Answer

A) Provided services on account. 
B) Paid cash owed to a supplier. 
C) Collected cash from customers. 
D) Borrowed money to support operating activities. 
A) Provided services on account. 
B) Paid cash owed to a supplier. 
C) Collected cash from customers. 
D) Borrowed money to support operating activities.

Question 10

At the end of 2013, the following information is available for ABC Company and XYZ Company:   Required:
1) For each company, calculate the debt to assets ratio and the return on equity ratio.
2) For each company, calculate the return on assets ratio.
3) Which company had a greater level of debt risk? Why?
4) What is financial leverage? Which company is using financial leverage more successfully?

Accepted Answer

1) Debt to assets ratio:
ABC = $1,200,00

Question 11

The three primary asset use transactions are incurring expenses, settling liabilities, and paying dividends.

Accepted Answer

A) True 
 B)False

Question 12

A trial balance can only be prepared at the end of the fiscal year, as part of the adjusting and closing processes.

Accepted Answer

A) True 
 B)False

Question 13

Indicate whether each of the following statements is true or false.
_____ a) A journal entry includes at least one debit and one credit entry.
_____ b) The double-entry accounting format records two separate events simultaneously.
_____ c) The double-entry system requires that total debits equal total credits.
_____ d) When an asset decreases in a double-entry system, an equity account may also decrease.
_____ e) The double entry system does not ensure complete accuracy in a company's accounting records.

Accepted Answer

a) True b) False c) True d) True e) True

Question 14

At the end of its fiscal year, a company must adjust its accounting records for unrecorded accruals and deferrals before it can prepare financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Which is one effect of the following journal entry?

Accepted Answer

A) Increases liabilities 
B) Increases equity 
C) Decreases liabilities 
D) Decreases assets 
A) Increases liabilities 
B) Increases equity 
C) Decreases liabilities 
D) Decreases assets

Question 16

A transaction recorded as a debit to Cash and a credit to Common Stock.

Accepted Answer

(I) (N) (I) (N) (N) (N) (I)
Ex

Question 17

When a company receives cash in advance from a customer, it should debit Cash and credit Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 18

The Warner Company issued common stock for $500,000 cash. Which of the following shows the proper entry using T-accounts?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 19

Which company has the highest return on assets?

Accepted Answer

A) Bridge 
B) Poker 
C) Rummy 
D) They all have equal return on assets. 
A) Bridge 
B) Poker 
C) Rummy 
D) They all have equal return on assets.

Question 20

What is the meaning of the terms "debit" and "credit"?

Accepted Answer

"Debit" means the left side of an accoun

The adjusting entry to record expense related to the use of a delivery van would involve which of the following?

Domino Co. purchased land and paid the full purchase price in cash. The journal entry necessary to record this event includes a:

Which of the following is decreased with a credit?

Explain how the following general journal entry affects the accounting equation.

Explain the significance of the return on equity ratio. Who (what category or type of financial statement users) would normally be most interested in this ratio?

Adjusting entries are made at the end of the period because of the need to

What transaction does the following general journal entry represent?

The three primary asset use transactions are incurring expenses, settling liabilities, and paying dividends.

A trial balance can only be prepared at the end of the fiscal year, as part of the adjusting and closing processes.

At the end of its fiscal year, a company must adjust its accounting records for unrecorded accruals and deferrals before it can prepare financial statements.

Which is one effect of the following journal entry?

A transaction recorded as a debit to Cash and a credit to Common Stock.

When a company receives cash in advance from a customer, it should debit Cash and credit Accounts Receivable.

The Warner Company issued common stock for $500,000 cash. Which of the following shows the proper entry using T-accounts?

Which company has the highest return on assets?

What is the meaning of the terms "debit" and "credit"?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships, Partnerships, and Corporations

Statement of Cash Flows

Financial Statement Analysis Available Online in the Connect Library

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Exam 3: The Double-Entry Accounting System

The adjusting entry to record expense related to the use of a delivery van would involve which of the following?

Domino Co. purchased land and paid the full purchase price in cash. The journal entry necessary to record this event includes a:

Which of the following is decreased with a credit?

Explain how the following general journal entry affects the accounting equation.

Explain the significance of the return on equity ratio. Who (what category or type of financial statement users) would normally be most interested in this ratio?

Adjusting entries are made at the end of the period because of the need to

What transaction does the following general journal entry represent?

The three primary asset use transactions are incurring expenses, settling liabilities, and paying dividends.

A trial balance can only be prepared at the end of the fiscal year, as part of the adjusting and closing processes.

At the end of its fiscal year, a company must adjust its accounting records for unrecorded accruals and deferrals before it can prepare financial statements.

Which is one effect of the following journal entry?

A transaction recorded as a debit to Cash and a credit to Common Stock.

When a company receives cash in advance from a customer, it should debit Cash and credit Accounts Receivable.

The Warner Company issued common stock for $500,000 cash. Which of the following shows the proper entry using T-accounts?

Which company has the highest return on assets?

What is the meaning of the terms "debit" and "credit"?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships, Partnerships, and Corporations

Statement of Cash Flows

Financial Statement Analysis Available Online in the Connect Library

Filters