Question 1

Cansing Company collected $5,000 from a customer on account.What journal entry will Cansing record?

Accepted Answer

A)  Debit Cash,credit Accounts Receivable.
B)  Debit Cash,credit Revenue.
C)  Debit Accounts Receivable,credit Revenue.
D)  Debit Accounts Receivable,credit Cash.E) A) and D)
F) None of the above

Question 2

Costs that benefit future periods are reported as assets.

Accepted Answer

A) True 
 B)False  True

Question 3

Trudy's Café paid employees $50,000 in September for work done that month.What journal entry will Trudy's record in September,assuming Trudy's did not owe any amounts to employees at the end of August?

Accepted Answer

A)  Debit Cash,credit Wages Revenue.
B)  Debit Cash,credit Wages Payable.
C)  Debit Wages Revenue,credit Cash.
D)  Debit Wages Expense,credit Cash.E) B) and D)
F) A) and D)

Question 4

Which of the following is an example of an error that would cause the trial balance to be out of balance?

Accepted Answer

A)  A journal entry was posted as a debit to Cash for $525 and a credit to Accounts Receivable for $552.
B)  A journal entry was posted as a debit to Cash and a credit to Sales Revenue when the company received a $400 payment from a customer on account.
C)  A purchase of supplies on account for $100 was posted as a debit to supplies for $10 and a credit to accounts payable for $10.
D)  A $350 transaction was not recorded at all.E) None of the above
F) A) and B)

Question 5

To evaluate a company's net profit margin,it is best to compare it to another company in the same industry.

Accepted Answer

A) True 
 B)False

Question 6

Company A receives $10,000 in advance this month for work to be performed next month.This month,the company should:

Accepted Answer

A)  Debit Cash $10,000 and credit Service Revenue $10,000.
B)  Debit Cash $10,000 and credit Unearned Revenue $10,000.
C)  Debit Cash $10,000 and credit Accounts Receivable $10,000.
D)  Debit Prepaid Expense $10,000 and credit Cash $10,000.E) A) and C)
F) A) and D)

Question 7

The correct entry by Seconds Best Company to record the receipt of payment in the current month is:

Accepted Answer

A)   
B)   
C)   
D)   E) A) and B)
F) A) and C)

Question 8

The Expense Recognition (Matching) principle indicates

Accepted Answer

A)  where expenses should be presented on the income statement.
B)  how expenses should be split between the income statement and the balance sheet
C)  the ordering of current assets and current liabilities on the balance sheet.
D)  when costs are recognized as expenses on the income statement.E) B) and C)
F) A) and B)

Question 9

Which of the following is a true statement?

Accepted Answer

A)  Revenue accounts are a subset of assets,and expense accounts are a subset of liabilities.
B)  Both revenue accounts and expense accounts are subsets of contributed capital.
C)  Both revenue accounts and expense accounts are subsets of retained earnings.
D)  Revenue accounts are a subset of cash,and expense accounts are a subset of accounts payable.E) None of the above
F) A) and B)

Question 10

Which of the following practices would not be considered ethical?

Accepted Answer

A)  Failing to record an expense even though cash has been paid.
B)  Recording 31 days of sales in April.
C)  Using the cash basis of accounting.
D)  Adjusting the accounts after a trial balance has been prepared.E) A) and D)
F) None of the above

Question 11

Customers paid $8,000 on their accounts.Which accounts are affected by this transaction?

Accepted Answer

A)  Revenue and Retained Earnings increase $8,000.
B)  Cash and Revenue increase $8,000.Liabilities and Expense increase $8,000.
C)  Cash increases $8,000 and Accounts Receivable decreases $8,000.Revenue and Retained Earnings are unchanged.
D)  Cash and liabilities decrease $8,000.E) A) and B)
F) All of the above C

Question 12

What is the amount of the total liabilities at December 31?

Accepted Answer

A)  $4,650
B)  $8,650
C)  $5,700
D)  $9,700E) B) and D)
F) All of the above

Question 13

Which of the following accounts does not have a normal credit balance?

Accepted Answer

A)  Contributed capital
B)  Accounts Payable
C)  Service Revenue
D)  Rent ExpenseE) None of the above
F) All of the above

Question 14

GAAP does not allow cash basis accounting to be used in external financial reports.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following represents a subtotal rather than an account?

Accepted Answer

A)  Advertising Expense.
B)  Service Revenue.
C)  Supplies Expense.
D)  Total Revenues.E) A) and B)
F) A) and C)

Question 16

During November 2013,Asler Inc.performs consulting services.The client does not pay Asler until January,2014.

Accepted Answer

A)  Using the accrual basis of accounting,the revenue is reported in January 2014.
B)  Using the cash basis of accounting,the revenue is reported in November 2013.
C)  Using the accrual basis of accounting,the revenue is reported in November 2013.
D)  Using the accrual basis of accounting,the revenue is reported when Asler's expenses are paid.E) A) and D)
F) None of the above C

Question 17

On June 30,a company purchased 1 year of insurance coverage which started immediately,paying cash of $2,400.Choose the true statement.

Accepted Answer

A)  On June 30,cash would be debited for $2,400.
B)  On the Income Statement for the year,insurance expense will be $1,200.
C)  On the Balance Sheet at the end of the year,prepaid insurance will be $2,400.
D)  On the Balance Sheet at the end of the year,prepaid insurance will be a non-current asset.E) B) and C)
F) C) and D)

Question 18

Sparkling Pools provides $1,000 of pool maintenance services during July and collects payment in August.The company performs $1,600 of pool maintenance services during July that were paid for in June.The company accepts an order to perform $500 of pool maintenance services in August and will be paid in the same month.Revenue should be credited for:

Accepted Answer

A)  $1,600 in June,$1,000 in July,and $500 in August.
B)  $1,600 in June,$0 in July,and $1,500 in August.
C)  $0 in June,$1,600 in July,and $1,500 in August.
D)  $0 in June,$2,600 in July,and $500 in August.E) B) and C)
F) A) and D)

Question 19

When a customer buys services on account,it should be recorded by the company as:

Accepted Answer

A)  a debit to Cash and a credit to Accounts Receivable.
B)  a debit to Accounts Receivable and a credit to Revenue.
C)  a debit to Services and a credit to Unearned Revenue.
D)  a debit to Cash and a credit to Accounts Payable.E) A) and D)
F) B) and D)

Question 20

On the 15th of the month,a company receives $8,000 in payments from customers.$1,000 is for services performed on that day and the remaining is payment for services performed in the previous month.The $8,000 cash receipt would be recorded as a:

Accepted Answer

A)  debit of $7,000 to Accounts Receivable,debit of $1,000 to Service Revenue,and a credit of $8,000 to Cash.
B)  debit of $8,000 to Cash,a credit of $7,000 to Accounts Receivable,and a credit of $1,000 to Service Revenue.
C)  debit of $7,000 to Accounts Receivable,a debit of $1,000 to Unearned Revenue,and a credit of $8,000 to Cash.
D)  debit of $8,000 to Cash,debit of $1,000 to Service Revenue,and a credit of $7,000 to Accounts Receivable.E) B) and C)
F) All of the above

Exam 3: The Income Statement

Cansing Company collected $5,000 from a customer on account.What journal entry will Cansing record?

Correct Answer
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Costs that benefit future periods are reported as assets.

Correct Answer
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True

Trudy's Café paid employees $50,000 in September for work done that month.What journal entry will Trudy's record in September,assuming Trudy's did not owe any amounts to employees at the end of August?

Correct Answer
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Which of the following is an example of an error that would cause the trial balance to be out of balance?

Correct Answer
verified

To evaluate a company's net profit margin,it is best to compare it to another company in the same industry.

Correct Answer
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Company A receives $10,000 in advance this month for work to be performed next month.This month,the company should:

Correct Answer
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The correct entry by Seconds Best Company to record the receipt of payment in the current month is:

Correct Answer
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The Expense Recognition (Matching) principle indicates

Correct Answer
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Which of the following is a true statement?

Correct Answer
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Which of the following practices would not be considered ethical?

Correct Answer
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Customers paid $8,000 on their accounts.Which accounts are affected by this transaction?

Correct Answer
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C

What is the amount of the total liabilities at December 31?

Correct Answer
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Which of the following accounts does not have a normal credit balance?

Correct Answer
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GAAP does not allow cash basis accounting to be used in external financial reports.

Correct Answer
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Which of the following represents a subtotal rather than an account?

Correct Answer
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During November 2013,Asler Inc.performs consulting services.The client does not pay Asler until January,2014.

Correct Answer
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C

On June 30,a company purchased 1 year of insurance coverage which started immediately,paying cash of $2,400.Choose the true statement.

Correct Answer
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Correct Answer
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When a customer buys services on account,it should be recorded by the company as:

Correct Answer
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On the 15^th of the month,a company receives $8,000 in payments from customers.$1,000 is for services performed on that day and the remaining is payment for services performed in the previous month.The $8,000 cash receipt would be recorded as a:

Correct Answer
verified

Exam 3: The Income Statement

Cansing Company collected $5,000 from a customer on account.What journal entry will Cansing record?

Correct AnswerverifiedShow Answer

Costs that benefit future periods are reported as assets.

Correct AnswerverifiedTrue

Trudy's Café paid employees $50,000 in September for work done that month.What journal entry will Trudy's record in September,assuming Trudy's did not owe any amounts to employees at the end of August?

Correct AnswerverifiedShow Answer

Which of the following is an example of an error that would cause the trial balance to be out of balance?

Correct AnswerverifiedShow Answer

To evaluate a company's net profit margin,it is best to compare it to another company in the same industry.

Correct AnswerverifiedShow Answer

Company A receives $10,000 in advance this month for work to be performed next month.This month,the company should:

Correct AnswerverifiedShow Answer

The correct entry by Seconds Best Company to record the receipt of payment in the current month is:

Correct AnswerverifiedShow Answer

The Expense Recognition (Matching) principle indicates

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Which of the following practices would not be considered ethical?

Correct AnswerverifiedShow Answer

Customers paid $8,000 on their accounts.Which accounts are affected by this transaction?

Correct AnswerverifiedC

What is the amount of the total liabilities at December 31?

Correct AnswerverifiedShow Answer

Which of the following accounts does not have a normal credit balance?

Correct AnswerverifiedShow Answer

GAAP does not allow cash basis accounting to be used in external financial reports.

Correct AnswerverifiedShow Answer

Which of the following represents a subtotal rather than an account?

Correct AnswerverifiedShow Answer

During November 2013,Asler Inc.performs consulting services.The client does not pay Asler until January,2014.

Correct AnswerverifiedC

On June 30,a company purchased 1 year of insurance coverage which started immediately,paying cash of $2,400.Choose the true statement.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a customer buys services on account,it should be recorded by the company as:

Correct AnswerverifiedShow Answer

On the 15th of the month,a company receives $8,000 in payments from customers.$1,000 is for services performed on that day and the remaining is payment for services performed in the previous month.The $8,000 cash receipt would be recorded as a:

Correct AnswerverifiedShow Answer

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Correct Answer
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True

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

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C

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Correct Answer
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Correct Answer
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On the 15^th of the month,a company receives $8,000 in payments from customers.$1,000 is for services performed on that day and the remaining is payment for services performed in the previous month.The $8,000 cash receipt would be recorded as a:

Correct Answer
verified