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"Unearned" accounts are liabilities that must be fulfilled.

A) True
B) False

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On May 31, the Cash account of Bottle's R US had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May?


A) A $0 balance.
B) A $4,300 debit balance.
C) A $4,300 credit balance.
D) A $5,700 debit balance.
E) A $5,700 credit balance.

F) B) and E)
G) A) and B)

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At year-end, Henry Laundry Service noted the following errors in its trial balance: 1. It understated the total debits to the Cash account by $500 when computing the account balance. 2. A credit sale for $311 was recorded as a credit to the revenue account, but the offsetting debit was not posted. 3. A cash payment to a creditor for $2,600 was never recorded. 4. The $680 balance of the Prepaid Insurance account was listed in the credit column of the trial balance. 5. A $24,900 van purchase was recorded as a $24,090 debit to Equipment and a $24,090 credit to Notes Payable. 6. A purchase of office supplies for $150 was recorded as a debit to Office Equipment. The offsetting credit entry was correct. 7. An additional investment of $4,000 by the stockholder was recorded as a debit to Common Stock and as a credit to Cash. 8. The cash payment of the $510 utility bill for December was recorded (but not paid) twice. 9. The revenue account balance of $79,817 was listed on the trial balance as $97,817. 10. A $1,000 cash dividend was recorded as a $100 debit to Dividends and $100 credit to Cash. 143. Using the form below, indicate whether each error would cause the trial balance to be out of balance, the amount of any imbalance, and whether a correcting journal entry is required. Would the error cause the trial Correcting balance to be out  Amount of Journal Entryof balance? ImbalanceReguired\begin{array}{|l|c|c|c|}\hline \quad \quad \quad &\text {Would the error }&\\ &\text {cause the trial }&& \text {Correcting }\\ &\text {balance to be out } & \text { Amount of }&\quad \text {Journal Entry} \\ &\text {of balance?} &\text { Imbalance}& \text {Reguired} \\\end{array}  Error  Yes  No  Yes  No 12345678910\begin{array}{|r|l|l|l|l|l|}\hline \text { Error } & \quad\quad\text { Yes }& \quad\text { No } & \quad \quad \quad \quad\quad& \quad\text { Yes }&\quad\text { No } \\\hline 1 & \\\hline 2 & \\\hline 3 & \\\hline 4 & \\\hline 5 & \\\hline 6 & \\\hline 7 & \\\hline 8 & \\\hline 9 & \\\hline 10 & \\\hline\end{array}

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None...

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The numbering system used in a company's chart of accounts:


A) Is the same for all companies.
B) Is determined by generally accepted accounting principles.
C) Depends on the source documents used in the accounting process.
D) Typically begins with balance sheet accounts.
E) Typically begins with income statement accounts.

F) None of the above
G) B) and C)

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A debit is used to record an increase in all of the following accounts except:


A) Supplies
B) Cash
C) Accounts Payable
D) Dividends
E) Prepaid Insurance

F) None of the above
G) A) and B)

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Indicate on which of the financial statements the following items appears. Use I for income statement, RE for statement of retained earnings, and B for balance sheet. More than one statement may be appropriate for some items.  a. Fees Earned  b. Cash  c. Unearned Revenue  d. Rent expense  e. Owner, Capital  f. Notes Payable  g. Prepaid Rent  h. Salaries Expense  i.Notes Payable  j.Owner, Withdrawal \begin{array} {| l | l| } \hline \text { a. Fees Earned } &\quad\quad\quad\quad\quad\quad\quad \\\hline \text { b. Cash } & \\\hline \text { c. Unearned Revenue } & \\\hline \text { d. Rent expense } & \\\hline \text { e. Owner, Capital } & \\\hline \text { f. Notes Payable } & \\\hline \text { g. Prepaid Rent } & \\\hline \text { h. Salaries Expense } & \\\hline \text { i.Notes Payable } & \\\hline \text { j.Owner, Withdrawal }&\\\hline\end{array}

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\[\begin{array} {| l | c| }
\hline \tex...

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A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.


A)  Accounts receivable 12,000 Cash12,000\begin{array} { | l | r | r | } \hline \text { Accounts receivable } & 12,000 & \\\hline \text { Cash} & & 12,000 \\\hline\end{array}
B)  Cash 12,000 Consulting servicesrevenue 12,000\begin{array}{|l|r|r|}\hline \text { Cash } & 12,000 & \\\hline \text { Consulting servicesrevenue } & & 12,000 \\\hline\end{array}
C)  Consulting services revenue 12,000 Cash 12,000\begin{array} { | l | l | l | } \hline \text { Consulting services revenue } & 12,000 \\\hline \text { Cash } & & 12,000\\\hline\end{array}
D)  Accounts payable 12,000 Consulting servicesrevenue 12,000\begin{array}{|l|r|r|}\hline \text { Accounts payable } & 12,000 & \\\hline \text { Consulting servicesrevenue } & & 12,000 \\\hline\end{array}
E)  Accounts Receivable 12,000 Consulting servicesrevenue 12,000\begin{array}{|l|r|r|}\hline \text { Accounts Receivable } & 12,000 & \\\hline \text { Consulting servicesrevenue } & & 12,000 \\\hline\end{array}

F) A) and B)
G) B) and E)

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Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.


A)  Unearned Catering Reverue 1,000 Catering Reverue 1,000\begin{array} { | l | r | r | } \hline \text { Unearned Catering Reverue } & 1,000 \\\hline \text { Catering Reverue } & & 1,000 \\\hline\end{array}
B)  Catering Reverue 1,000 Accourts Receivable 1,000\begin{array} { | l | r | r | } \hline \text { Catering Reverue } & 1,000 \\\hline \text { Accourts Receivable } & & 1,000 \\\hline\end{array}
C)  Accourts Receivable 1,000 Unearned Catering Reverue 1,000\begin{array} { | l | r | r | } \hline \text { Accourts Receivable } & 1,000 \\\hline \text { Unearned Catering Reverue } & & 1,000 \\\hline\end{array}
D)  Accourts Receivable 1,000 Catering Reverue 1,000\begin{array} { | l | r | r | } \hline \text { Accourts Receivable } & 1,000 \\\hline \text { Catering Reverue } & & 1,000 \\\hline\end{array}
E)  Cash 1,000 Catering Revenue 1,000\begin{array} { | l | r | r | } \hline \text { Cash } & 1,000 \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}

F) A) and C)
G) A) and D)

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Identify the statement below that is incorrect.


A) The normal balance of accounts receivable is a debit.
B) The normal balance of dividends is a debit.
C) The normal balance of unearned revenues is a credit.
D) The normal balance of an expense account is a credit.
E) The normal balance of the common stock account is a credit.

F) All of the above
G) A) and B)

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An income statement is also called an earnings statement, a statement of operations or a profit and loss statement.

A) True
B) False

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Revenues always increase equity.

A) True
B) False

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A credit is used to record an increase in all of the following accounts except:


A) Accounts Payable
B) Service Revenue
C) Unearned Revenue
D) Wages Expense
E) Common Stock

F) A) and E)
G) B) and E)

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Describe what source documents are and the purpose they serve in a business.

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Source documents are the proof that tran...

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Which of the following is NOT an asset account:


A) Cash
B) Land
C) Services Revenue
D) Buildings
E) Equipment

F) B) and E)
G) A) and B)

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A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000. Which of the following would be an incorrect way to complete the recording of this transaction:


A) Credit another asset account for $1,500.
B) Credit another liability account for $1,500.
C) Credit a revenue account for $1,500.
D) Credit the common stock account for $1,500.
E) Debit another asset account for $1,500.

F) C) and D)
G) A) and D)

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Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?


A)  Salaries Expense 300 Accounts Payable 300\begin{array} { | l | r | r | } \hline \text { Salaries Expense } & 300 & \\\hline \text { Accounts Payable } & & 300 \\\hline\end{array}
B)  Cash 300 Salaries Expense 300\begin{array} { | l | r | r | } \hline \text { Cash } & 300 \\\hline \text { Salaries Expense } & & 300 \\\hline\end{array}
C)  Salaries Expense 300 Dividends 300\begin{array} { | l | r | r | } \hline \text { Salaries Expense } & 300 & \\\hline \text { Dividends } & & 300 \\\hline\end{array}
D)  Salaries Payable 300 Salaries Expense 300\begin{array} { | l | r | r | } \hline \text { Salaries Payable } & 300 & \\\hline \text { Salaries Expense } & & 300 \\\hline\end{array}
E)  Salaries Expense 300 Cash 300\begin{array} { | l | r | r | } \hline \text { Salaries Expense } & 300 & \\\hline \text { Cash } & & 300 \\\hline\end{array}

F) B) and C)
G) A) and E)

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At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:


A) 300%.
B) 33.3%.
C) 75.0%.
D) 66.67%.
E) $400,000.

F) D) and E)
G) B) and E)

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Mary Martin, the sole stockholder of Martin Consulting, started the business by investing $40,000 cash. Identify the general journal entry below that Martin Consulting will make to record the transaction.


A)  Cash 40,000 Corrmon Stock 40,000\begin{array} { | l | r | r | } \hline \text { Cash } & 40,000 & \\\hline \text { Corrmon Stock } & & 40,000 \\\hline\end{array}
B)  Corrunon Stock 40,000 Cash 40,000\begin{array} { | l | r | r | } \hline \text { Corrunon Stock } & 40,000 & \\\hline \text { Cash } & & 40,000 \\\hline\end{array}
C)  Irvestrnents 40,000 Cash 40,000\begin{array} { | l | r | r | } \hline \text { Irvestrnents } & 40,000 & \\\hline \text { Cash } & & 40,000 \\\hline\end{array}
D)  Irvestrnents 40,000 Corrmon Stock 40,000\begin{array} { | l | r | r | } \hline \text { Irvestrnents } & 40,000 & \\\hline \text { Corrmon Stock } & & 40,000 \\\hline\end{array}
E)  Cash 40,000 Ircreased Equity 40,000\begin{array} { | l | r | r | } \hline \text { Cash } & 40,000 \\\hline \text { Ircreased Equity } & & 40,000 \\\hline\end{array}

F) A) and E)
G) B) and C)

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A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n) :


A) Account.
B) Trial balance.
C) Journal.
D) T-account.
E) Balance column account.

F) A) and D)
G) A) and B)

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A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?


A) Supplies, understated $130; Fees Earned, overstated $130.
B) Supplies, understated $260; Fees Earned, overstated $130.
C) Supplies, overstated $130; Fees Earned, overstated $130.
D) Supplies, overstated $130; Fees Earned, understated $130.
E) Supplies, overstated $260; Fees Earned, understated $130.

F) C) and D)
G) A) and B)

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