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| 1 | |
The typical accounting worksheet has five sets of columns with each set having a debit column on the left and a credit column on the right. In moving from left to right across the worksheet, which of the following lists describes the proper order for four of these sets of columns? |
| | A) | Adjustments, Adjusted Trial Balance, Unadjusted Trial Balance, and Income Statement |
| | B) | Adjustments, Adjusted Trial Balance, Income Statement, and Balance Sheet |
| | C) | Adjusted Trial Balance, Adjustments, Income Statement, and Balance Sheet |
| | D) | Adjustments, Adjusted Trial Balance, Balance Sheet, and Income Statement |
| | E) | Unadjusted Trial Balance, Adjustments, Income Statement, and Adjusted Trial Balance |
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| 2 | |
In the context of the worksheet, what do the terms debit and credit mean? |
| | A) | There are ten numbered columns; columns 1 through 5 are for debits and columns 6 through 10 are for credits. |
| | B) | There are five sets of columns with each set having two adjacent columns. Within each set the column on the left is the credit column and the column on the right is the debit column. |
| | C) | There are five sets of columns with each set having two adjacent columns. Within each set the column on the left is the debit column and the column on the right is the credit column. |
| | D) | There are ten numbered columns; columns 1 through 5 are for credits and columns 6 through 10 are for debits. |
| | E) | None of the above is correct. |
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| 3 | |
A company accountant has started to prepare a ten-column worksheet as shown in the chapter. She calculates the amount of an adjustment and is about to enter it in the Adjustments column but cannot locate the name of the account on the worksheet. What should she do? |
| | A) | Go back to the general ledger. Open an account with the proper name. Enter the adjustment into the newly created account and then re-enter the adjustment on the worksheet. |
| | B) | If there is no proper account name on the worksheet, she cannot enter the adjustment on the worksheet. |
| | C) | Go back to the Chart of Accounts and add a new account to it. Enter the adjustment into the general journal and then transfer it to the worksheet without having posted it to the general ledger. |
| | D) | Write the name of the account on the first blank line in the worksheet. Enter the adjustment on this line in the Adjustments column and continue with the worksheet. There is no need to go back to the general journal or the general ledger at this time. |
| | E) | None of these is the proper procedure. |
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| 4 | |
The unadjusted trial balance set of columns on the worksheet shows a debit balance in the Depreciation Expense account. In the Adjustments column there is a debit adjustment to Depreciation Expense and a credit adjustment to Depreciation Expense. How does the accountant arrive at the proper Adjusted Trial Balance balance for this account? |
| | A) | The debit adjustment is subtracted from the unadjusted amount of Depreciation Expense and the credit adjustment is subtracted from the unadjusted amount of Depreciation Expense to get the adjusted amount of Depreciation Expense. |
| | B) | The debit adjustment is subtracted from the unadjusted amount of Depreciation Expense and the credit adjustment is added to the unadjusted amount of Depreciation Expense to get the adjusted amount of Depreciation Expense. |
| | C) | Since Depreciation Expense cannot have a credit adjustment, the credit adjustment is ignored and the debit adjustment is added to the unadjusted amount of Depreciation Expense to get the adjusted amount of Depreciation Expense. |
| | D) | Since Depreciation Expense cannot have a debit adjustment, the debit adjustment is ignored and the credit adjustment is added to the unadjusted amount of Depreciation Expense to get the adjusted amount of Depreciation Expense. |
| | E) | The debit adjustment is added to the unadjusted balance of Depreciation Expense and the credit adjustment is subtracted from the unadjusted amount of Depreciation Expense to get the adjusted amount of Depreciation Expense. |
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| 5 | |
Braxton Company is a sole proprietorship. Its owner is preparing the accounting worksheet for the 2005 calendar year. The worksheet is the normal type of 10-column worksheet studied in the chapter. There is a $20,000 adjusted balance in the Owner's Drawings account and the account has its normal or expected balance. What happens to this balance on the worksheet? |
| | A) | The adjusted balance is extended into the debit column of the Income Statement set of columns. |
| | B) | The adjusted balance is extended into the credit side of the Income Statement set of columns. |
| | C) | The adjusted balance is extended into the debit side of the Balance Sheet set of columns. |
| | D) | The adjusted balance is extended into the credit side of the Balance Sheet set of columns. |
| | E) | None of the above. |
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| 6 | |
Franklin Company is a proprietorship. It prepares monthly financial statements and uses a calendar year accounting period. The bookkeeper uses a worksheet for each month. In preparing the monthly worksheets the company averages 10 adjustments per month. The monthly worksheet adjustments are not entered into the General Journal except for December's entries which are so entered. How much work has the bookkeeper saved herself by using monthly worksheets? |
| | A) | She has not saved herself any work because she should be entering the monthly adjustments into the General Journal even though she prepares worksheets. |
| | B) | She has saved herself from entering 120 adjustments into the General Journal. |
| | C) | She has saved herself from entering 60 adjustments into the General Journal. |
| | D) | She has saved herself from entering 110 adjustments into the General Journal. |
| | E) | None of the above. |
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| 7 | |
A company's bookkeeper has prepared a worksheet for the 2005 calendar year. He has made all of the adjustments and finished the Adjusted Trial Balance set of columns. He has extended each of the adjusted account balances from the Adjusted Trial Balance columns over into either the Income Statement or the Balance Sheet set of columns as appropriate. He has added up the Income Statement debit and credit columns and he has added up the Balance Sheet debit and credit columns and has entered the four totals on the appropriate part of the worksheet. He has not made any mistakes up to this point. What can we say about the worksheet at this point in time? |
| | A) | If the company has Net Income for the period, the total debits in the Income Statement columns will equal the total credits in the Income Statement columns at this point in time. |
| | B) | If the company has Net Income for the period, the Income Statement debit column subtotal will be greater than the Income Statement credit column subtotal. |
| | C) | If the company has Net Income for the period, the Income Statement credit column subtotal will be greater than the Income Statement debit column subtotal. |
| | D) | If the company has a Net Income for the period, the Balance Sheet debit column subtotal will be less than the Balance Sheet credit column subtotal. |
| | E) | None of the above. |
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| 8 | |
The closing process is an important step in the accounting cycle that occurs at the end of the accounting period. Which non-accounting event described below is the best analogy between the closing process and the event described? |
| | A) | Turning up the thermostat in your house from 70 degrees to 74 degrees. |
| | B) | Turning the ignition key to start your car in the morning. |
| | C) | Turning the coffee pot off. |
| | D) | Pushing the reset button on your car's trip odometer because you want to measure the mileage between your house and your new job location. |
| | E) | Forgetting to clear your calculator to prepare it for a new calculation. |
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| 9 | |
Which of the following sets of accounts are both considered to be temporary accounts which must be closed at the end of the accounting period? |
| | A) | Cash and Service Revenue |
| | B) | Depreciation Expense and Interest Revenue |
| | C) | Owner's Drawings and Accounts Payable |
| | D) | Cash and Notes Payable |
| | E) | Owner's Equity and Owner's Drawings |
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| 10 | |
As described in the textbook, in what order should the temporary accounts be closed? |
| | A) | (1) expenses, (2) revenues, (3) income summary, and (4) owner's drawings |
| | B) | (1) owner's drawings, (2) expenses, (3) revenues, and (4) income summary |
| | C) | (1) revenues, (2) expenses, (3) owner's drawings, and (4) income summary |
| | D) | (1) revenues, (2) expenses, (3) income summary, and (4) owner's drawings |
| | E) | None of the above. |
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| 11 | |
Which of the following accounts is a temporary account? |
| | A) | Notes Payable |
| | B) | Unearned Revenue |
| | C) | Capital, Lola Delong |
| | D) | Lola Delong, Withdrawals |
| | E) | Land |
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| 12 | |
Before the closing process is performed at the end of the accounting period, revenues and expenses should have which of the following? |
| | A) | A balance of zero |
| | B) | Revenue accounts would normally have a credit balance showing the total revenues for the period while each expense account would have a normal debit balance showing the total for that expense for the same accounting period. |
| | C) | Each expense and revenue account will have a balance for the period equal to the balance in the owner's capital account at the beginning of the period. |
| | D) | A net balance equal to assets minus liabilities |
| | E) | None of the above |
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| 13 | |
Which of the following closing entries is usually recorded first? |
| | A) | Closing the Income Summary account |
| | B) | Closing the expense accounts |
| | C) | Closing the withdrawals account |
| | D) | Closing the revenue accounts |
| | E) | Closing the Capital account |
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| 14 | |
Which of the following is listed on the post-closing trial balance for a sole proprietorship? |
| | A) | The Income Summary account |
| | B) | The Sales Revenue account |
| | C) | Accumulated Depreciation |
| | D) | Depreciation Expense |
| | E) | Salaries Expense |
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| 15 | |
What are the main purposes of the post-closing trial balance? |
| | A) | To make sure all transactions have been correctly recorded in the general journal |
| | B) | To verify that all the temporary or nominal accounts have zero balances |
| | C) | To verify that only real accounts continue to have a balance in them and that the sum of all of the debit balances in the real accounts is equal to the sum of all the credit balances in the real accounts. |
| | D) | B and C |
| | E) | All of the above |
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| 16 | |
Which of the following is a benefit to using a work sheet at the end of the accounting cycle? |
| | A) | It reduces errors when working with accounting systems requiring many accounts and adjustments. |
| | B) | It links accounts and adjustments to their impact on the financial statements. |
| | C) | It assists in planning and organizing an audit of financial statements |
| | D) | It is useful in preparing interim statements. |
| | E) | All of the above, but not limited to all of the above |
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| 17 | |
The subtotals of the Income Statement debit and credit columns of the work sheet are $17,300 and $29,800, respectively. If the subtotal of the Balance Sheet Debit column is $12,800, what should be the subtotal of the Balance Sheet Credit column? |
| | A) | $15,300 |
| | B) | $10,300 |
| | C) | $ 300 |
| | D) | $ 2,500 |
| | E) | A total other than the choices shown |
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| 18 | |
The subtotals of the Income Statement debit and credit columns of the work sheet are $11,400 and $9,600, respectively. If the subtotal of the Balance Sheet debit column is $11,500, what should be the subtotal of the Balance Sheet Credit column? |
| | A) | $13,300 |
| | B) | $19,700 |
| | C) | $11,900 |
| | D) | $ 1,800 |
| | E) | A total other than the choices shown |
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| 19 | |
Which of the following statements about the accounting cycle is false? |
| | A) | Posting is done after transactions have been analyzed |
| | B) | Preparing the post-closing trial balance is done after the temporary account have been closed |
| | C) | Adjusting the accounts is done prior to preparing the adjusted trial balance |
| | D) | Journalizing the transactions is performed before preparing the unadjusted trial balance |
| | E) | Financial statements are prepared before preparing the adjusted trial balance. |
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| 20 | |
The accounting cycle consists of the following ten steps?
| A. Preparing an adjusted trial balance | F. Journalizing | | B. Adjusting the accounts | G. Posting | | C. Preparing a post-closing trial balance | H. Closing temporary accounts | | D. Preparing an unadjusted trial balance | I. Preparing the statements | | E. Analyzing the transactions | J. Reversing entries |
What is the proper order of steps four through eight of the accounting cycle? |
| | A) | C, D, E, F, G |
| | B) | D, B, A, I, H |
| | C) | D, A, C, I, J |
| | D) | D, B, I, H, A |
| | E) | None of the above |
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| 21 | |
Current assets total $120,000, plant and equipment assets $24,000, current liabilities $48,000, and long-term liabilities $12,000. What is the current ratio of the business? |
| | A) | 1.0:1 |
| | B) | 2.0:1 |
| | C) | 2.5:1 |
| | D) | 3.0:1 |
| | E) | None of the above |
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| 22 | |
Which year shows the best current ratio? |
| | A) | 1999: Ratio 2.15:1 |
| | B) | 2000: Ratio 2.97:1 |
| | C) | 2001: Ratio 2.45:1 |
| | D) | 2002: Ratio 1.68:1 |
| | E) | 2003: Ratio 1.43:1 |
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| 23 | |
Current assets total $240,000 and current liabilities total $120,000. The company pays off an accounts payable of $30,000 with cash. How the does the current ratio change after the transaction? |
| | A) | It does not change |
| | B) | It changes from 2.00:1 to 1.80:1 |
| | C) | It changes from 2.00:1 to 2.25:1 |
| | D) | It changes from 2.00:1 to 2.33:1 |
| | E) | It changes from 2.00:1 to 3.00:1 |
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| 24 | |
Optional entries that transfer the balances in balance sheet accounts which arose as a result of certain adjusting entries to income statement accounts is the definition for which term below? |
| | A) | Adjusting entries |
| | B) | Reversing entries |
| | C) | Closing entries |
| | D) | Declarations of cash dividends |
| | E) | Payment of cash dividends |
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| 25 | |
At the end of the fiscal year, an adjusting entry was made for accrued salaries of $1,500. On the first day of the following year, the adjusting entry was reversed. The salaries for one week, $3,750, were paid on the first Friday of the following year. The entry to record paying the salaries expense for the week would be which of the following? |
| | A) | Salaries Exp., debit, $1,500; Salaries Payable, debit, $2,250; Cash, credit, $3,750 |
| | B) | Salaries Expense, debit, $3,750; Cash, credit, $3,750 |
| | C) | Salaries Exp., debit, $2,250; Salaries Payable, debit, $1,500; Cash, credit, $3,750 |
| | D) | Salaries Expense, debit, $3,750; Salaries Payable, credit, $3,750 |
| | E) | None of the journal entries shown above |
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| 26 | |
Which statement concerning adjusting entries is not true? |
| | A) | A real account and a nominal account are affected |
| | B) | A permanent account and a temporary account are affected |
| | C) | A permanent and a real account are affected |
| | D) | It is required to satisfy the realization and matching principles |
| | E) | None of the above |
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