ACC 371 Week 1 Quiz 2

ACC 371 Week 1 Quiz 2 | Mercer University

Question 1

Pinkerton HR Consultants borrowed $100,000 from National Bank on October 1, 2019, with a 9 month 6% note payable. The principal and interest on the note are due to be paid back on July 1, 2020. 

Pinkerton should record the following amount of interest expense in an adjusting journal entry on December 31, 2019:  

$-0-  

$ 4,500  

$ 6,000  

$ 1,500  

$ 2,000 

Question 2

Which of the following will be recorded as a debit in a journal entry?  

An increase in Dividends Payable...  

An increase in Salaries Expense.  

An increase in Salaries Payable.  

A decrease in Accounts Receivable.  

A decrease in Prepaid Insurance

Question 3

What statements below are true about an adjusted trial balance?  

The sum of debit balances should equal the sum of credit balances.  

The retained earnings account should be updated for current year income and dividends. 

There should be fewer accounts listed than on the unadjusted trial balance.  

Both A and B are true. 

Both A and C are true.

Question 4

Pinkerton HR Consultants borrowed $100,000 from National Bank on October 1, 2019, with a 9 month 6% note payable. The principal and interest on the note are due to be paid back on July 1, 2020. 

Pinkerton should record an adjusting journal entry for this note on December 31, 2019, with the following accounts debited and credited:  

Debit Interest Expense; Credit Interest Revenue.  

Debit Interest Expense; Credit Note Payable.  

Debit Interest Expense; Credit Cash.  

Debit Interest Expense; Credit Interest Payable  

Debit Interest Expense; Credit Prepaid Interest

Question 5

The purpose(s) of closing entries is(are) to:  

Transfer the balances of temporary accounts to Retained Earnings.  

Set the balances of income statement accounts only to zero at the end of the fiscal year.  

Update the balance of Retained Earnings for the effect of current year net income/(loss) and dividends declared.  

A, B, and C are all true.  

A and C are true.

Question 6

Which of the following statements is true?  

Retained earnings, as a category, represents the resources available to a business.  

Liabilities show the amount of assets claimed by creditors.  

The accounting equation shows that the total resources of a business is equal to the total amount of financing of those resources.  

Both A and B are true.  

Both B and C are true. 

Question 7

At the beginning of 2019, Pixel Film Corp. had a balance of $23,000 in its Deferred Demolition Revenue account. During 2019, Pixel Film Corp. received additional cash prepayments totaling $156,800 by customers for demolition jobs to be completed later. The cash prepayments were correctly accounted for with an increase in Deferred Demolition Revenue. As of the company's year end of December 31, 2019, Pixel had completed $143,500 of the prepaid contracts.

Pixel should record the following journal entry on December 31, 2019:

12/31          Deferred Demolition Revenue                             143,500

                              Demolition Revenue                                                       143,500

12/31          Deferred Demolition Revenue                               36,300

                              Demolition Revenue                                                         36,300

12/31          Demolition Revenue                                             36,300

                              Deferred Demolition Revenue                                           36,300

12/31          Demolition Revenue                                             23,000

                        Cash                                                                             120,500

                              Deferred Demolition Revenue                                         143,500

12/31          Deferred Demolition Revenue                             143,500

                              Accounts Receivable                                                        23,000

                              Demolition Revenue                                                       120,500

Question 8

If the Accounts Payable account starts with a normal balance of $34,500, and the firm purchases $4,300 worth of inventory on account, and later pays $12,700 on the accounts payable amount due, what is the ending balance of Accounts Payable?

A debit balance of $26,100.  

A credit balance of $21,800.  

A credit balance of $26,100.  

A debit balance of $21,800. 

The correct ending balance is not displayed as a choice.

Question 9

If Alexis Corp. paid $3,500 to a marketing firm for help with an advertising campaign, how would this transaction affect Alexis's accounting equation?

Assets   =             Liabilities              +             Stockholders’ Equity

Advertising                        Accounts Payable

+$3,500                               +$3,500

Assets   =             Liabilities              +             Stockholders’ Equity

Cash                                                     Consulting Expense

-$3,500                                                -$3,500

Assets   =             Liabilities              +             Stockholders’ Equity

Cash                     Accounts Payable

+$3,500                               +$3,500

Assets   =             Liabilities              +             Stockholders’ Equity

Advertising                                                        Consulting Expense

+$3,500                                                               -$3,500

Rationale: Cash paid represents a decrease in assets and a decrease (via an expense) of shareholders’ equity.

Question 10

Cal-Ex Corp. sold products from inventory for $23,500 cash. The inventory sold had a cost of $11,300. Which statement below is true about the journal entries recorded for the sale of the inventory?  

The account Retained Earnings is credited for $23,500.  

The account Cost of Goods Sold is credited for $11,300.  

The account Sales Revenue is credited for $12,200.  

The account Inventory is credited for $11,300.  

Both B and C are true. 

Rationale: The journal entries for the transaction are as follows:

XXX           Cash                                         23,500

                              Sales Revenue                                      23,500

XXX           Cost of Goods Sold                  11,300

                              Inventory                                               11,300