ACCN 2010 Quiz 4

ACCN 2010 Quiz 4 | Tulane University

Question 1

Which one of the following is not a justification for adjusting entries?

·         Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

·         Adjusting entries are necessary to ensure that the expense recognition principle is followed.

·         Adjusting entries are necessary to ensure that the revenue recognition principle is followed.

·         Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.

 

Question 2

Prepaid expenses are:

·         incurred and already paid or recorded.

·         paid and recorded in an asset account after they are used or consumed.

·         incurred but not yet paid or recorded.

·         paid and recorded in an asset account before they are used or consumed.

 

Question 3

On January 1, 2022, Novak Corp. purchased equipment for $65880. The company is depreciating the equipment at the rate of $920 per month. The book value of the equipment at December 31, 2022 is:

·         $0.

·         $54840.  

·         $65880.

·         $11040.

 

Question 3

Unearned revenue is classified as a(n):

·         asset account.

·         revenue account.

·         liability.

·         contra revenue account.

 

Question 4

The balance in the prepaid rent account before adjustment at the end of the year is $13920 and represents three months rent paid on December 1. The adjusting entry required on December 31 is:

·         debit Prepaid Rent, $4640; credit Rent Expense $4640.

·         debit Rent Expense, $13920; credit Prepaid Rent, $13920.

·         debit Rent Expense, $4640; credit Prepaid Rent, $4640.

·         debit Prepaid Rent, $9280; credit Rent Expense, $9280.

 

Question 6

If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be:

·         debit Unearned Service Revenue and credit Cash.

·         debit Unearned Service Revenue and credit Accounts Receivable.

·         debit Unearned Service Revenue and credit Prepaid Expense.

·         debit Unearned Service Revenue and credit Service Revenue.

 

Question 7

Accumulated Depreciation is a(n):

·         expense account.

·         stockholders’ equity account.

·         liability account.

 

Question 8

On January 1, 2021, Windsor, Inc. purchased equipment for $21500. The company is depreciating the equipment at the rate of $860 per month. At January 31, 2022, the balance in Accumulated Depreciation is:

·         $10320 credit.

·         $860 debit.

·         $53320 debit.

·         $11180 credit.

·         contra asset account

 

Question 9

The trial balance for Oriole Company appears as follows:

 

                Oriole Company

                Trial Balance

                December 31, 2022

                Cash      $270                      

                Accounts Receivable      470                        

                Prepaid Insurance           74                          

                Supplies               162                        

                Equipment          3600                      

                Accumulated Depreciation, Equipment                                  $540

                Accounts Payable                                            346

                Common Stock                                 1080

                Retained Earnings                                            1260

                Service Revenue                                              2700

                Salaries and Wages Expense       900                        

                Rent Expense    450                        

                                $5926                    $5926

 

If, on December 31, 2022, supplies on hand were $36, the adjusting entry would contain a:

·         credit to Supplies Expense for $126.

·         debit to Supplies Expense for $126.  

·         credit to Supplies for $36.

·         debit to Supplies for $36.

 

 

 

Question 10

The trial balance for Skysong, Inc. appears as follows:

 

                Skysong, Inc.

                Trial Balance

                December 31, 2022

                Cash      $320                      

                Accounts Receivable      553                        

                Prepaid Insurance           87                          

                Supplies               191                        

                Equipment          4240                      

                Accumulated Depreciation, Equipment                                  $640

                Accounts Payable                                            407

                Common Stock                                 1270

                Retained Earnings                                            1480

                Service Revenue                                              3184

                Salaries and Wages Expense       1060                      

                Rent Expense    530                        

                                $6981                    $6981

 

If as of December 31, 2022, rent of $159 for December had not been recorded or paid, the adjusting entry would include a:

 

Question 11

Mary Richardo has performed $600 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Mary make?

·         Debit Accounts Receivable and credit Service Revenue

·         Debit Accounts Receivable and credit Unearned Service Revenue

·         Debit Cash and credit Unearned Service Revenue

·         Debit Unearned Service Revenue and credit Service Revenue

 

Question 12

Sunland Tables paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29–31). Employees work 5 days a week and the company pays $980 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January?

 

                               

Question 13

Which of the statements below is not true?

·         An adjusted trial balance should show ledger account balances.

·         An adjusted trial balance proves the mathematical equality of debits and credits in the ledger.

·         An adjusted trial balance is prepared before all transactions have been journalized.

·         An adjusted trial balance can be used to prepare financial statements.

 

Question 14

Based on the account balances below, what is the total of the debit and credit columns of the adjusted trial balance?

 

                Service revenue               $5610                    Equipment          $7620

                Cash      2655                       Prepaid insurance            1385

                Unearned service revenue          5570                       Depreciation expense   790

                Salaries and wages expense

                1200                       Accum. depreciation      1400

                Common stock  470                         Retained earnings           600

 

·         $11660

·         $13240

·         $12250

·         $13650

 

Question 15

Given the following adjusted trial balance:

 

                Debit                     Credit

Cash      $1828                   

Accounts receivable       2308                      

Inventory            3436                      

Prepaid rent       95                          

Equipment          330                        

Accumulated depreciation-equipment

                                                $57

Accounts payable                                            90

Unearned service revenue

                                                134

Common stock                                  232

Retained earnings                                           7270

Service revenue                                               405

Interest revenue                                             62

Salaries and wages expense

                180                        

Travel expense 73                          

        Total              $8250                    $8250

 

Net income for the year is:

·         $467.

·         $214.  

·         $413.

·         $652.

 

Question 16

Given the following adjusted trial balance:

 

                Debit                     Credit

Cash      $2028                   

Accounts receivable       2560                      

Inventory            3811                      

Prepaid rent       105                        

Equipment          370                        

Accumulated depreciation-equipment

                                                $63

Accounts payable                                            100

Unearned service revenue

                                                149

Common stock                                  266

Retained earnings                                           8060

Service revenue                                               449

Interest revenue                                             68

Salaries and wages expense

                200                        

Travel expense 81                          

        Total              $9155                    $9155

 

After closing entries have been posted, the balance in retained earnings will be:

·         $8468.

·         $7847.

·         $8296.

·         $8100.

·         Question 16

Question 17.

A post-closing trial balance will show:

·         zero balances for all accounts.

·         only balance sheet accounts.

·         only income statement accounts.

·         zero balances for balance sheet accounts.

 

Question 18

The following information is from the Income Statement of the Sheffield Laundry Service:

 

Revenues                                           

        Service Revenues                                    $4940

Expenses                                            

        Salaries and wages expense               $ 1860                  

        Advertising expense              380                        

        Rent expense            230                        

        Supplies expense    150                        

        Insurance expense 80                          

        Total expenses                                         2700

            Net income                                            $2240

 

The entry to close the expense accounts includes a:

·         credit to Retained Earnings for $2700.

·         debit to Salaries and Wages Expense for $1860.

·         debit to Income Summary for $2700.

·         credit to Income Summary for $2700.

 

Question 19

The Accounts Receivable account has a beginning balance of $64500 and an ending balance of $91800. If total sales on account were $52100 for the year, what were the total collections on account?

·         $91800

·         $24800  

·         $104200

·         $79400

 

Question 20

Under the accrual basis of accounting:

·         cash must be received before revenue is recognized.

·         events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.  

·         the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

·         net income is calculated by matching cash outflows against cash inflows.