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Unit 5 : Ch 1-4 QUIZ
Unit 5 : Ch 1-4 Review
1. The return on equity ratio is calculated by dividing average owner's equity by net income. (Points :1)
True
False
2. Two businesses with the same owner must have separate accounting records. (Points :1)
True
False
3. Land appraised at $40,000 and worth that much to its purchaser should be recorded at its worth ($40,000), even though it was purchased through hard bargaining for $35,000. (Points :1)
True
False
4. The statement of cash flows shows a company's revenues, expenses, and net income or loss. (Points :1)
True
False
5. Net Income + Owner investments - Owner withdrawals = the increase in owner's equity during the year. (Points :1)
True
False
6. Debits are used to record increases in assets, withdrawals, and expenses. (Points :1)
True
False
7. The process of recording transactions in a journal is called posting. (Points :1)
True
False
8. In double-entry accounting, all errors are avoided by being sure that debits and credits are equal when transactions are recorded. (Points :1)
True
False
9. The cost of renting an office during the current period is an expense; however, the cost of renting an office six periods in advance is an asset. (Points :1)
True
False
10. The debt ratio is used to assess a company's risk of failing to pay its debts when they are due. (Points :1)
True
False
11. The cost principle required financial statement information to be based on ________ incurred in business transactions. (Points :1)
12. The ________________ principle requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold. (Points :1)
13. Under the ______________ principle every business is to be accounted for as a separate entity separate and distinct from its owners. (Points :1)
14. The _________ principle requires financial statement information to be supported by evidence other than someone's opinion or imagination. (Points :1)
15. Assets created by selling goods and services on credit are called ___________. (Points :1)
16. Liabilities created by buying goods and services on credit are called _____________. (Points :1)
17. Equity on a balance sheet is the difference between a companys _________ and its __________. (Points :2)
18. An excess of revenues over expenses for a period results in a ______________. (Points :1)
19. The financial statement that lists revenues and expenses is the __________. (Points :1)
20. The ____________ is known as the book of original entry. (Points :1)
21. The _________ is known as the book of final entry. (Points :1)
22. The process of recording transactions in a journal is called __________. (Points :1)
23. The process of transferring journal entry information to the ledger is called _____________. (Points :1)
24. Notes receivable and prepaid insurance are examples of a(n) __________ account. (Points :1)
25. Unearned revenues and interest payable are examples of a(n) _________ account. (Points :1)
26. Balances of _______ and __________ accounts flow into the income statement. (Points :1)
27. The normal balance of an asset account is a ___________. (Points :1)
28. The normal balance of a liability account is a ___________. (Points :1)
29. Financial statement information about Boom Company is as follows:
December 31, 19X1: Assets $42,000 Liabilities $17,000
December 31, 19X2 Assets $47,000 Liabilities $14,800
During 19X2: Net Income $18,000; Owner Investments ??; Owner withdrawals $10,800
The amount of owner investments during 19X2 is:
(Points :3)
$7,200
$14,400
$25,000
$0
some other amount
30. If on January 16, 19X1, Kay Bee Company rendered services for a customer in exchanged for $175 cash, what would be the effects on the accounting equation? (Points :2)
Assets, $175 increase; Liabilities no effect; Owner's Equity $175 increase
Assets, no effect; Liabilities $175 decrease; Owner's Equity $175 increase
Assets, $175 increase; Liabilities $175 increase; Owner's Equity no effect
Assets, $175 increase; Liabilities $175 decrease; Owner's Equity $350 increase
There is no effect on the accounting equation.
31. Hans Hammer's company had a capital balance of $12,300 on June 30 and $23,800 on July 31. Net income for the month of July was $14,000. How much did Hammer withdraw from the business during July? (Points :2)
$22,100
$25,500
$2,500
$11,500
$0
32. The following transactions occurred during the month of October:
1. Paid $1,500 cash for store equipment.
2. Paid $1,000 in partial payment for supplies purchased 30 days previously.
3. Paid October's utility bill of $600.
4. Paid $1,200 to owner of business for his personal use.
5. Paid $1,400 salary of office employee for October.
What is the total amount of expense during October? (Points :2)
$3,000
$4,500
$2,000
$3,500
$5,700
33. The journal entry to record the completion of legal work for a client on credit and billing the client $1,700 for the services rendered would be: (Points :2)
Debit Accounts Receivable $1700
Credit Unearned Legal Fees $1700
Debit Legal Fees Earned $1,700
Credit Accounts Receivable $1,700
Debit Accounts Payable $1700
Credit Legal Fees Earned $1700
Debit Legal Fees Earned $1700
Credit Sales $1700
Debit Accounts Receivable $1700
Credit Legal Fees Earned $1700
34. Revenue accounts should begin each accounting period with zero balances. (Points :1)
True
False
35. An expense account with a blance should never appear on a post-closing trial balance. (Points :1)
True
False
36. The withdrawals account is normal closed by debiting it. (Points :1)
True
False
37. If all columns balance upon the completion of a worksheet, you can be sure that no errors were made in preparing the worksheet. (Points :1)
True
False
38. Long-term investments in stocks are classified as intangible assets. (Points :1)
True
False
39. The matching principle requires that revenue be assigned to the accounting period in which it is earned. (Points :1)
True
False
40. If the accountant failed to make the end-of-period adjustment to removed the Unearned Fees account the amount of fees earend, the omission would cause an overstatement of assets. (Points :1)
True
False
41. Under the cash basis of accounting, revenues are recognized when they are earned and expenses are matched with revenues. (Points :1)
True
False
42. After all closing entries are posted at the end of an accounting period, the Income Summary account balance is zero. (Points :1)
True
False
43. Throughout the current period, one could refer to the balance of the Income Summary account to determine the amount of net income or loss that was earned in the prior accounting period. (Points :1)
True
False
44. The last step in the accounting cycle is ________________. (Points :1)
45. Unrecorded expenses for which payment is not due and which must be recroded with adjusting entries at the end of an accounting period are called, (what type of adjusting entry) _____Prepaid expanses____________________. (Points :1)
46. The basis of accounting that requires revenues to be assigned to the accounting period in which they were earned regardless of when received in cash, is called the _____________ basis of accounting. (Points :1)
47. Revenue accounts have credit balances; consequently to close a revenue account and make it show a zero balance, the revenue account is ____Debit______ and the Income Summary account is _Credit_________ for the amount of the balance. (Points :2)
48. Expense accounts have debit balances; therefore, expense accounts are _____Credit___ and the Income Summary account is _Debit________ in closing the expenses accounts. (Points :2)
49. Only balance sheet accounts should have balances appearing on the post-closing trial balance because the balances of all temporary accounts are reduced to _zero______ in the closing procedures. (Points :1)
50. Closing entries are necessary because if at the end of an accounting period the revenue and expense accounts are to show only one period's revenues and expenses, they must begin the period with zero________ balances and closing entries cause the revenue and expense accounts to begin a new period with ___zero___ balances. (Points :2)
51. A worksheet is started after all transactions are recorded but before___Adjustment entires_______. (Points :1)
52. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Purchased office supplies on credit.
(Points :2)
53. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Completed an appraisal for a client and immediately collected cash for the work done.
(Points :2)
54. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Received the telephone bill of the business and immediately issued a check to pay it.
(Points :2)
55. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Completed an appraisal for a client who promised to pay at a later date.
(Points :2)
56. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Paid for the supplies purchased in the first transaction.
(Points :2)
57. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Paid the salary of the office secretary.
(Points :2)
58. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Robert Day wrote a check on the bank account of the business to pay his home telephone bill. There were not business calls on the bill.
(Points :2)
59. Robert Day is a property manager and real estate consultant and below are the names of several accounts in his ledger with each account name preceded by a number. Indicate the accounts debited and credited in recording each transaction by indicating the proper account numbers in this format: # (account debited); # (account credited) ie: 5;6
1. Accounts Payable 8. Office Supplies Expense
2. Accounts Receivable 9. Management Fees Earned
3. Appraisal Fees Earned 10. Prepaid Insurance
4. Cash 11. Salaries Expense
5. Insurance Expense 12. Telephone Expense
6. Office Equipment 13. Robert Day, Capital
7. Office Supplies 14. Robert Day, Withdrawals
Transaction: Received payment from the customer who had promised to pay at a later date. (3rd transaction)
(Points :2)
60. What effect does the following transaction have on the accounting equation? Mark all those answers that apply.
Transaction: Completed work for a client on credit, $2000.
(Points :2)
+ 2000 Assets
- 2000 Assets
+ 2000 Liabilities
- 2000 Liabilities
+ 2000 Owner's Equity
- 2000 Owner's Equity
61. What effect does the following transaction have on the accounting equation? Mark all those answers that apply.
Transaction: Paid $250 to satisfy supplier's account.
(Points :2)
+250 Assets
- 250 Assets
+ 250 Liabilities
- 250 Liabilities
+ 250 Owner's Equity
- 250 Owner's Equity
62. What effect does the following transaction have on the accounting equation? Mark all those answers that apply.
Transaction: Withdrew $900 cash from the business to pay personal expenses.
(Points :2)
+ 900 Assets
- 900 Assets
+ 900 Liabilities
- 900 Liabilities
+ 900 Owner's Equity
- 900 Owner's Equity
63. What effect does the following transaction have on the accounting equation? Mark all those answers that apply.
Transaction: Paid utility bill of $235 immediately upon receipt.
(Points :2)
+ 235 Assets
- 235 Assets
+ 235 Liabilities
- 235 Liabilities
+ 235 Owner's Equity
- 235 Owner's Equity
64. What effect does the following transaction have on the accounting equation? Mark all those answers that apply.
Transaction: Borrowed $8000 on long-term note payable.
(Points :2)
+ 8000 Assets
- 8000 Assets
+ 8000 Liabilities
- 8000 Liabilities
+ 8000 Owner's Equity
- 8000 Owner's Equity
65. What effect does the following transaction have on the accounting equation? Mark all those answers that apply.
Transaction: Purchased Office supplies for Cash, $350.
(Points :2)
+ 350 Assets
- 350 Assets
+ 350 Liabilities
- 350 Liabilities
+ 350 Owner's Equity
- 350 Owner's Equity
66. Below are words or phrases with the applicable definition. (Points :20)
Matching
Answer Potential Matches:
: A record in which the effects of transactions are first recorded and from which amounts are posted to the ledger. 1: Book of original entry
2: revenue recognition principle
3: Accounting
4: Owner's Equity
5: Compound journal entry
6: external transactions
7: going-concern principle
8: Partnership
9: Cost Principle
10: Corporation
11: Chart of Accounts
12: liabilities
13: Assets
14: book of final entry
15: Income Statement
16: Objectivity Principle
17: creditors
18: Unearned Revenues
19: monetary unit principle
20: business entity
: The accounting guideline that requires financial statement information to be supported by evidence other than someone's opinion or imagination; adds to the reliability and usefulness of accounting information.
: A service activity that provides useful information to people who make rational investment, credit, and similar decisions to help them make better decisions.
: A business that is owned by two or more people and that is not organized as a corporation.
: The financial statement that shows whether the business earned a profit; it lists the types and amounts of the revenues and expenses.
: Liabilities created by advance cash payments from customers for roducts or services; satisfied by delivering the products or services in the future.
: A list of all accounts used by a company, including the identification number assigned to each account.
: The accounting principle that requires financial statement information to be based on costs incurred in business transactions; it requires assets and services to be recorded initially at the cash or cash equivalent amount given in exchange.
: A journal entry that affects at least three accounts.
: A business chartered or incorporated as a separate legal entity under state or federal laws.
: The difference between a company's assets and its liabilities; more precisely, the residual interest in the assets of an entity that remains after deducting its liabilities.
: Properties or economic resources owned by the business; more precisely, probably future economic benefits obtained or ontrolled bya particular entity.
: The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue.
: Another name for a ledger.
: The rule that: 1) requires revenue to be recognized at the time it is earned; 2)allows the inflow of assets associated with revenue to be in a form other than cash. and 3) measurers the amounts of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services.
: The principle that requires every business to be accounted for separately and distinctly from its owner or owners; based on the goal of providing relevant information about the business.
: Debts owed by a business or organization; probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.
: Individuals or organizations entitle to receive payments from a comopany.
: Exchanges between the entity and some other person or organizations.
: The principle that requires the expression of transactions and events in money units; examples include units such as the dollar, peso, and pound sterling.
67. Time periods covered by statements are called: (Points :1)
seasonal periods
fiscal years
operating cycles of a business
accounting periods
natural business years
68. ABC Company's financial statements show the following:
Net Income $195,000
Total Revenues $850,000
Total Expenses $655,000
ABC's profit margin is: (Points :1)
22.9%
29.8%
435.9%
129.8%
77.1%
69. In what order are the following steps in the accounting cycle performed?
1. Preparing an unadjusted trial balance.
2. Recording and posting closing entries.
3. Journalizing transactions.
4. Preparing a post-closing trial balance.
5. Preparing the financial statements.
6. Completing the work sheet.
7. Journalizing and posting adjusting entries.
8. Posting the entries to record transactions.
(Points :3)
1,3,8,7,6,2,4,5
3,8,1,6,5,7,2,4
1,3,8,6,7,2,5,4
3,1,8,7,6,5,4,2
3,7,1,8,6,2,4,5
70. Real accounts are: (Points :1)
Accounts that are closed at the end of the accounting period; therefore, the revenue, expense, Income Summary, and withdrawals accounts.
Accounts used to record the owner's investment in the business plus any more or less permanent changes in owner's equity.
Accounts the balance of which is subtracted from the balance of an associated account to show a more proper amount for the item recorded in the associated account.
Also called temporary accounts.
Also called permanent accounts.
71. The following information is available from the financial statements of Harvard Company:
Current Assets $195,000
Total Assets $850,000
Current Liabilities $113,500
Total Liabilities $441,500
Stockholder's Equity $408,500
Harvard's current ratio is:
(Points :2)
1.9
2.1
1.7
1.5
5.8
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18 Dec 2015
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Unit 5 : Ch 1-4 QUIZ
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