Question Details

ACCT/510 ACCT510 ACCT 510 CHAPTER 4 MULTIPLE CHOICE QUESTIONS PART 7

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE


MULTIPLE CHOICE QUESTIONS


101. Which of the following steps in the accounting cycle would not generally be performed
daily?
a. Journalize transactions
b. Post to ledger accounts
c. Prepare adjusting entries
d. Analyze business transactions


102. Which of the following steps in the accounting cycle may be performed more frequently
than annually?
a. Prepare a post-closing trial balance
b. Journalize closing entries
c. Post closing entries
d. Prepare a trial balance


103. Which of the following depicts the proper sequence of steps in the accounting cycle?
a. Journalize the transactions, analyze business transactions, prepare a trial balance
b. Prepare a trial balance, prepare financial statements, prepare adjusting entries
c. Prepare a trial balance, prepare adjusting entries, prepare financial statements
d. Prepare a trial balance, post to ledger accounts, post adjusting entries


104. The two optional steps in the accounting cycle are preparing
a. a post-closing trial balance and reversing entries.
b. a worksheet and post-closing trial balances.
c. reversing entries and a worksheet.
d. an adjusted trial balance and a post-closing trial balance.


105. The first required step in the accounting cycle is
a. reversing entries.
b. journalizing transactions in the book of original entry.
c. analyzing transactions.
d. posting transactions.


106. Correcting entries
a. always affect at least one balance sheet account and one income statement account.
b. affect income statement accounts only.
c. affect balance sheet accounts only.
d. may involve any combination of accounts in need of correction.


4 - 16 Test Bank for Accounting Principles, Eighth Edition


107. Speedy Bike Company received a $940 check from a customer for the balance due. The
transaction was erroneously recorded as a debit to Cash $490 and a credit to Service
Revenue $490. The correcting entry is
a. debit Cash, $940; credit Accounts Receivable, $940.
b. debit Cash, $450 and Accounts Receivable, $490; credit Service Revenue, $940.
c. debit Cash, $450 and Service Revenue, $490; credit Accounts Receivable, $940.
d. debit Accounts Receivable, $940; credit Cash, $450 and Service Revenue, $490.


108. If errors occur in the recording process, they
a. should be corrected as adjustments at the end of the period.
b. should be corrected as soon as they are discovered.
c. should be corrected when preparing closing entries.
d. cannot be corrected until the next accounting period.


109. A correcting entry
a. must involve one balance sheet account and one income statement account.
b. is another name for a closing entry.
c. may involve any combination of accounts.
d. is a required step in the accounting cycle.


110. An unacceptable way to make a correcting entry is to
a. reverse the incorrect entry.
b. erase the incorrect entry.
c. compare the incorrect entry with the correct entry and make a correcting entry to
correct the accounts.
d. correct it immediately upon discovery.


111. Cole Company paid the weekly payroll on January 2 by debiting Wages Expense for
$45,000. The accountant preparing the payroll entry overlooked the fact that Wages
Expense of $27,000 had been accrued at year end on December 31. The correcting entry
is
a. Wages Payable.................................................................... 27,000
Cash......................................................................... 27,000
b. Cash .................................................................................... 18,000
Wages Expense....................................................... 18,000
c. Wages Payable.................................................................... 27,000
Wages Expense....................................................... 27,000
d. Cash .................................................................................... 27,000
Wages Expense....................................................... 27,000


112. Tyler Company paid $530 on account to a creditor. The transaction was erroneously
recorded as a debit to Cash of $350 and a credit to Accounts Receivable, $350. The
correcting entry is
a. Accounts Payable................................................................ 530
Cash......................................................................... 530
b. Accounts Receivable ........................................................... 350
Cash......................................................................... 350
c. Accounts Receivable ........................................................... 350
Accounts Payable .................................................... 350
d. Accounts Receivable ........................................................... 350
Accounts Payable................................................................ 530
Cash......................................................................... 880


Completing the Accounting Cycle 4 - 17


113. A lawyer collected $830 of legal fees in advance. He erroneously debited Cash for $380
and credited Accounts Receivable for $380. The correcting entry is
a. Cash..................................................................................... 380
Accounts Receivable............................................................ 450
Unearned Revenue .................................................. 830
b. Cash..................................................................................... 830
Service Revenue ...................................................... 830
c. Cash..................................................................................... 450
Accounts Receivable............................................................ 380
Unearned Revenue .................................................. 830
d. Cash..................................................................................... 450
Accounts Receivable ................................................ 450


114. All of the following are property, plant, and equipment except
a. supplies.
b. machinery.
c. land.
d. buildings.


115. The first item listed under current liabilities is usually
a. accounts payable.
b. notes payable.
c. salaries payable.
d. taxes payable.


116. Office Equipment is classified in the balance sheet as
a. a current asset.
b. property, plant, and equipment.
c. an intangible asset.
d. a long-term investment.


117. A current asset is
a. the last asset purchased by a business.
b. an asset which is currently being used to produce a product or service.
c. usually found as a separate classification in the income statement.
d. an asset that a company expects to convert to cash or use up within one year.


118. An intangible asset
a. does not have physical substance, yet often is very valuable.
b. is worthless because it has no physical substance.
c. is converted into a tangible asset during the operating cycle.
d. cannot be classified on the balance sheet because it lacks physical substance.


119. Liabilities are generally classified on a balance sheet as
a. small liabilities and large liabilities.
b. present liabilities and future liabilities.
c. tangible liabilities and intangible liabilities.
d. current liabilities and long-term liabilities.


4 - 18 Test Bank for Accounting Principles, Eighth Edition


120. Which of the following would not be classified a long-term liability?
a. Current maturities of long-term debt
b. Bonds payable
c. Mortgage payable
d. Lease liabilities