The business provided services to a credit customer.

a.

Assets and owners equity increase

b.

Assets and revenue increase

c.

Liabilities and owner s equity increase

d.

None of the above are correct

A credit may signify a(n):

a.

Decrease in revenues

b.

Decrease in assets

c.

Decrease in capital

d.

Decrease in liabilities

A credit to an asset account was posted to an owners equity account. This error would cause:

a.

Assets were overstated

b.

Owners equity was overstated

c.

Liabilities were overstated

d.

Both A and C are correct

A debit to an asset account was posted to an expense account. This error would cause:

a.

Assets were overstated

b.

Expenses were overstated

c.

Liabilities were overstated

d.

None of the above are correct

One asset would be debited and another credited if:

a.

A business paid a creditor

b.

The business provided services to a cash customer

c.

The business bought supplies paying cash

d.

The business provided services to a credit customer

Paid the rent for the next six months.

a.

an asset would be debited and an expense credited

b.

an asset would be debited and a revenue credited

c.

capital would be debited and a revenue credited

d.

an asset would be debited and an asset credited

M. Sands, CPA, collected fees of $650 not previously billed or recorded. The journal entry to record the collection would be:

a.

accounting fees 650, cash 650

b.

accounts receivable 650, cash 650

c.

cash 650, accounting fees 650

d.

cash 650, M. Sands Capital 650

A $600 check written for supplies was journalized as $60. The entry to correct this error is:

a.

debit supplies, $540; credit cash, $540

b.

debit supplies, $60; credit cash $60

c.

debit cash, $540; credit supplies, $540

d.

debit cash, $60; credit cash, $60

Proof that the dollar amount in debits equals the dollar amount of the credits in the ledger means:

a.

all accounts have their correct balances in the ledger

b.

all of the information from the journal was correctly transferred to the ledger

c.

only that the debit dollar amounts equal the credit dollar amounts

d.

only the ledger is accurate; the journal may be incorrect

A debit to a revenue account was posted to an asset account. This would cause:

a.

revenue to be understated

b.

liabilities to be understated

c.

expense to be understated

d.

assets to be overstated

The general journal entry to record an exchange of assets would most commonly include:

a.

a debit to cash and a credit to fees earned

b.

a debit to fees earned and a credit to accounts receivable

c.

a debit to supplies and a credit to accounts payable

d.

a debit to cash and a credit to accounts receivable

If cash has been debited, it is most likely that:

a.

the business borrowed cash from the bank

b.

a charge customer made a payment

c.

the owner made an investment

d.

all of these are possible

If the adjustment for supplies used during the period was not made:

a.

expenses would be too high

b.

revenue would be too high

c.

expenses would be too low

d.

asset office supplies would be too low

Roy purchased a one year insurance policy for $2400. The adjusting entry for he one month would be:

a.

debit to prepaid insurance, $200

b.

credit to cash, $200

c.

debit to insurance expense, $200

d.

none of these answers are correct

The capital balance amount shown in the balance sheet column of the worksheet represents:

a.

beginning capital plus net income

b.

beginning capital plus investments to capital

c.

beginning capital less withdrawals

d.

beginning capital plus net income less withdrawal

When counting the supplies a file cabinet was forgotten and the adjustment was made based upon the incorrect count. This would:

a.

overstate the periods net income

b.

overstate the end of period assets

c.

understand the end of period assets

d.

none of these are correct

The adjustment for accrued wages included the entire pay period, some of which occurs next month. This would:

a.

understate the end of period liabilities

b.

overstate the periods net income

c.

overstate the end of period liabilities

d.

none of these are correct

The purchase of equipment will require an adjustment of:

a.

increasing the total assets and increasing the total expenses at the end of the month

b.

decreasing the total assets and decreasing the total expenses at the end of the month

c.

decreasing the total assets and increasing the total expenses at the end of the month

d.

none of the above

Which of the following would cause an asset to be debited and a liability to be credited?

a.

Recorded the adjustment for the expiration of the insurance policy

b.

Recorded the adjustment for the expiration of rent

c.

Purchases supplies on account

d.

None of these would have that effect

Which of the following would cause a liability to be credited and an expense debited?

a.

Recorded the adjustment for the accrual of wages

b.

It s the end of the month and no utility bill has been received

c.

Recorded an accrued expense

d.

All of the above would have that effect

Which of the following accounts will be directly closed to capital at the end of the fiscal year?

a.

Depreciation expense

b.

Fees revenue

c.

Salaries expense

d.

Withdrawals

The income summary account shows debits of $20,000 and credits of $18,000. This is a result of a:

a.

Net loss of $38,000

b.

Net income of $2,000

c.

Net income of $38,000

d.

Net loss of $2,000

After closing the revenue, expense and withdrawal accounts, the capital increased by $2,000. Which of the following situations could have occurred

a.

The owner made withdrawals

b.

The company had a net income of $5,000

c.

The owner invested an additional amount

d.

All of these answers are correct

When the expense are closed:

a.

Owners capital will be debited

b.

Income summary will be credited

c.

Income summary will be debited

d.

None of these are correct

Close the fees earned account:

a.

Owners capital would increase

b.

Owners capital would remain the same

c.

Owners capital would increase

d.

None of these are correct

A check for $78 is incorrectly recorded on the checkbook stub as $87. The $9 error should be shown on the bank reconciliation as:

a.

Deducted from the balance per bank statement

b.

Added to the balance per bank statement

c.

Added to the balance per books

d.

Deducted from the balance per books

Which of the following bank reconciliation items would not be reflected in a journal entry?

a.

Outstanding checks

b.

NSF customer check

c.

Collection of a note by the bank

d.

Bank service charges

The debit recorded in the journal to establish the petty cash fund is to:

a.

Petty cash

b.

Accounts receivable

c.

Cash

d.

Accounts payable

Robbins supply journal entry to establish a $100 petty cash fund for the office would include a:

a.

Credit to petty cash for $100

b.

Credit to cash for $100

c.

Debit to office expense for $100

d.

Debit to cash for $100

An error recording a $72 check as $27 would be included on the bank reconciliation as a(n):

a.

Subtraction from the balance per bank

b.

Subtraction from the balance per books

c.

Addition to the balance per books

d.

Addition to the balance per bank

The accounting department forgot to estimate the worker s compensation, this will cause:

a.

The net income to be understated

b.

The liabilities to be overstated

c.

The assets to be overstated

d.

The net income to be overstated

Posting the payroll entry comes from the:

a.

Employees earning record

b.

Journal

c.

Payroll register

d.

None of these answers are correct

The entry to record he employers payroll taxes would include:

a.

a credit to state and federal unemployment tax payable

b.

a credit to fica-social security taxes payable and fica-medicare taxes payable

c.

a debit to payroll taxes expense

d.

all of these answers are correct

The entry to record the payroll tax expense would include:

a.

a credit to cash

b.

a credit to fica (social security and medicare) taxes payable

c.

a credit to federal income taxes payable

d.

a credit to wages payable

The normal balance of the sales returns and allowances account is:

a.

a debit

b.

zero

c.

a credit

d.

it does not have a normal balance

Accounts of a single type are kept in this ledger

a.

Subsidiary ledger

b.

Supplemental ledger

c.

Additional ledger

d.

None of these answers are correct

Payment for merchandise sold on credit for $100 subject to 2/10 n/30 was received within the discount period – $98 was received. This was recorded with a debit to sales discounts for $2, a debit to cash for $98 and a credit to accounts receivable 100, but no mention was made of the subsidiary ledger account. This error will cause:

a.

The net income for the period to be overstated

b.

The net income for the period to be understated

c.

The assets to be overstated

d.

The control account to not agree with the subsidiary ledger

A list of creditors with ending balances is called:

a.

A trade list

b.

A schedule of accounts payable

c.

A list of suppliers

d.

A schedule of accounts receivable

Purchased office supplies on account. This will be recorded with:

a.

A debit to a liability and a credit to an asset

b.

A credit to a liability and a debit to an asset

c.

A credit to an asset and a debit to an expense

d.

A debit to an asset and a credit to an expense

The journal entry to record the return of a purchase of inventory under the perpetual system includes a:

a.

Credit to merchandise inventory

b.

Credit to purchases

c.

Debit to purchase returns and allowances

d.

Debit to merchandise inventory

Deluth Corporation has a normal gross profit of 40%. The current year s beginning inventory was $2,000, purchase were $5,000 and retail sales were $6,000. The estimated ending inventory under the gross margin method is:

a.

$3,600

b.

$3,400

c.

$3,450

d.

$4,500

When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:

a.

Subtracted from the cost of the new asset

b.

Credited to gain on exchange of an asset

c.

Absorbed into the cost of the new asset

d.

Recorded in the other income section of the income statement

Salvage value was ignored using units of production depreciation. This error would cause:

a.

The periods net income to be understated

b.

The periods net income will be overstated

c.

The periods net assets will be overstated

d.

None of these are correct