Accounting Test 1

Accounting Test 1
1. A potential investor interested in evaluating whether a company can pay

its liabilities when they come due would look at which of the following
financial statements? - Balance sheet
2. What effect does an accrued revenue adjustment have on a company's

net income?
accrued revenue
- increase assets
- increase revenue
- net income
- stockholder equity
3. A business purchases equipment for $150,000 by paying $10,000 in cash

and signing a notes payable for the balance. How does this transaction
impact the accounting equation?
A= L+ SE
150000-1000=+140000+SE
Assets and liabilities increase 140000
4. All of the following are characteristics of useful accounting information

under the conceptual framework of accounting EXCEPT: - informative
5. Transactions affecting Stockholders' Equity include: -

stockholder - expense
/revenue
- sale of common stock and payment of expenses
6. A liability that arises from an expense that has not yet been paid is a(n): -
accrued expense
7. Which of the following is NOT a business transaction -

-financial impact / cash or goods of services change
-hiring a new president
8. At the end of the current accounting period, account balances were as

follows: Cash, $180,000; Accounts Receivable, $75,000; Accounts
Payable, $50,000; Common Stock, $20,000; Retained Earnings, $65,000.
Assuming other than liabilities, these are the only accounts the company
has, total liabilities for the period were: - 170000
9. The income statement is prepared to determine: - the changed in

retained earnings due to the results of operations
10. The owners' equity of any business is its: - assets - liabilities

11. Which statement about the journal (or a journal entry) is NOT true? - The
journal entry shows the balance in each account
12. Which of the following transactions will decrease an asset account and
decrease a liability account? - paying off a notes payable
13. To close the books of a company, you should -

debit revenue credit retained earning
debit retained earning
credit expense account
credit dividends debit retained earnings
14. In what order are financial statements generally prepared? - Income

Statement, Statement of Retained Earnings, and Balance Sheet
15. A company started the year with $800 of supplies. During the year, the
company purchased an additional $1,600 of supplies. There were $900 of
supplies on hand at the end of the year. An adjusting entry prepared at
the end of the accounting period includes a: - supplies expense 1500
16. Oakwood Company had accounts receivable of $650,000 and an

allowance for doubtful accounts of $18,500 just prior to writing off as
worthless an account receivable for Hyland Company of $3,000. Calculate
the net realizable value of accounts receivable as shown by the
accounting records after the write-off - 631500
17. Turner Co. uses the percentage of credit sales method to estimate bad
debts. Based on past experience Turner Co. estimates that 3% of its
credit sales will be uncollectible. Turner's total sales for the year were
$3,500,000 and its credit sales for the year were $1,800,000. During the
year, Turner wrote off $20,000 of uncollectible accounts. Turner's
allowance for uncollectible accounts had a $15,000 credit balance on
January 1. In its December 31 balance sheet, what amount should Turner
report as Allowance for Uncollectible Accounts? - 49000
18. . Porter Corp. specializes in custom order computers. Porter Corp.

requires the customer to pay the full price of the computer when the order
is placed due to the custom nature of the product. Assume John Titus, a
customer, places an order for a custom computer on June 1, 2020 and
pays Porter Corp. $5,000 cash for the computer. Porter Corp. begins
production of the computer on June 20, 2020, and completes production
on July 15, 2020. Porter Corp. then delivers the computer to John Titus on
July 25, 2020. On what date should Porter Corp. recognize the revenue
associated with the sale to John Titus? - July 25,2020
19. . Which of the following accounts is considered a "temporary" account? -

income statement and dividends
20. . At the beginning of the period, assets were $525,000 and stockholders'
equity was $280,000. During the year, assets increased by $80,000,
liabilities increased by $100,000, and stockholders' equity decreased by
$20,000. Calculate ending liabilities. - 145000
21. . A company pays an employee $1,500 per week for a five day work week.
The adjusting entry on December 31, which is a Tuesday, is a: -
1500/5=300
300*2=600
salary expense 600
salaries payable 600
22. . If the debit amount of an entry to record the purchase of supplies on

account was not posted:
supplied
understate assets
23. Which accounts are increased by debits? - assets, expenses, dividends
24. Warren Corporation received $1,500 cash on account from customers.

The journal entry Warren Corporation would record for this transaction
includes: - cash /accounts receivable 1500
25. . On October 1, 2020 Rella Inc. signed a $600,000, 10 month, 10% note
payable. At due date, the principal and interest will be paid. Calculate the
amount of interest expense that Rella Inc. should report on its income
statement for the year ended December 31, 2021. (round to the nearest
dollar) - 35000
26. Which of the following is a false statement regarding a trial balance: - trial
balance lists all accounts free of all errors
27. . ABC Company has shipped goods to one of its customers FOB
destination. ABC Company will recognize sales revenue when: - the
goods are received
28. accrued revenue -
A revenue that has been earned but for which the cash has not yet
been collected.
Accounts receivable - debit (increase assets)

Revenue - credit
balance sheet - acid and liabilities
29. At the end of the current accounting period, account balances were as
follows: Cash, $80,000; Common Stock, $30,000; Retained Earnings,
$45,000; Accounts payable $60,000; Notes payable, $120,000; Salaries
payable $40,000; and Utilities payable $1200. Assuming other than
assets these are the only accounts the company has, assets at the end of
the current period were: - 296200
30. Failure to make an adjusting entry to recognize accrued interest payable

would cause an: - Understate expense overstate net income
31. understate liabilities
32. Which of the following transactions would increase total assets?

I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
V. Performing services on account would: - increase net income and

stockholders' equity
33. The following accounts are up-to-date and need no adjustment at the end
of the period: - cash, land and common stock.
34. The Houston Rockets basketball team receives $5,000 for season tickets
on August 1. By December 31, they have earned $2,000 of the revenue.
The adjusting entry to be made on December 31 by the Houston Rockets
includes a: - debit to Unearned Revenue of $2,000
35. Revenues are recorded when: - the work is completed on the job,
whether or not the cash is received.
36. Which of the following is a false statement regarding a trial balance: - A

trial balance ensures the financial statements are free of all errors
37. . Which section of the Statement of Cash Flows is the most important? -
Operating Activities
38. . On September 1, 2020, Beard Entertainment paid $4,000 for September,

October, November and December's rent in advance. The company
recorded this transaction by increasing the balance in the Prepaid Rent
account. The balance in the Prepaid Rent account as of October 31, 2020,
will be - 2000
39. Bigg and Talle Corporation uses the percent-of-sales method to estimate
uncollectibles. Net credit sales for the current year amount to $5,000,000,
and management estimates 2% will be uncollectible. Allowance for
Uncollectible Accounts prior to adjustment has a credit balance of
$16,000. The amount of expense reported on the income statement will
be: - 100000
40. . On September 1, Banger Bros. Company paid $9,000 for one year of
rent, in advance. Which of the following accounts and amounts will appear
on an adjusted trial balance prepared on December 31? - rent expense
3000

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Accounting Test 1

1. A potential investor interested in evaluating whether a company can pay

2. What effect does an accrued revenue adjustment have on a company's

3. A business purchases equipment for $150,000 by paying $10,000 in cash

4. All of the following are characteristics of useful accounting information

5. Transactions affecting Stockholders' Equity include: -

7. Which of the following is NOT a business transaction -

8. At the end of the current accounting period, account balances were as

9. The income statement is prepared to determine: - the changed in

10. The owners' equity of any business is its: - assets - liabilities

13. To close the books of a company, you should -

14. In what order are financial statements generally prepared? - Income

16. Oakwood Company had accounts receivable of $650,000 and an

18. . Porter Corp. specializes in custom order computers. Porter Corp.

19. . Which of the following accounts is considered a "temporary" account? -

22. . If the debit amount of an entry to record the purchase of supplies on

23. Which accounts are increased by debits? - assets, expenses, dividends

24. Warren Corporation received $1,500 cash on account from customers.

28. accrued revenue -

Accounts receivable - debit (increase assets)

balance sheet - acid and liabilities

30. Failure to make an adjusting entry to recognize accrued interest payable

32. Which of the following transactions would increase total assets?

V. Performing services on account would: - increase net income and

36. Which of the following is a false statement regarding a trial balance: - A

38. . On September 1, 2020, Beard Entertainment paid $4,000 for September,

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