Accounting Quiz 1

Purchasing an item of equipment for cash will cause total assets, total liabilities, and stockholders’ equity to:

A.   increase, increase, and remain unchanged, respectively.
B.   remain unchanged, remain unchanged, and remain unchanged, respectively.
C.   increase, remain unchanged, and increase, respectively.
D.   increase, remain unchanged, and decrease, respectively.
E.   None of these.

Paying a previously recorded accounts payable will cause total assets, total liabilities, and stockholders’ equity to:

A.   decrease, remain unchanged, and decrease, respectively.
B.   remain unchanged, remain unchanged, and decrease, respectively.
C.   remain unchanged, remain unchanged, and remain unchanged, respectively.
D.   decrease, decrease, and remain unchanged, respectively.
E.   None of these.

Which of the following is considered a revenue item?

A.   Proceeds of a bank loan.
B.   Investments by owner.
C.   Sales on account.
D.   All of these.
E.   None of these.

Which of the following would not cause stockholders’ equity to fluctuate?

A.   Investments by shareholders.
B.   Dividends.
C.   Providing services at a profit or loss.
D.   Collection of accounts receivable.
E.   None of these.

Assume beginning assets of $60,000, ending assets of $80,000, a $10,000 decrease in liabilities, and ending stockholders’ equity of $45,000.  If dividends exceeded capital stock issuances by $20,000, how much was net income for the period?

A.   $15,000.
B.   $30,000.
C.   $50,000.
D.   Cannot be determined from the information given.
E.   None of these.

Microtel began operations at the beginning of 20X6 with a $10,000 cash investment by stockholders. During 20X6, Microtel had revenue on account of $5,000; of this amount $2,000 was collected during 20X6 and $3,000 was an outstanding receivable at year-end. Microtel incurred $3,000 of operating expenses during 20X6; of this amount $1,000 was unpaid at year-end.  During 20X6, $1,000 cash was disbursed as dividends.  The only other transaction during 20X6 was the purchase of $5,000 of equipment for cash near the end of the year.  How much were Microtel’s total assets at year-end?

Of the following account types, which normally display a credit balance:

A.   Assets and expenses.
B.   Assets and stockholders’ equity.
C.   Assets, revenues, and stockholders’ equity.
D.   Liabilities and expenses.
E.   None of these.

The dividend account:

A.   is an expense account.
B.   appears on the income statement.
C.   appears on the statement of retained earnings.
D.   normally has a credit balance.
E.   None of these.

Richards billed patients for $12,000 of services rendered.  The appropriate journal entry to record this transaction is:

A.   Debit Cash/Credit Revenue.
B.   Debit Accounts Receivable/Credit Revenue.
C.   Debit Revenue/Credit Cash.
D.   Debit Accounts Receivable/Credit Capital Stock.
E.   None of these.

Richards Corporation paid $3,000 toward an outstanding accounts payable that was previously established when supplies were purchased.  The appropriate journal entry to record this transaction is:

A.   Debit Cash/Credit Accounts Payable.
B.   Debit Supplies/Credit Accounts Payable.
C.   Debit Accounts Payable/Credit Supplies.
D.   Debit Accounts Payable/Credit Cash.
E.   None of these.

Richards Corporation collected $5,000 on an outstanding accounts receivable that was previously established when services were provided to customers.  The appropriate journal entry to record this transaction is:

A.   Debit Cash/Credit Accounts Receivable.
B.   Debit Revenues/Credit Accounts Receivable.
C.   Debit Accounts Receivable/Credit Revenues.
D.   Debit Accounts Receivables/Credit Cash.
E.   None of these.

Archie Corporation’s trial balance included debits to expense accounts of $125,000, credits to revenue accounts of $175,000, and debits to the Dividends account of $50,000.  Based on this information, the company’s ending retained earnings is:

A.   $0.
B.   $50,000.
C.   $125,000.
D.   Cannot be determined.
E.   None of these.

Jennings Company had a beginning Accounts Receivable account balance of $380.  During the period Jennings’ sold goods on account for $1,400.  Ending Accounts Receivable had a $630 balance.  How much was collected on account during the period?

Jorden Company reports total assets and total liabilities of $251,000 and $100,000, respectively, at the conclusion,of its first year of business.  The company earned $75,000 during the first year, and distributed $30,000 to shareholders as dividends.  How much did shareholders initially invest in the business?

Beginning and ending balances of Accounts Receivable were $43,000 and $22,000, respectively.  If collections from clients during the period were $65,000, how much were services rendered on account?

For purposes of reporting the results of operations, the life of a business is:

A.   considered to be one continuous reporting period..
B.   divided into discrete accounting periods.
C.   divided into one-year time intervals.
D.   divided into specific points in time.
E.   None of these.

On March 1, 20X3, Jimenez purchased a one-year insurance policy for $2,400.  On that date, Jimenez debited Prepaid Insurance for $2,400.  If Jimenez desires to prepare financial statements at the end of March, the adjusting journal entry would include a:

A.   debit to Insurance Expense for $2,400.
B.   debit to Insurance Expense for $200.
C.   credit to Insurance Expense for $2,200.
D.   credit to Prepaid Insurance for $2,200.
E.   None of these.

A company failed to record utilities consumed during the current period.  The company will be billed for the utilities during the next accounting period.  As a result, current period assets, liabilities, stockholders’ equity, and income, respectively, are:

A.   overstated, overstated, correct, correct..
B.   correct, understated, overstated, overstated.
C.   overstated, understated, overstated, overstated.
D.   overstated, understated, correct, correct.
E.   None of these.

The proper journal entry to record depreciation of a truck would entail which of the following?

A.   A debit to Depreciation Expense.
B.   A credit to Accumulated Depreciation.
C.   A credit to Truck.
D.   Two of the above.
E.   None of these.

On January 7, Collin purchased supplies on account for $1,000, and recorded this purchase to the Supplies account.  At the end of January, Collin had $600 of these supplies still on hand.  The proper adjusting journal entry at January 31 would:

A.   include a debit to Supplies for $1,000.
B.   include a credit to Supplies for $400.
C.   include a debit to Accounts Payable for $400.
D.   include a debit to Supplies Expense for $600.
E.   None of these.

On January 26, a customer paid Collin Printing $250 in advance for printing.  On January 28, Collin printed 500 posters for Grubb at a price of 30¢ each.  The proper entry on January 26 would include a:

A.   debit to Unearned Revenue of $250.
B.   credit to Unearned Revenue for $100.
C.   credit to Unearned Revenue for $250.
D.   debit to Unearned Revenue for $100.
E.   None of these.

On January 26, a customer paid Collin Printing $250 in advance for printing.  On January 28, Collin printed 500 posters for Grubb at a price of 30¢ each.  The proper entry on January 28 would include a:

A.   debit to Unearned Revenue of $250.
B.   credit to Unearned Revenue for $100.
C.   credit to Unearned Revenue for $250.
D.   debit to Unearned Revenue for $100.
E.   None of these.

Net income may be found in the:

A.   balance sheet and income statement.
B.   income statement and statement of retained earnings.
C.   income statement and balance sheet.
D.   balance sheet and statement of retained earnings.
E.   None of these.

After closing all Revenue and Expense accounts, Weiss Company had a debit balance in its Income Summary account of $5,000.  The proper entry to record the closing of the Income Summary account would include:

A.   a debit to Expenses of $5,000.
B.   a credit to Retained Earnings of $5,000.
C.   a credit to Income Summary of $5,000.
D.   a credit to Revenues of $5,000.
E.   None of these.

In a post-closing trial balance:

A.   debits should equal credits..
B.   no balances remain in the Dividends, Revenue, and Expense accounts.
C.   Retained earnings includes net income.
D.   All of the above.
E.   None of these.

Current assets are those assets which management intends to convert into cash or consume within:

A.   one year.
B.   the operating cycle.
C.   the longer of A or B.
D.   the shorter of A or B.
E.   None of these.

Lena White Corporation has a current ratio of 3:1.  If Lena uses cash to pay an outstanding accounts payable, the revised current ratio will:

A.   remain the same.
B.   increase.
C.   decrease.
D.

Cannot be determined from the information given.
E.

None of these.