ACCT220 Quiz 1 latest 2016

True or False

Indicate whether the following statements are true or false.

Question 1

Generally Accepted Accounting Principles (GAAP) allow companies to issue financial statements, using either the cash basis or the accrual basis of accounting, depending on their needs.

Question options:

True

False

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Question 2

Adjusting entries are done to make sure that expenses and revenues are recorded in the proper accounting period.

Question options:

True

False

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Question 3

A single journal entry must debit only one account and credit only one account for the same amount so that the entry is in balance.

Question options:

True

False

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Question 4

The current ratio is cash divided by current liabilities.

Question options:

True

False

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Question 5

Materiality is subjective. One company may consider $1,000 material and another company may not.

Question options:

True

False

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Multiple Choice

Select the best answer for each of the following questions.

Question 6

Revenues are recorded when _______________.

Question options:

goods or services are delivered to the customer

the check has cleared and the money is available for use

a check is received from a customer

a contract is signed

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Question 7

Which of the following is NOT a liability?

Question options:

unearned revenue

long-term debt

accumulated depreciation

accounts payable

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Question 8

Management failing to reveal a default on a loan agreement will have violated what principle?

Question options:

cost principle

ethics principle

matching principle

full-disclosure principle

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Question 9

Expenses are recorded in the same period that related revenue is recorded, according to the _______________.

Question options:

revenue-recognition principle

matching principle

accounting equation

cost principle

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Question 10

The percentage-of-completion method recognizes revenue _______________.

Question options:

at the end of the entire project for a multi-year contract

at 10% per month

based on an estimate of the portion of work complete

when the contracted work has begun

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Question 11  

An asset cost $14,400 and is expected to last 8 years, at which time it will be sold for a scrap value of $2,400. Using straight-line depreciation, the monthly depreciation journal entry would be _______________.

Question options:

debit depreciation expense and credit accumulated depreciation for $150

debit depreciation expense and credit accumulated depreciation for $125

debit accumulated depreciation and credit depreciation expense for $125

debit accumulated depreciation and credit depreciation expense for $150

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Question 12

When money is collected from a customer previously billed, we _______________.

Question options:

credit cash and debit accounts receivable

credit accounts payable and debit cash

credit cash and debit accounts payable

debit cash and credit accounts receivable

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Question 13

Which event will have the effect of increasing retained earnings?

Question options:

a customer pays us for a bill we sent last month

revenue is recognized

an expense is paid

a dividend is declared

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Question 14  

The income summary account is used to _______________.

Question options:

set aside earned money available to owners

zero out expense and revenue accounts at the end of the period

record a history of income items

calculate net income

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Question 15

The dividends payable account belongs on which statement?

Question options:

Balance sheet

Income statement

Statement of retained earnings

Statement of cash flows

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Journal Entries

Prepare the following journal entries. Dates and descriptions are not required.

Question 16  

Paid $20,000 for stock in a newly formed corporation.

Prepare the journal entry to document this transaction. Dates and descriptions are not required

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Question 17

Purchased photocopier for $5000 on account.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

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Question 18

Bought office supplies for immediate consumption for $200 cash.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

Particulars

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Question 19

Billed customer $3500 for services performed

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

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Question 20

Customer paid $2,000 on account.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

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Question 21

Prepaid insurance account has a $2,400 balance for a twelve-month premium. Month one has ended.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

Question 22

Office supplies on hand account has a balance of $1,955, and a physical count reveals that there are $715 worth of supplies remaining at month end.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

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Question 23

A customer had previously paid $500 in advance on an order. The order has now been shipped FOB destination.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

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Question 24

Sales tax of $100 is collected from a customer to be remitted to the state at a later date.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.

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Question 25

At month end, $2,300 of wages are due to employees but not yet paid.

Prepare the journal entry to document this transaction. Dates and descriptions are not required.