Accounting - Download as DOC by shitingting

VIEWS: 1,572 PAGES: 7

									                                        MIDTERM EXAM REVIEW

CHAPTER 1



1.        All of the financial statements are for a period of time except the

          a.   income statement.
          b.   owner's equity statement.
          c.   balance sheet.
          d.   statement of cash flows.


3.        Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000.
          During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses.
          Stahl made an additional investment of $3,000 and withdrew cash of $5,000 during the year.
          Owner’s equity changed by what amount from the beginning of the year to the end of the year?

          a.   $15,000
          b.   $14,000
          c.   $6,000
          d.   $3,000

4.        If total liabilities increased by $15,000 and owner’s equity increased by $5,000 during a period of
          time, then total assets must change by what amount and direction during that same period?

          a.   $20,000 decrease
          b.   $20,000 increase
          c.   $25,000 increase
          d.   $30,000 increase

5.        Benito Company began the year with owner’s equity of $175,000. During the year, the company
          recorded revenues of $250,000, expenses of $190,000, and had owner drawings of $20,000.
          What was Benito’s owner’s equity at the end of the year?

          a.   $255,000.
          b.   $215,000.
          c.   $405,000.
          d.   $235,000.

     6.       Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000.
          During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses.
          Stahl made an additional investment of $3,000 and withdrew cash of $5,000 during the year.The
          owner’s equity at the end of the year was

          a. $21,000.
          b. $18,000.
          c. $8,000.
CHAPTER 2


  9.   Which of the following correctly identifies normal balances of accounts?

       a. Assets                       Debit

           Liabilities                 Credit

           Owner's Equity              Credit

           Revenues                    Debit

           Expenses                    Credit

       b. Assets                       Debit

           Liabilities                 Credit

           Owner's Equity              Credit

           Revenues                    Credit

           Expenses                    Credit

       c. Assets                       Credit

           Liabilities                 Debit

           Owner's Equity              Debit

           Revenues                    Credit

           Expenses                    Debit

       d. Assets                       Debit

           Liabilities                 Credit

           Owner's Equity              Credit

           Revenues                    Credit

           Expenses                    Debit


10.    Taylor Industries purchased supplies for $1,000. They paid $500 in cash and agreed to pay the
       balance in 30 days. The journal entry to record this transaction would include a debit to an asset
       account for $1,000, a credit to a liability account for $500. Which of the following would be the
       correct way to complete the recording of the transaction?

       a.   Credit an asset account for $500.
       b.   Credit another liability account for $500.
       c.   Credit the Taylor, Capital account for $500.
       d.   Debit the Taylor, Capital account for $500.

11.    On June 1, 2010 Quang Le buys a copier machine for his business and finances this purchase
       with cash and a note. When journalizing this transaction, he will

       a.   use two journal entries.
       b.   make a compound entry.
       c.   make a simple entry.
       d.   list the credit entries first, which is proper form for this type of transaction.

 12.   If a company has overdrawn its bank balance, then

       a.   its cash account will show a debit balance.
       b.   its cash account will show a credit balance.
       c.   the cash account debits will exceed the cash account credits.
       d.   it cannot be detected by observing the balance of the cash account.

 13.   At October 1, 2010, Padilla Industries had an accounts payable balance of $30,000. During the
       month, the company made purchases on account of $25,000 and made payments on account of
       $40,000. At October 31, 2010, the accounts payable balance is

       a.   $30,000.
       b.   $10,000.
       c.   $15,000.
       d.   $40,000.

 15.   Rusthe Company showed the following balances at the end of its first year:

              Cash                                       $ 7,000

              Prepaid insurance                              700

              Accounts receivable                           3,500

              Accounts payable                              2,800

              Notes payable                                 4,200

              Denton, Capital                               1,400

              Denton, Drawing                                700

              Revenues                                    21,000

              Expenses                                    17,500
      What did Rusthe Company show as total credits on its trial balance?

      a.   $30,100
      b.   $29,400
      c.   $28,700
      d.   $30,800

CHAPTER 3

17.   Ron's Hot Rod Shop follows the revenue recognition principle. Ron services a car on
      July 31. The customer picks up the vehicle on August 1 and mails the payment to Ron
      on August 5. Ron receives the check in the mail on August 6. When should Ron show
      that the revenue was earned?
      a. July 31
      b. August 1
      c. August 5
      d. August 6

18.   The following is selected information from Alpha-Beta-Gamma Corporation for the fiscal
      year ending October 31, 2010.
            Cash received from customers                                      $300,000
            Revenue earned                                                     350,000
            Cash paid for expenses                                             170,000
            Cash paid for computers on November 1, 2009 that will be used
             for 3 years (annual depreciation is $16,000)                        48,000
            Expenses incurred, not including any depreciation                   200,000
            Proceeds from a bank loan, part of which was used to pay for
              the computers                                                     100,000
      Based on the accrual basis of accounting, what is Alpha-Beta-Gamma Corporation’s net
      income for the year ending October 31, 2010?
      a. $114,000.
      b. $134,000.
      c. $82,000.
      d. $150,000.

19.   Bee-In-The-Bonnet Company purchased office supplies costing $6,000 and debited
      Office Supplies for the full amount. At the end of the accounting period, a physical count
      of office supplies revealed $2,400 still on hand. The appropriate adjusting journal entry
      to be made at the end of the period would be
      a. Debit Office Supplies Expense, $2,400; Credit Office Supplies, $2,400.
      b. Debit Office Supplies, $3,600; Credit Office Supplies Expense, $3,600.
      c. Debit Office Supplies Expense, $3,600; Credit Office Supplies, $3,600.
      d. Debit Office Supplies, $2,400; Credit Office Supplies Expense, $2,400.

20.   Depreciation is the process of
      a. valuing an asset at its fair market value.
      b. increasing the value of an asset over its useful life in a rational and systematic
         manner.
      c. allocating the cost of an asset to expense over its useful life in a rational and
         systematic manner.
       d. writing down an asset to its real value each accounting period.

 21.   Cindi’s Candies paid employee wages on and through Friday, January 26, and the next
       payroll will be paid in February. There are three more working days in January (29–31).
       Employees work 5 days a week and the company pays $900 a day in wages. What will
       be the adjusting entry to accrue wages expense at the end of January?
       a. Wages Expense .................................................................   900
                Wages Payable ..........................................................          900
       b. Wages Expense ................................................................. 4,500
                Wages Payable ..........................................................        4,500
       c. Wages Expense ................................................................. 2,700
                Wages Payable ..........................................................        2,700
       d. No adjusting entry is required.


23.    James Corporation purchased a one-year insurance policy in January 2010 for $48,000.
       The insurance policy is in effect from May 2010 through April 2011. If the company
       neglects to make the proper year-end adjustment for the expired insurance
       a. Net income and assets will be understated by $32,000.
       b. Net income and assets will be overstated by $32,000.
       c. Net income and assets will be understated by $16,000.
       d. Net income and assets will be overstated by $16,000.

CHAPTER 4


27.    Topeka 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.

28.    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.

 29.   The balance in the income summary account before it is closed will be equal to
       a. the net income or loss on the income statement.
       b. the beginning balance in the owner's capital account.
       c. the ending balance in the owner's capital account.
       d. zero.

30.    A post-closing trial balance is prepared
       a. after closing entries have been journalized and posted.
       b. before closing entries have been journalized and posted.
       c. after closing entries have been journalized but before the entries are posted.
       d. before closing entries have been journalized but after the entries are posted.
 31.   Closing entries are made
       a. in order to terminate the business as an operating entity.
       b. so that all assets, liabilities, and owner's capital accounts will have zero balances
          when the next accounting period starts.
       c. in order to transfer net income (or loss) and owner's drawing to the owner's capital
          account.
       d. so that financial statements can be prepared.


CHAPTER 5

32.    If a company determines cost of goods sold each time a sale occurs, it
       a. must have a computer accounting system.
       b. uses a combination of the perpetual and periodic inventory systems.
       c. uses a periodic inventory system.
       d. uses a perpetual inventory system.

33.    During 2010, Yoder Enterprises generated revenues of $60,000. The company’s
expenses were as follows: cost of goods sold of $30,000, operating expenses of $12,000 and a
loss on the sale of equipment of $2,000.

       Yoder’s income from operations is
       a. $60,000.
       b. $30,000.
       c. $18,000.
       d. $12,000.

34.    A company shows the following balances:
              Sales                                         $1,000,000
              Sales Returns and Allowances                     180,000
              Sales Discounts                                   20,000
              Cost of Goods Sold                               560,000
       What is the gross profit percentage?
       a. 56%
       b. 70%
       c. 44%
       d. 30%



35.    The collection of a $900 account after the 2 percent discount period will result in a
       a. debit to Cash for $882.
       b. debit to Accounts Receivable for $900.
       c. debit to Cash for $900.
       d. debit to Sales Discounts for $18.


36.    Tony’s Market recorded the following events involving a recent purchase of
       merchandise:
               Received goods for $50,000, terms 2/10, n/30.
               Returned $1,000 of the shipment for credit.
               Paid $250 freight on the shipment.
               Paid the invoice within the discount period.
       As a result of these events, the company’s merchandise inventory
       a. increased by $48,020.
       b. increased by $49,250.
       c. increased by $48,265.
       d. increased by $48,270.


Bonus Answer

Maxwell Company's financial information is presented below.

Sales                                        $ ????   Cost of Goods Sold
Sales Returns and Allowances                 30,000   Gross Profit
Net Sales                                   450,000


The missing amounts above are:

          Sales        Gross
                       Profit
      $420,000      $210,000

      $420,000      $180,000

      $480,000      $180,000

      $480,000      $210,000

								
To top