Class:
Name:
Date:
ID: A
TEST 1
Multiple Choice
Identifuthechoicethat bestcompletesthestatementor answersthequestion,
l.
Profit is the difference between
a. assetsand liabilities
b. the incoming cashand outgoing cash
c. the assetspurchasedwith cashcontributedby the owner and the cashspentto operatethe
business
d. the assetsreceivedfor goodsand servicesand the amountsusedto provide the goodsand
services
2. An entity that is organized according to stateor federal statutesand in which ownership is divided into shares
of stock is a
a. proprietorship
b. corporation
c. partnership
d. governmentalunit
3. Which of the following best describesaccounting?
a. recordseconomicdata but doesnot communicatethe datato usersaccordingto any
specificrules
b. is an information systemthat providesreportsto users
c. is of no use by individuals outsideof the business
d. is usedonly for filling out tax returnsand for financial statementsfor varioustype of
governmentalreporting requirements
4. Which of the following is not a role of accountingin business?
a. To provide reportsto usersaboutthe economicactivitiesand conditionsof a business.
b. To personallyguaranteeloans of the business.
c. To provide information to other usersto determinethe economicperformanceand
condition of the business.
d. To assessthe various informationalneedsof usersand designits accountingsystemto
meetthoseneeds.
5. Darnell Companypurchased$88,000of computerequipmentfrom JosephCompany. Darnell Companypaid
for the equipmentusing cashthat had beenobtainedfrom the initial investmentby Donnie Darnell. The
transactioninvolving the computer equipment should be recorded on the accounting records of which of the
following entities?
a. Darnell Companyand Donnie Darnell's personalrecords
b. JosephCompanyand Donnie Darnell's personalrecords
c. Darnell Companyand JosephCompany
d. JosephCompany
l
l
ID: A
Name:
is
marketvalueof $55,000is offeredfor saleat $75,000.Theequipment
6. Equipment
with an estimated
acquiredfor $20,000in cashanda notepayableof $40,000duein 30 days.Theamountusedin thebuyer's
accountingrecordsto recordthis acquisitionis
a. $55,000
b. $60,000
c. $20,000
d. $75,000
7. The accountingequationmay be expressed
as
:
a. Assets Equities Liabilities
b. Assets+ Liabilities: Owner'sEquity
c. Assets= Revenues
lessLiabilities
d. Assets- Liabilities: Owner'sEquity
8. Whichof thefollowingis not an asset?
a. Investments
b. Cash
c. Inventory
d. Owner'sEquity
9. Earningrevenue
a. increases
assets,
increases
owner'sequity.
b. increases
assets,
decreases
owner'sequity
c. increases
asset,
decreases
anotherasset
one
increases
liabilities
d. decreases
assets,
whenit makesa saleon accountis termed
10. Theassetcreatedby a business
payable
a. accounts
prepaid
b.
expense
c. unearnedrevenue
receivable
d. accounts
11. The grossincreases
in owner'sequityattributableto businessactivitiesarecalled
a, assets
b. liabilities
c. revenues
d. netincome
12. A chartofaccountsis
a, the sameasa balancesheet
b. usuallya listing of accountsin alphabeticalorder
c. usuallya listing of accountsin financialstatementorder
d. usedin placeof a ledger
ID: A
Name:
13. Whichof the followingtypesof accounts
havea normalcreditbalance?
a. assets
andliabilities
b. liabilitiesandexpenses
c. revenues
andliabilities
d. capitalanddrawing
14, A creditsignifiesa decrease
in
a. drawing
b. liabilities
c. capital
d. revenue
in
15. A debitsignifiesa decrease
a. assets
b. expenses
c. drawing
d. revenues
payableaccountis
16. Theclassification
andnormalbalanceof theaccounts
a. anassetwith a creditbalance
b. a liabilitywith a creditbalance
c. owner'sequitywith a creditbalance
d. revenuewith a creditbalance
17. Theclassification
andnormalbalanceof thedrawingaccountis
a. an expensewith a creditbalance
b. anexpense
with a debitbalance
c. a liabilitywith a creditbalance
d. owner'sequitywith a debitbalance
of cashby RonYork, ownerof a proprietorship?
18. Whichof thefollowingentriesrecordsthe investment
a. debitRonYork, Capital;creditAccountsReceivable
b. debitCash;creditRonYork, Capital
c. debitRonYork, Drawing;creditCash
d. debitCash;creditRon York, Drawing
19. Which of the following entriesrecordsthe receiptof a utility bill from the watercompany?
a. debitUtilitiesExpense;creditAccountsPayable
b. debitUtilitiesPayable;creditAccountsReceivable
c. debitAccountsPayable;creditCash
d. debitAccountsPayable;creditUtilities Payable
20. Deferredrevenueis revenuethat is
a. earnedandthe cashhasbeenreceived
b. earnedbut the cashhasnot beenreceived
c. not earnedandthe cashhasnot beenreceived
d. not earnedbut the cashhasbeenreceived
ID: A
Name:
21. Adjusting entriesare
a. the sameas correctingentries
b. neededto bring accountsup to date and match revenueand expense
c. optionalunder generallyacceptedaccountingprinciples
d. rarely neededin large companies
22. Generallyacceptedaccountingprinciplesrequiresthat companiesuse the _
a. cashbasis
b. deferralbasis
c. accrualbasis
d. accountbasis
of accounting.
23. The balancein the office suppliesaccounton June I was $6,300,suppliespurchasedduring Junewere
$3,100,and the supplieson hand at June30 were $2,500. The amountto be usedfor the appropriate
adjustingentry is
a. $3,700
b. $11,900
c. $5,700
d. $6,900
24. What is the proper adjustingentry at April 30, the end of the fiscal year, basedon a prepaidinsurance
accountbalancebefore adjustment,$16,000,and unexpiredamountsper analysisof policies, $6,000?
a. debit InsuranceExpense,$6,000;credit PrepaidInsurance,$6,000
b. debit InsuranceExpense,$16,000;credit PrepaidInsurance,$16,000
c. debit PrepaidInsurance,$10,000;credit InsuranceExpense,$10,000
d. debitInsuranceExpense,$10,000;creditPrepaidInsurance,$10,000
25. DepreciationExpenseand AccumulatedDepreciationare classified,respectively,as
a. expense,contra asset
b. asset,contra liability
c. revenue,asset
d. contraasset,expense
26. The following adjustingjournal entry was found on page4 of the journal. Selectthe bestexplanationfor the
entry.
UnearnedRevenue
Feesearned
3.800
????????????????
a,
b.
c.
d.
Record payment of fees earned
Record fees earned at the end of the month
Record fees that have not been earnedat the end of the month
Record the payment of fees to be earned.
3,800
ID: A
Name:
Use the following information in the adjustedtrial balancefor Stockton Company to answerthe following
questions.
Stockton Companv
AdiustedTrialBalance
FortheYearendedDecember
3 2010
Cash
AccountsReceivable
PrepaidExpenses
Eouioment
AccumulatedDepreciation
AccountsPavable
NotesPavable
Bob Steely,Capital
Bob Steelv.Withdrawals
FeesEarned
$ 6,030
2,100
700
13,700
$ I,100
1,900
4,200
12.940
790
8.750
2,500
1.960
775
WasesExoense
Rent Expense
UtilitiesExoense
2s0
DepreciationExpense
MiscellaneousExpense
Totals
85
$28,890
$28,890
27. Determinethenet income(loss)for theperiod.
a.
b.
c.
d.
Net Income$2,390
Net Loss$790
NetLoss55,570
NetIncome$3,180
28. Determinetotalassets.
a.
b.
c.
d.
$23,630
$15,330
$21,430
$22,530
29. Whichof thefollowingaccountswill 4! be closedto IncomeSummaryat the endof thefiscalyear?
a.
b.
c.
d.
Expense
Salaries
FeesEarned
Unearned
Rent
DepreciationExpense
Name:
ID: A
30. Whatis thetermappliedto the excessof netrevenuefrom salesoverthe costof merchandise
sold?
a. grossprofit
b. incomefrom operations
c. netincome
d. grosssales
31. A company,
usingtheperiodicinventorysystem,hasmerchandise
inventorycosting$175on handat the
beginningof theperiod.Duringtheperiod,merchandise
costing$635is purchased.At year-end,
merchandise
inventorycosting$160is on hand.Thecostof merchandise
soldfor theyearis
a. $970
b. s6s0
c. $300
d. $620
32. Usingthefollowinginformation,whatis theamountof costof merchandise
sold?
Purchases
Merchandise
inventory
SeotemberI
Salesreturnsand
allowances
Purchasesreturnsand
allowances
a.
b.
c.
d.
$32,000
5,700
910
1,200
26,900
20,530
30,210
28,130
Purchases
discounts
$960
Merchandiseinventorv
Seotember30
Sales
6,370
FreightIn
63,000
1,040
E1@
37@o \
( !.3ttt )
/octo
(aue\
33. Merchandisewith a salesprice of $800 is sold on accountwith term 2/10, n/30. The journal entry to record
thesalewouldincludea
a. debitto Cashfor $800
b. Debitto SalesDiscounts
for $16
c. Creditto Salesfor $800
d. Debitto AccountsReceivable
for $784
( tz'.o2
b )o>P
?
34. Merchandisesubjectto terms lll0, n130,FOB shippingpoint, is sold on accountto a customerfor $25,000.
The sellerpaid freight costsof $2,000and issueda credit memo for $ 10,000prior to payment. What is the
amountof the cashdiscountallowable?
a. $170
b. $1s0
c. $130
d. $250
Name:
ID: A
purchased
35. Whena buyerreturnsmerchandise
for cash,the buyermay recordthe transactionusingthe
following entry
a. debitMerchandise
Inventory;creditCash
b. debitCash;creditMerchandise
Inventory
c. debitCash;creditSalesReturnsandAllowances
d. debitSalesReturnsandAllowances:creditCash
ID: A
TEST1
Answer Section
MULTIPLE CHOICE
1. ANS: D
PTS: I
DIF: Easy
NAT: AACSBAnalyticIAICPA FN-Measurement
2. ANS: B
PTS: I
DIF: Easv
NAT: AACSBAnalyticIAICPA BB-Industry
3. ANS: B
PTS: I
DIF: Moderate
NAT: AACSBAnalyticIAICPA BB-Industry
4. ANS: B
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPA BB-Industry
5. ANS: C
PTS: I
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
PTS: I
DIF: Difficult
6, ANS: B
NAT: AACSBAnalyticIAICPA FN-Measurement
DIF: Moderate
7. ANS: D
PTS: 1
NAT: AACSBAnalyticIAICPA FN-Measurement
8. ANS: D
PTS: 1
DIF: Easy
NAT: AACSBAnalyticIAICPA FN-Measurement
PTS: I
DIF: Moderate
9, ANS: A
NAT: AACSB Analytic I AICPA FN-Measurement
10. ANS: D
PTS: I
DIF: Easy
NAT: AACSBAnalyticIAICPA FN-Measurement
PTS: 1
DIF: Easv
11. ANS: C
NAT: AACSBAnalyticIAICPA FN-Measurement
12. ANS: C
PTS: I
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
13. ANS: C
PTS: I
DIF: Easy
NAT: AACSBAnalyticIAICPA FN-Measurement
DIF: Moderate
14. ANS: A
PTS: I
NAT: AACSBAnalyticIAICPA FN-Measurement
15. ANS: D
PTS: I
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
16. ANS: B
PTS: 1
DIF: Easv
NAT: AACSBAnalyticIAICPA FN-Measurement
PTS: I
DIF: Easv
17. ANS: D
NAT: AACSBAnalyticIAICPA FN-Measurement
PTS: I
DIF: Moderate
18. ANS: B
NAT: AACSBAnalyticIAICPA FN-Measurement
19. ANS: A
PTS: I
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
DIF: Difficult
20. ANS: D
PTS: I
NAT: AACSBAnalvticIAICPA FN-Measurement
OBJ: 01-01
OBJ: 01-02
OBJ: 01-01
OBJ: 0l-01
OBJ: 0l-02
OBJ: 01-02
OBJ: 01-03
OBJ: 01-03
OBJ: 01-04
OBJ: 0l-04
OBJ: 02-01
OBJ: 02-01
OBJ: 02-02
OBJ: 02-02
OBJ: 02-02
OBJ: 02-02
OBJ: 02-02
OBJ: 02-02
OBJ: 02-02
OBJ: 03-01
ID: A
21. ANS: B
PTS: 1
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
22. ANS: C
PTS: 1
DIF: Easy
NAT: AACSBAnalyticIAICPA FN-Measurement
23, ANS: D
PTS: I
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
24. ANS: D
PTS: I
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
25. ANS: A
PTS: I
DIF: Easy
NAT: AACSBAnalyticIAICPA FN-Measurement
26. ANS: B
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPA FN-Measurement
27. ANS: D
PTS: 1
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
28. ANS: C
PTS: 1
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
29. ANS: C
PTS: 1
DIF: Moderate
NAT' AACSBAnalyticIAICPA FN-Measurement
30. ANS: A
PTS: I
DIF: Easy
NAT: AACSB Analytic I AICPA FN-Measurement
31. ANS: B
PTS: I
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
32, ANS: C
PTS: 1
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
33. ANS: C
PTS: I
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
34, ANS: B
PTS: I
DIF: Difficult
NAT: AACSBAnalyticIAICPA FN-Measurement
35. ANS: B
PTS: I
DIF: Moderate
NAT: AACSBAnalyticIAICPA FN-Measurement
OBJ: 03-01
OBJ: 03-01
OBJ: 03.02
OBJ: 03-02
OBJ: 03-02
OBJ: 03-02
OBJ: 04-02
OBJ: 04-02
OBJ: 04-03
OBJ: 06-01
OBJ: 06-02
OBJ: 06-02
OBJ: 06-03
OBJ: 06.03
OBJ: 06-03