Name: TaftUCrf,Prt-

ID: A

Date:

'Jnd-'at

T e s t1 - C h a p t e1r , 2 , 3 & 4
Multiple Choice
Identifu the choice that best completesthe statementor answers the question.
1. Profit is the differencebetween
a. assets
and liabilities
b. the incomingcashand outgoingcash
c. the assetspurchasedwith cashcontributedby the owner and the cashspentto operatethe
business
d. the assetsreceivedfor goodsand servicesand the amountsusedto provide the goodsand
servlces
2. Financialreportsare usedby
a. management
b. creditors
c. investors
d. all are correct
3. The initialsGAAP standfor
a. GeneralAccounting Procedures
b. GenerallyAcceptedPlans
c. GenerallyAcceptedAccountingPrinciples
d. GenerallyAcceptedAccounting Practices
4. For accountingpurposes,the businessentify shouldbe consideredseparatefrom its ownersif the entity is
a. a corporation
b, a proprietorship
c. a partnership
d. all ofthe above
5. Equipmentwith an estimatedmarketvalueof $55,000is offeredfor saleat $75,000.The equipmentis
acquiredfor $20,000in cashand a note payableof $40,000due in 30 days.The amountusedin the buyer's
accountingrecordsto recordthis acquisitionis
a. 555.000
b. $60.000

c. $20,000
d . $ 7 5 ,0 0 0
6. Owned resourcesof a businessare referredto as
a. assets
b. liabilities
c. equities
d. revenues

,{$

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ID: A
7. Debtsowed by a businessare referredto as
a. accountsreceivables
b. equities
c. owner'seqLrity
d. liabilities
8. The accountingequationmay be expressed
as
a. Assets= Equities- Liabilities
b. Assets+ Liabilities= Owner'sEquity
c. Assets= RevenueslessLiabilities
d. Assets- Liabilities: Owner'sEquity
9. Accounts
a. do not reflect money amounts
b. are not usedby entitiesthat manufactureproducts
c. are recordsof irrcreases
and decreases
in individualfinancialstatementitems
d. are only usedby largeentitieswith manytransactions

10. Which of the following accountsis an owner'sequityaccount?

a. Cash
b. AccountsPayable
c. PrepaidInsurance
d. RossMorris, Capital
1l.

Tlre grossincreasesit'towner'sequityattributableto businessactivitiesare called

a. assets
b. liabilities
c. revenues
d. net income

12. An
a.
b.
c.

accountis said to have a debit balanceif

the amountof the debits exceedsthe amountof the credits
thereare more entrieson the debit sidethanon the creditside
its normalbalanceis debit without regardto the amourrtsor numberof entrieson the
debitside
d. the first entry of the accountingperiodwas postedon the debit side

13. A debitmay signifya(n)

a. decreasein assetaccounts
b. decreasein liability accounts
c. increasein the capital account
d. decreasein the drawins account

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ID: A

14. Whichof thefollowinggroupsof accounts

havea normaldebitbalance?
a. revenues,
liabilities,capital
b. capital,assets
c. liabilities,expenses
d. assets,
expenses
15. A creditmaysignifya
a. decrease
in assets
b. decrease
in liabilities
c. decrease
in capital
d. decrease
in revenue
16. Whichof thefollowingentriesrecords
thepayment
of anaccountpayable?
a. debitCash;creditAccountsPayable
b. debitAccountsReceivable;
creditCash
c, debitCash;creditSupplies
Expense
d. debitAccounts
Payable;
creditCash
17. Thebalance
of theaccountis determined
by
a, addingall of thedebitsto all of thecredits.
b. alwayssubtracting
the debitsfrom thecredits.
c. alwayssubtracting
all of thecreditsfromthedebit.
d. addingall of thedebits,addingall of thecredits,andthensubtracting
thesmallersum
fromtlie largersurn.
18, PrarieClinicpLrrchased
X-rayequipment
for $4,000,paid$l ,275down,with theremainder
to bepaidlater.
Thecorrectentrywouldbe
a, Equiprnent
1,27
5
Cash
1,275
b. Cash
1,215
Accounts
Payable 2,725
Equipment
4,000
c. Equipment
Expense 4,000
AccountsPayable
1,275
Cash
2,725
d. Equiprnerrt
4,000
AccountsPayable 2,725
Cash
1,275
e. Cash
1,275
Equiprnent
1,275
19. Whichof thefollowingstatements
is not trueaboutliabilities?
a. Liabilitiesaredebtsowedto outsiders.
b. Accounttitlesof liabilitiesoftenincludethetermo'payable".
c. Cashreceived
beforeservices
areperformed
areconsidered
to be liabilities.
d. Liabilitiesdo not includewagesowedto employees
of thecompany.

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20. All
a.
b.
c.
d.

ID: A
exceptone of tlie following accountswill be increased
with a debit:
UnearnedReverrues
Land
AccountsReceivable
Casfr

21. Usingaccrualaccounting,expensesare recordedand reportedonly

a. when they are incurred,whetheror not cashis paid
b. when they are incurredand paid at the sametime
c. ifthey are paid before they are incurred
d. if they are paid after they are incurred
22. Adjustingentriesare
a. the sarneas correctirrgentries
b. neededto bring accountsLrpto dateand nratchrevenlleand expense
c. optiorialundergenerallyacceptedaccountingprinciples
d. rarelyneededin largecompanies
23. Generallyacceptedaccountingprinciplesrequiresthat companiesusethe _
a. cashbasis
b. deferralbasis
c. accrualbasis
d. accountbasis

of accounting.

24. Which accountwould norrnally4! requirearradjLrsting

entry?
a. WagesExpense
b. AccountsReceivable
c. AccumulatedDepreciation
d. Smith,Capital
2 5 . T h e b a l a n c e i n t h e o f f i c e s u p p l i e s a c c o u n t o n Jl uwnaes $ 6 , 3 0 0 , s u p p l i e s p u r c h a s e d d u r i n g J u n e w e r e
e0
a .m o u n t t o b e u s e d f o r t h e a p p r o p r i a t e
$ 3 , l 0 0 , a n d t h e s u p p l i e s o n h a n d a t J u n e 3 0 w e r e $ 2T, l5r 0
adjustirrgentry is
a, $3,700
b. $I 1,900
c. $5,700
d. $6,900
26. A businesspaysweekly salariesof $20,000on Fridayfor a five-dayweek endingon that day. The adjusting
entrynecessary
at the end ofthe fiscal periodendingon Tuesdayis
a. debit SalariesPayable,$8,000;creditCash,$8,000
b. debit SalaryExpense,$8,000;creditDrawing,$8,000
c. debit SalaryExpense,$8,000;credit SalariesPayable,$8,000
d. debit Drawing,$8,000;creditCash,$8,000
27. The adjustingentry to recordtlie depreciationof equipmentfor the fiscal period is
a. debitDepreciation
Expense;creditEquiprnent
b. debit DepreciationExpense;creditAccumulatedDepreciation
c. debitAccurnulatedDepreciation;credit Depreciatiorr
Expense
d, debit Equipment;creditDepreciationExpense

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ID: A

28, The incomestatementis preparedfrom:

a. the adjLrsted
trial balance.
b. the incomestaternent
columnsof the work sheet.
c. eitherthe adjustedtrial balanceor the inconlestatenleltt
columnsof the work sl,eet.
d. boththe adjLrsted
trial balanceand the incorrestatementcolumnsof the work sheet.
29. The Statementof Owner's Equity shouldbe prepared
a. beforethe incomestatementand afterthe balancesheet
b. beforethe incomestatementand balancesheet
c. afterthe incomestatementand balancesheet
d. afterthe incomestatementand beforethe balancesheet
Usethe following irrformationirr the adjustedtrial balancefbr StocktonCompanyto answerthe followir-rg
questions.
StocktonConrpanv
AdiustedTrial Balance
For the Year endedDecernber3 2010
Cash
AccountsReceivable
PrepaidExperrses
Equipment
Accumulated
Depreciation
AccountsPayable
NotesPayable
Bob Steely,Capital
Bob Steelv.Withdrawals
FeesEarned
WagesExpense
RentExpense

s 6.030

UtilitiesExpense

775
250
85
$28"890

Depreciatiorr
Expense
Miscellaneous
Exoense
Totals

3 0 . Determine
thenetincome(loss)for theperiod.
a.
b.
c,
d.

Net Income$2,390
Net Loss$790
Net Loss$5.570
N e tI n c o m $
e3,180

2 . 10 0
700

r3.700
$ t,100
1.900
4.200
12.940
790
8.750

2,500

r.960

$28,890

Name:

3 l.

ID: A
Determine
the owner'sequityendingbalancefor the period.
a. $12,150
b. $15,330
c. $16,120
d. $12,940

32. Which of the following accountsshouldbe closedto IncomeSummaryat the end of the fiscalyear?
a. SuppliesExpense
b. AccumulatedDepreciation
c. PrepaidInsurance
d. UnearnedRent
Usethe followingworksheetto answerthe followingqLrestions.
FinleyCompany
Worksheet
For the YearEndedDecember31,2010

AccountTitle
Cash
Accor-rnts
Receivable
SLrpplies
Equipment
AccumulatedDepr-Equio
AccountsPayable

AdjustedTrial
IncomeStatement
Balance
Debit
Credit
Dcbit
Credit
48,000
18,000
6.000
57,000
18,000

Totals
Net Income(Loss)

Debit

r 8.000
6.000
57,000
18.000
30.000

6,000

33,000

33.000

3,000

3.000
141.000

141.000

63,000

63,000

r8.000

r8.000
r5.000

15.000

Credit

48.000

30,000
6,000

WasesPavable
C, Finley,Capital
. rawins
C. FinleyD
FeesEarned
WagesExperrse
RentExpense
Deoreciatiorr
Exoense

BalanceSheet

228"000 228.000 96,000 1 4 1 . 0 0 0 1 3 2 . 0 0 0 87.000

4s.000
4s.000
1 4 1 . 0 0 0 1 4 1 . 0 0 0 132.000 r32.000

33. ThejoLrrnalentryto closerevenues

would be:
a . d e b i tI n c o m eS u m m a r y$ 1 4 1 , 0 0 0c,r e d i tF e e sE a r n e d$ 1 4 1 , 0 0 0
b . d e b i tC . F i r r l e yC, a p i t a $l 1 4 1 , 0 0 0c,r e d i tF e e sE a r n e d$ 1 4 1 , 0 0 0
c. debitFeesEarned$ 141,000;creditIncomeSummary$ 141,000
d . c r e d i tF e e sE a r n e d$ 1 4 1 , 0 0 0c;r e d i tC . F i n l e y C
, a p i t a$l 1 4 1 , 0 0 0

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34. Based
on thepreceding
trialbalance,
theentryto closeexpenses
wouldbe:
a. WagesExpense
63,000
RentExpense
| 8,000
Depreciation
Expense 15,000
IncomeSummary 96,000
b. Expenses
96,000
Irrcome
Summary 96,000
c. WagesExpense
63,000
RentExpense
18,000
DepreciationExpense
15,000
C. Finley,Drawing 96,000
d. Income
Suntmary
96,000
WagesExpense
63,000
RentExperrse
18,000
Depreciation
Expense15,000

ID: A

ID: A

T e s tI - C h a p t e 1
r ,2 , 3 &
AnswerSection
MULTIPLE CHOICE
L ANS: D
PTS: I
DIF: Easy
NAT: AACSBAnalyticI AICPAFN-Measuremenr
2. ANS: D
PTS: I
DIF: Easy
N A T : A A C S BA r r a l y t iIcA t C p AB B - l n d u s t r y
3 . A N S :C
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPAFN-Measurernent
4. ANS: D

PTS: I

DIF: Moderate

NAT: AACSBAnalyticI AICPABB-tndustry

5. ANS:B
PTS: I
DIF: Difficult
NAT: AACSB AnalyticIAICPA FN-Measurement
6, ANS: A
PTS: I
DIF: Easy
NAT: AACSB AnalyticI AICPA FN-Measurement
7. ANS: D
PTS: I
DIF: Easy
NAT: AACSB AnalyticI AICPA FN-Measuremerrr
8. ANS: D
PTS: I
DIF: Moclerate
NAT: AACSB AnalyticI AICPA FN-Measurement
9. ANS: C
PTS: I
DIF: Easy
NAT: AACSB ArralyticI AICPA FN-Measuremenr
10. ANS: D
PTS: I
DIF: Easy
NAT: AACSB AnalyticI AICPA FN-Measurement
ll. ANS: C
PTS: I
DIF: Easy
NAT: AACSB AnalyticI AICPA FN-Measuremenr
12. ANS: A
PTS: I
DIF: Difficutt
NAT: AACSI) AnalyticI AICPA FN-Measuremenr
13, ANS: B
PTS: I
DIF: Moderare
NAT: AACSB AnalyticI AICpA FN-Measurerrrenr
14. ANS: D
PTS: I
DIF: f:asy
NAT: AACSB AnalyticI AICPA FN-Measurement
15. ANS: A
PTS: I
DtF: Moderare
NAT: AACSB Analytic I AICPA FN-Measurement
16. ANS: D
PTS: I
DIF: Difficutt
NAT: AACSB AnalyticiAICPA FN-Measurement
17. ANS: D
PTS: I
DtF: DifficLrlt
NAT: AACSB AnalyticI ATCPAFN-Measuremenr
18. ANS: D
PTS: I
DtF: Moderare
NAT: AACSB AnalyticIAICPA FN-Measurement
19. ANS: D
PTS: I
DIF: Difficutt
NAT: AACSB AnalyticIAICPA FN-Measuremenr
20. ANS: A
PTS: I
DIF: Easy
NAT: AACSB Analytic I AICPA FN-Measurement

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OBJ: 02-02
OBJ: 02-01
OBJ: 02-02

ID: A
21. ANS: A
PTS: I
DIF: Moclerate
NAT: AACSBAnalyticI AICPAFN-Measuremenr
22. ANS: B
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPAFN-Measuremenr
23. ANS: C
PTS: I
DIF: Easy
NAT: AACSBAnalyticI AICPA FN-Measurement
24. ANS: D
PTS: I
DtF: Difficult
NAT: AACSBAnalyticI AICPAFN-Measurerrrent
25. ANS: D
PTS: I
DIF: Difficult
NAT: AACSBAnalyticI AICPAFN-Measuremenr
26. ANS: C
PTS: I
DIF: Difficult
NAT: AACSBAnalyticI AICPAFN-Measurement
27. ANS: B
PTS: I
DIF: Moderate
NAT: AACSBAnalyticIAICPAFN-Measurement
28. ANS: C
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPA FN-Measurement
29. ANS: D
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPAFN-Measurernent
30. ANS: D
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPAFN-Measurement
31. ANS: B
PTS: I
DIF: Difficult
NAT: AACSBAnalyticI AICPAFN-Measurement
32. ANS: A
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPAFN-Measurernent
33. ANS: C
PTS: I
DIF: Moderate
NAT: AACSBAnalyticI AICPA FN-Measurement
34. ANS: D
PTS: I
DIF: Moderate
NAT: AACSBAnalvticIAICPA FN-Measurement

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