Identify the journal entry required to correctly record

Reference no: EM133675424

Accounting for Business Decisions / Accounting for Managers

Question 1: If equipment is purchased for cash:

A. one asset increases and another asset decreases.
B. an asset increases and a liability increases.
C. an asset decreases and a liability decreases.
D. an asset decreases and shareholders' equity decreases.

Question 2: If equipment is purchased on credit:

Question 3: If a payment is received from accounts receivable:

A. shareholders' equity increases and an asset decreases.
B. an asset increases and a liability increases.
C. an asset decreases and a liability decreases.
D. one asset increases and another asset decreases.

Question 4: If a company borrows money to purchase equipment:

A. one asset increases and another asset decreases.
B. an asset increases and a liability increases.
C. an asset decreases and a liability decreases.
D. an asset increases and shareholders' equity increases.

Question 5: If the owner contributed cash as additional capital:

A. one asset increased and another asset decreased.
B. a liability increased and shareholders' equity decreased.
C. an asset increased and shareholders' equity increased.
D. a liability decreased and shareholders' equity increased.

Question 6: An invoice from a consultant was received for work done in May 2016. There was no previous record of the transaction. It will be paid in July 2016. In May 2016:

A. an asset decreased and an expense increased.
B. an asset decreased and a liability decreased.
C. a liability increased and an expense increased.
D. no entry is required until the next accounting period.

Question 7: A $10 000 receipt was received from an accounts receivable; as a result:

A. an asset decreased and an expense decreased.
B. an asset decreased and another asset increased.
C. an asset decreased and an expense increased.
D. a liability decreased and an expense increased.

Question 8: If a year's depreciation is charged on a piece of equipment, the effect on the accounting equation is that:

A. an asset increases and another asset decreases.
B. an asset decreases and shareholders' equity decreases.
C. an asset decreases and a liability decreases.
D. a liability increases and shareholders' equity decreases.

Question 9: Consider the following transactions:
issued share capital for cash of $250 000
received $50 000 from accounts receivable
paid $30 000 to accounts payable
purchased new equipment for $160 000 on credit Total assets increased by:

A. $220 000.
B. $230 000.
C. $380 000.
D. $430 000.

Question 10. The assets of ALS Ltd increased by $5476 during year ended 30 June 2022 and during the same period liabilities decreased by $3019. Consequently shareholders' equity must have:

A. increased by $2457.
B. increased by $8495.
C. decreased by $2457.
D. decreased by $8495.

Question 11. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
An electricity account was paid. There was no previous record of the charge.

A. An asset increased and another asset decreased.
B. An asset decreased and an expense increased.
C. An asset decreased and a liability decreased.
D. A liability increased and an expense increased.

Question 12. For the following transaction, identify the type of change that would have occurred in the accounting equation:

Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
Inventory was purchased on credit.

A. An asset increased and another asset decreased.
B. An asset decreased and an expense increased.
C. An asset decreased and a liability decreased.
D. A liability increased and an asset increased.

Question 13. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
An account for advertising was received. There was no previous record of the charge.

A. An asset increased and another asset decreased.
B. An asset decreased and an expense increased.
C. An asset decreased and a liability decreased.
D. A liability increased and an expense increased.

Question 4. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
Inventory was purchased for cash.

A. An asset increased and another asset decreased.
B. An asset decreased and an expense increased.
C. An asset decreased and a liability decreased.
D. A liability increased and an expense increased.

Question 15. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
The business made a loan to the sales manager.

A. An asset increased and another asset decreased.
B. An asset decreased and an expense increased.
C. An asset decreased and a liability decreased.
D. A liability increased and an expense increased.

Question 16. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
A payment was made to a creditor.

A. A liability increased and another liability decreased.
B. An asset decreased and a liability decreased.
C. An asset increased and revenue increased.
D. An asset decreased and an expense increased.

Question 17. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
A customer was invoiced for services rendered.

A. A liability increased and another liability decreased.
B. An asset decreased and a liability decreased.
C. An asset increased and revenue increased.
D. An asset increased and another asset decreased.

Question 18. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends

The company received cash dividends on investments.

A. A liability increased and another liability decreased.
B. An asset decreased and a liability decreased.
C. An asset increased and revenue increased.
D. An asset increased and equity increased.

Question 19. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
An account was paid for stationery purchased in the previous accounting period.

A. A liability increased and another liability decreased.
B. An asset decreased and a liability decreased.
C. An asset increased and revenue increased.
D. An asset decreased and an expense increased.

Question 20.

For the following transaction, identify the type of change that would have occurred in the accounting equation:

Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
Commission was earned which will be paid for in 4 months' time.

Question 21. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
A new CEO was appointed to commence in 3 months' time on a salary of $400 000 per annum.

A. A liability increased and another liability decreased.
B. An asset decreased and a liability decreased.
C. An asset increased and revenue increased.
D. This had no effect on the accounting equation.

Question 22. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
At the end of the accounting period, 3 months' interest is owing to the company from the bank on a term deposit with the bank.

A. A liability increases and another liability decreases.
B. An asset decreases and a liability decreases.
C. An asset increases and revenue increases.
D. An asset increases and another asset decreases.

Question 23. For the following transaction, identify the type of change that would have occurred in the accounting equation:
Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses -
Dividends
A cheque was drawn to pay an account payable.

A. A liability increased and another liability decreased.
B. An asset decreased and a liability decreased.
C. An asset decreased and an expense increased.
D. None of the above is correct.

Question 24. During the year, the liabilities of a company decreased by $32 034 and the assets decreased by $16 035. Consequently the shareholders' equity must have:

A. decreased by $15 999.

B. increased by $15 999.
C. increased by $48 069.
D. decreased by $48 069.

Question 25. Using the following information, calculate net profit before tax.

$
Credit sales 250 000
Cash sales 100 000
Cash received from accounts
receivable 60 000
Cost of goods sold 70 000
Cash purchases of inventory 40 000
Operating expenses 80 000

A. $160 000.
B. $200 000.
C. $220 000.
D. $260 000.

Question 26. Received cash from customer.

A. Dr Accounts receivable Cr Cash
B. Dr Cash Cr Accounts payable
C. Dr Cash Cr Accounts receivable
D. None of the answers are correct.

Question 27. Identify the journal entry required to correctly record the following transaction. Received cash from customer.

A. Dr Accounts receivable Cr Cash
B. Dr Cash Cr Accounts payable
C. Dr Cash Cr Accounts receivable
D. Dr Cash Cr Share capital
ANS: C PTS: 1 TOP: More journal entries

Question 28. Identify the journal entry required to correctly record the following transaction. Purchased goods on credit.

A. Dr Inventory Cr Accounts payable
B. Dr Inventory Cr Accounts receivable
C. Dr Accounts receivable Cr Inventory
D. Dr Purchases Cr Cash at bank

Question 29. Identify the journal entry required to correctly record the following transaction. Depreciation expense on motor vehicles for the year incurred.

A. Dr Motor vehicles Cr Accumulated depreciation

B. Dr Accumulated depreciation Cr Depreciation expense
C. Dr Depreciation expense Cr Motor vehicles
D. Dr Depreciation expense Cr Accumulated depreciation

Question 30. Which of the following entries correctly records the receipt of an electricity bill from the power company?

A. Dr Electricity expense Cr Accounts payable
B. Dr Electricity payable Cr Accounts payable
C. Dr Accounts payable Cr Electricity expense
D. Dr Accounts payable Cr Electricity payable

Question 31. Cash was paid by XYZ to creditors. Which of the following entries for XYZ correctly records this transaction?

A. Dr Cash Cr Accounts payable
B. Dr Accounts payable Cr Cash
C. Dr Accounts receivable Cr Cash
D. Dr Accounts cash Cr Accounts receivable

Question 32. Which of the following is NOT an accounting transaction?

A. A payment is made by cheque to Telstra.
B. The company is awarded a contract to build a bridge, with construction to commence in 12 months' time.
C. A creditor charges interest for late payment.
D. The payroll department issues a cheque to pay an employee.

Question 33. Which of the following is an internal transaction?

A. Payment of dividends to shareholders
B. Loan to a director
C. Depreciation of equipment
D. Purchase of machinery on credit

Question 34. Which of the following is NOT a source document of a business enterprise?

A. Trial balance
B. Purchase order
C. List of the day's collections
D. An invoice

Question 35. The following are steps in the accounting cycle:

1. Adjusting journal entries

2. Post-closing trial balance
3. Ledgers
4. Source documents
5. Financial statements
6. Pre-closing trial balance
7. Journals
8. Closing journal entries
9. Adjusted trial balance

What is the order that is normally followed?

A. 4, 7, 3, 6, 1, 9, 2, 8, 5.
B. 4, 7, 3, 6, 8, 9, 1, 2, 5.
C. 4, 7, 3, 6, 1, 9, 8, 2, 5.
D. None of the above.

Question 36. A chart of accounts is:

A. a means of ensuring that the debits equal the credits.
B. a chronological record of all transactions.
C. a list of the titles of all accounts in the ledger, together with an appropriate
numbering system for the accounts.
D. a trial balance.

Question 37. A chart of accounts is:

A. a depiction of the significant and formal relationships and roles within a business organisation.
B. a list, in some logical form, of all relevant transactions in a business organisation.
C. a list, in chronological order, of journal accounts used in an accounting system.
D. a list of the complete set of account titles and their related reference numbers.

Question 38. Identify the correct classification for the following four ledger accounts:

1. prepaid insurance
2. accumulated depreciation on equipment
3. fees receivable
4. wages payable

A. 1 expense, 2 expense, 3 asset, 4 expense.
B. 1 expense, 2 asset, 3 revenue, 4 liability.
C. 1 asset, 2 asset, 3 revenue, 4 liability.
D. 1 asset, 2 asset, 3 asset, 4 liability.

Question 39. Identify the correct classification for the following four ledger accounts in the chart of accounts:

1. prepaid insurance

2. accrued wages
3. depreciation
4. cost of goods sold

A. 1 expense, 2 liability, 3 expense, 4 expense.
B. 1 asset, 2 liability, 3 expense, 4 expense.
C. 1 asset, 2 liability, 3 expense, 4 asset.
D. 1 asset, 2 liability, 3 liability, 4 revenue.

Question 40. The journal entry for the receipt of cash from accounts receivable is:

A. Dr Cash Cr Sales revenue
B. Dr Accounts receivable Cr Sales revenue
C. Dr Cash Cr Accounts receivable
D. Dr Sales Cr Accounts receivable

Question 41. When a company orders goods for resale, what is the accounting entry?

A. Dr Cash Cr Accounts payable
B. Dr Purchases Cr Accounts payable
C. Dr Inventory Cr Accounts payable
D. No accounting entry is required yet.

Question 42. The following accounts were taken from the trial balance:

$
Accumulated depreciation 5 000
Fees earned 15 000
Depreciation expense 1 500
Insurance expense 1 000
Prepaid insurance 4 000
Supplies 500
Supplies expenses 1 500

Net profit for the period is:

A. $10 000.
B. $11 000.
C. $12 000.
D. $12 500.

Reference no: EM133675424

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