Reference no: EM13786450
1. The order of the steps to prepare the worksheet are __________.
A. prepare the trial balance, complete adjustments, prepare the adjusted trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
B. complete the adjustments, prepare the adjusted trial balance, prepare the trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
C. extend the totals to the Income Statement and Balance Sheet columns, prepare the trial balance, complete the adjustments, prepare the adjusted trial balance
D. prepare the adjusted trial balance, complete the adjustments, prepare the trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
If Prepaid Rent for the period is not adjusted __________.
A. assets will be overstated and expenses will be overstated
B. assets will be overstated and expenses will be understated
C. assets will be understated and expenses will be overstated
D. assets will be understated and expenses will be understated
When historical cost is used to record equipment, it would appear as the __________.
A. original cost on the balance sheet
B. residual value on the income statement
C. residual value on the balance sheet
D. original cost on the income statement
The entry to record the expiration of part of the prepaid rent will __________.
A. decrease total assets and increase total expenses at the end of the month
B. decrease total assets and decrease total expenses at the end of the month
C. increase total assets and increase total expenses at the end of the month
D. increase total assets and decrease total expenses at the end of the month
The adjusted trial balance columns __________.
A. help to ensure the ledger is still in balance
B. help to identify any errors that may have been made during adjustment
C. show updated account balances to aid in preparation of the financial statements
D. All of the above answers are correct.
If the balance of supplies at the start of the month was $900 and at the end of the month you had $450 on hand, the adjustment for Supplies would be __________.
A. $450
B. $550
C. $350
D. $900
If the Supplies account is not adjusted __________.
A. assets will be overstated and expenses will be understated
B. assets will be overstated and expenses will be overstated
C. assets will be understated and expenses will be overstated
D. assets will be understated and expenses will be understated
An adjustment for Prepaid Rent would indicate __________.
A. the amount originally paid
B. the amount expired
C. the amount on hand
D. the amount of the trial balance
Which of the following would cause total assets to decrease and total expense to increase?
A. recording the depreciation of equipment
B. recording the consumption of supplies
C. recording the expiration of prepaid rent
D. All of the above would have that effect.
The adjustment to record supplies used during the period would be __________.
A. debit Supplies; credit Supplies Expense
B. debit Supplies Expense; credit Cash
C. debit Supplies Expense; credit Supplies
D. debit Supplies; credit Cash
Which of the following would cause a contra-asset to be credited and an expense debited?
A. recording an accrued expense
B. recording the consumption of supplies
C. recording the building depreciation
D. All of the above would have that effect.
As Prepaid Rent is used, the asset becomes a(n. __________.
A. liability
B. expense
C. contra-asset
D. revenue
Bringing account balances up to date before preparing financial reports is called __________.
A. posting
B. adjusting
C. journalizing
D. analyzing
It's the end of the accounting period and no electric bill has been received (but the expense has been incurred.; you should record an entry that __________.
A. increases the total assets and increases the total expenses
B. decreases the total assets and increases the total expenses
C. increases the total liabilities and increases the total expenses
D. decreases the total liabilities and increases the total expenses
If the adjustment for Supplies used during the period was not made __________.
A. expenses would be too low
B. assets would be too low
C. expenses would be too high
D. revenue would be too high
When historical cost is used in the accounting records, the book value of the asset is __________.
A. the original cost
B. the market value
C. original cost less accumulated depreciation
D. closed out
It is the year end, but not the pay period end. How will this affect the balance sheet?
A. Assets will be increased.
B. Liabilities will be increased.
C. Owner's equity will be increased.
D. This has no effect on the period end balance sheet.
The cost of an asset less accumulated depreciation equals __________.
A. residual value
B. book value
C. depreciation expense
D. None of the above answers are correct.
The capital balance amount shown in the balance sheet column of the worksheet represents __________.
A. the beginning capital plus net income
B. the beginning capital plus net income less withdrawal
C. the beginning capital less withdrawals
D. the beginning capital plus any investments to capital that occurred during the period
The capital balance amount shown in the balance sheet column of the worksheet represents __________.
A. the beginning capital plus net income
B. the beginning capital plus net income less withdrawal
C. the beginning capital less withdrawals
D. the beginning capital plus any investments to capital that occurred during the period
The depreciation of equipment will require an adjustment that results in __________.
A. total assets increasing and total expenses increasing
B. total assets increasing and total expenses decreasing
C. total assets and expenses decreasing
D. total assets decreasing and total expenses increasing
Debt management ratios measure __________.
A. how effectively a company is using its cash
B. how well a company is using debt versus equity position
C. a company's ability to earn profit
D. a company's ability to meet payable obligations
Profitability ratios measure __________.
A. a company's ability to earn profits
B. a company's ability to meet short-term obligations
C. how well a company is using debt versus equity
D. how effectively a company is using its assets
Assets that are not expected to provide benefits for a number of accounting periods are called __________.
A. current assets
B. fixed assets
C. long-term assets
D. property, plant, and equipment
How do you close the expense accounts?
A. debit Capital; credit the expense accounts
B. credit Capital; debit the expense accounts
C. credit Income Summary; debit the expense accounts
D. debit Income Summary; credit the expense accounts
Closing entries __________.
A. need not be journalized since they appear on the worksheet
B. need not be posted if the financial statements are prepared from the worksheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted
The correct order for closing accounts is __________.
A. revenue, expenses, income summary, withdrawals
B. revenue, income summary, expenses, withdrawals
C. revenue, expenses, capital, withdrawals
D. revenue, capital, expenses, withdrawals
Which of the following assets would not be classified as property, plant, and equipment?
A. delivery truck
B. copyright
C. land
D. furniture
An account in which the balance is not carried over from one accounting period to the next is called a __________.
A. permanent account
B. real account
C. temporary account
D. zero account
Which of the following is a non-depreciable asset?
A. desk chairs
B. land
C. computer
D. building
Income Summary __________.
A. is a temporary account
B. is a permanent account
C. summarizes revenue and expenses and transfers the balance to Capital
D. Both A and C are correct.
If current assets are $60,000 and current liabilities are $50,000, the current ratio is __________.
A. 0.8:1
B. 8.3:1
C. 2.1:1
D. 1.2:1
Debt management ratios measure __________.
A. how effectively a company is using its cash
B. how well a company is using debt versus equity position
C. a company's ability to earn profit
D. a company's ability to meet payable obligations
For vertical analysis purposes, a base item on a balance sheet is __________.
A. total assets
B. total equity
C. total liabilities
D. net equity
Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called __________.
A. comparative financial statements
B. common-size statements
C. cash flow analysis
D. horizontal analysis
Which analysis deals with the percentage of changes in certain items over several years?
A. vertical analysis
B. ratio analysis
C. trend analysis
D. common-size statement
The current ratio for a company with current assets of $70,000, current liabilities of $50,000, total assets of $150,000, and net sales of $80,000, would be __________.
A. 1.4
B. 0.714
C. 3.0
D. 0.875
The current ratio determines the ability of a company to __________.
A. pay off all payables
B. pay off current payables
C. manage its ability to earn profit
D. use its equity
To close the Withdrawals account __________.
A. debit Withdrawals; credit Capital
B. debit Capital; credit Withdrawals
C. debit Withdrawals; credit Income Summary
D. debit Income Summary; credit Withdrawals
Liquidity ratios measure __________.
A. how effectively a company is using its equity
B. how effectively a company is using its liabilities
C. a company's ability to pay shareholders
D. a company's ability to pay off short-term debts
The final step in the accounting cycle is __________.
A. preparing the post-closing trial balance
B. preparing the financial statements
C. journalizing the closing entries
D. journalizing the adjusting entries
Determine the adjusted cash balance per bank for Santa's Packaging on November 30, from the following information.
Cash balance on the bank statement
$2,350
Customer's check returned-NSF
500
Customer's note collected by the bank
600
Deposits in transit, November 30
1,400
Outstanding checks, November 30
2,650
A. $1,250
B. $1,100
C. $1,550
D. $1,350
If the written amount on the check does not match the amount expressed in figures, the bank may __________.
A. pay the amount written in words
B. return the check unpaid
C. contact the drawer to see what was meant
D. All of these answers are correct.
The bank statement shows __________.
A. the beginning bank balance of the cash at the start of the month
B. the checks the bank has paid and any deposits received
C. any other charges or additions to the bank balance
D. All of these answers are correct.
Internal control over a company's assets should include which of the following?
A. Responsibilities and duties of employees will be divided.
B. All cash receipts will be deposited into the bank the same day they arrive.
C. All cash payments will be made by check (except petty cash..
D. All of these answers are correct.
Scotch Services received a credit memorandum from the bank. During the bank reconciliation they should __________.
A. increase their cash account on the company's books
B. decrease their cash account on the company's books
C. increase the ending cash balance on the bank statement
D. decrease the ending cash balance on the bank statement
Endorsing a check __________.
A. guarantees payment
B. transfers the right to deposit or transfer cash
C. cancels the transaction
D. All of these answers are correct.
Advantages of on-line banking include __________.
A. convenience
B. transaction speed
C. effectiveness
D. All of the above answers are correct.
The check is written and signed by the __________.
A. drawer
B. drawee
C. payee
D. payer
Outstanding checks __________.
A. have been subtracted on the bank records but not the checkbook records
B. have not been presented to the bank for payment and have not been subtracted from the checkbook
C. have not been presented to the bank for payment but have been subtracted in the checkbook
D. have been returned to the business for nonpayment
Which of the following bank reconciliation items would be reflected in a journal entry?
A. error made by the bank
B. outstanding checks
C. bank service charges
D. deposit in transit
Company policy for internal control should include all of the following EXCEPT for what?
A. Employees will be rotated.
B. Monthly bank statements should be sent to and reconciled by the same employees who authorize payments and write checks.
C. The owner (or responsible employee. signs all checks after receiving authorization to pay from the departments concerned.
D. At time of payment, all supporting invoices or documents will be stamped "paid."
The bank charged another company's check against our account, this would be included on the bank reconciliation as a(n. __________.
A. addition to the balance per books
B. subtraction from the balance per books
C. addition to the balance per bank
D. subtraction from the balance per bank
Which item(s. will require a journal entry to update the balance in the Cash account?
A. checks outstanding and deposits in transit
B. bank service charges, note collected by the bank, and deposits in transit
C. bank service charges, note collected by the bank, and error made by Accounting Services
D. None of these answers are correct.
A blank endorsement on a check __________.
A. can be further endorsed by someone else
B. cannot be further endorsed by someone else
C. is the safest type of endorsement
D. permits only the original endorser to get the money
The bank statement included bank charges. On the bank reconciliation, the item is __________.
A. an addition to the balance per company books
B. an addition to the balance per bank statement
C. a deduction from the balance per bank statement
D. a deduction from the balance per company books
A nonsufficient funds check was returned to your company. How does the bank treat this on your bank statement?
A. It is added to the bank balance.
B. It is shown as a debit memo.
C. It is shown as a credit memo.
D. None of these answers are correct.
The journal entry to reverse the entry of a customer's nonsufficient funds check would include a __________.
A. debit to Cash
B. credit to Cash
C. debit to Accounts Payable
D. credit to Accounts Receivable
From the bank reconciliation no entry was recorded for deposits in transit. This would cause __________.
A. assets to be overstated
B. assets to be understated
C. no impact since deposits in transit are already included in the balance per books
D. no impact since deposits are not recorded on the books
The drawee is the __________.
A. person who writes the check
B. bank that drawer has an account with
C. the person to whom the check is payable
D. the person who reconciles the account
Calculate, from the following information the adjusted cash balance at the end of April.
Bank statement ending cash balance
$2,000
General ledger cash balance ending
3,250
Bank monthly service charge
45
Deposits in transit
2,500
Outstanding checks
1,500
NSF check returned with bank statement
205
A. $3,000
B. $4,250
C. $4,000
D. $5,500