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Acc290 r2 Final Examination Study Guide

Acc290 r2 Final Examination Study Guide

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Final Examination Study Guide
ACC/290 Version 1
1
 ACC/290 Final Examination Study Guide
This study guide will prepare you for the Final Examination you will complete in Week Five. It containspractice questions, which are related to each week’s objectives. In addition, refer to each week’s readingsand your student guide as study references for the Final Examination.
Week One: Basic Accounting Principles and ConceptsObjective: Identify the four basic financial statements.
1.Which of the four basic financial statements has three main sections: one dealing with operatingexpenses, another dealing with financial activities, and another dealing with investment activities?
a.
Income statement
 b.
Retained earnings statement
c.
Balance sheet
d.
Statement of cash flows
2.
Which of the following lists the main sections of the statement of cash flows?
a.
Operations, investment, and credit activities
 b.
Investments, credit, and cash operations
c.
Operations, investment, and financial activities
d.
Financing, investment, and credit activities
Objective: Classify transactions using the rules of debit and credit.
3.Which accounts have a normal credit balance?
a.
Assets and expenses
 b.
Liabilities and expenses
c.
Assets and revenue
d.
Liabilities and revenue4.A debit entry may indicate which of the following:
a.
An increase in an asset account
 b.
A decrease in an asset account
c.
An increase in a liability account
d.
An increase in a capital account
Objective: Journalize basic transactions.
5.
 ABC Corporation records sales for the day totaling $50,000 in cash sales and $35,000 in sales onaccount. Which of the following is the correct journal entry?
a.
Cash $50,000Accounts Receivable $35,000Sales $85,000
 b.
Cash $50,000Accounts Receivable $35,000Sales on Account $35,000Cash Sales $50,000
c.
Sales $85,000Cash $50,000Accounts Receivable $35,000
d.
Sales on Account $35,000
 
Final Examination Study Guide
ACC/290 Version 1
2Cash Sales $50,000Cash $50,000 Accounts Receivable $35,000
6.
 ABC Corporation pays its utility bill for October. They received an invoice for $6,000. Which of thefollowing is the correct journal entry?
a.
Utility expense$6,000Cash$6,000
 b.
Prepaid utilities$6,000Cash$6,000
c.
Cash$6,000Prepaid Utilities$6,000
d.
Cash$6,000Utility expense$6,000
Objective: Post transactions from journals to ledgers.
7.
 ABC Corporation is a merchandiser that sells high volume merchandise to a large number of customers on account on a daily basis. ABC records credit sales in a sales journal and cash salesin their cash receipts journal. ABC will most likely post the sales journal transactions to subsidiaryledger 
a.
daily
 b.
at least once per month and before customer billings
c.
quarterly, before closing
d.
once a year, prior to preparing financial statements
8.
The accounts receivable ledger should reconcile to a control account located in which ledger?
a.
Accounts payable control ledger 
 b.
Accounts receivable control ledger 
c.
Accounts payable subsidiary ledger 
d.
General ledger 
Week Two: Starting the Accounting CycleObjective: Differentiate between accrual basis and cash basis accounting.
9.Using accrual basis accounting, expenses are recorded and reported only
a.
when they are incurred, whether or not cash is paid
 b.
when they are incurred and paid at the same time
c.
if they are paid before they are incurred
d.
if they are paid after they are incurred10.A small company may be able to justify using the cash basis of accounting if they have
a.
sales under $1,000,000
 b.
no accountants on staff 
c.
few receivables and payables
d.
all sales and purchases on account
Objective: Create adjusting entries.
11.
Leyland Realty Company received a check for $12,000 on July 1, which represents a 6-monthadvance payment of rent on a building it rents to a client. Unearned Rental Revenue was credited
 
Final Examination Study Guide
ACC/290 Version 1
3for the full $12,000. Financial statements will be prepared on July 31. Leyland Realty should makethe following adjusting entry on July 31:
a.
Debit Unearned Rental Revenue, $2,000; credit Rental Revenue, $2,000
 b.
Debit Rental Revenue, $2,000; credit Unearned Rental Revenue, $2,000
c.
Debit Unearned Rental Revenue, $12,000; credit Rental Revenue, $12,000
d.
Debit Cash, $12,000; credit Rental Revenue, $12,000
12.
Boyce Company purchased office supplies costing $5,000 and debited office supplies for the fullamount. At the end of the accounting period, a physical count of office supplies revealed $1,400 stillon hand. The appropriate adjusting journal entry to be made at the end of the period would be
a.
debit Office Supplies Expense, $3,600; credit Office Supplies, $3,600
 b.
debit Office Supplies, $1,400; credit Office Supplies Expense, $1,400
c.
debit Office Supplies Expense, $1,400; credit Office Supplies, $1,400
d.
debit Office Supplies, $3,600; credit Office Supplies Expense, $3,600
Objective: Prepare an adjusted trial balance.
13.
Given the following adjusted trial balance:DebitCredit Cash$1,562 Accounts receivable 2,098Inventory 3,124Prepaid rent 86Property, plant, & equipment 300 Accumulated depreciation$ 52 Accounts payable 82Unearned revenue 172Common stock 206Retained earnings 6,610Service revenue 218Interest revenue 56Salary expense 160Travel expense 66Totals $7,396$7,396Net income for the year is
a.
$324
 b.
$270
c.
$48
d.
$49614.Can financial statements be prepared directly from the adjusted trial balance?
a.
They cannot. The general ledger must be used.
 b.
Yes, adjusting entries have been recorded in the general ledger and posted to the ledger accounts.
c.
No, the adjusted trial balance merely proves the equality of the total debit and the total creditbalances in the ledger after adjustments are posted. It has no other purpose.
d.
They can because that is the only reason that an adjusted trial balance is prepared.
Week Three: Completing the Accounting CycleObjective: Prepare closing entries, reversing entries, and a post-closing trial balance.

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