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ACCT 2301, Exam 1 Student Name: Summer I, 2007
ACCT 2301, Exam 1 Student Name: Summer I, 2007
Summer I, 2007
Chapter 1
Student Name:
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2. An entity that is organized according to state or federal statutes and in which ownership is
divided into shares of stock is a
a. proprietorship
b. corporation
c. partnership
d. governmental unit
ANS: B
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ANS: B
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6. The initials GAAP stand for
a. General Accounting Procedures
b. Generally Accepted Plans
c. Generally Accepted Accounting Principles
d. Generally Accepted Accounting Practices
ANS: C
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14. Goods purchased on account for future use in the business, such as supplies, are called
a. prepaid liabilities
b. revenues
c. prepaid expenses
d. liabilities
ANS: C
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Chapter 2
15. Revenue should be recognized when
a. cash is received
b. the service is performed
c. the customer places an order
d. the customer charges an order
ANS: B
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21. Which of the following types of accounts have a normal credit balance?
a. assets and liabilities
b. liabilities and expenses
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22. Which of the following groups of accounts have a normal debit balance?
a. revenues, liabilities, capital
b. capital, assets
c. liabilities, expenses
d. assets, expenses
ANS: D
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23. Which of the following describes the classification and normal balance of the fees earned
account?
a. asset, credit
b. liability, credit
c. owner's equity, debit
d. revenue, credit
ANS: D
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25. In which of the following types of accounts are increases recorded by debits?
a. assets, liabilities
b. drawing, liabilities
c. expenses, liabilities
d. assets, expenses
ANS: D
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Chapter 3
26. Using accrual accounting, revenue is recorded and reported only
a. when cash is received without regard to when the services are rendered
b. when the services are rendered without regard to when cash is received
c. when cash is received at the time services are rendered
d. if cash is received after the services are rendered
ANS: B
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27. Using accrual 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 incurred
ANS: A
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28. If the effect of the debit portion of an adjusting entry is to increase the balance of an
expense account, which of the following describes the effect of the credit portion of the
entry?
a. decreases the balance of an owner's equity account
b. increases the balance of an liability account
c. increases the balance of an asset account
d. decreases the balance of an expense account
ANS: B
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29. The primary difference between deferred and accrued expenses is that deferred expenses
have
a. been incurred and accrued expenses have not
b. not been incurred and accrued expenses have been incurred
c. been recorded and accrued expenses have not been incurred
d. not been recorded and accrued expenses have been incurred
ANS: B
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30. The balance in the prepaid rent account before adjustment at the end of the year is
$15,000, which represents three months' rent paid on December 1. The adjusting entry
required on December 31 is
a. debit Rent Expense, $5,000; credit Prepaid Rent, $5,000
b. debit Prepaid Rent, $10,000; credit Rent Expense, $5,000
c. debit Rent Expense, $10,000; credit Prepaid Rent, $5,000
d. debit Prepaid Rent, $5,000; credit Rent Expense, $5,000
ANS: A
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31. A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that
day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is
a. debit Salaries Payable, $16,000; credit Cash, $16,000
b. debit Salary Expense, $16,000; credit Drawing, $16,000
c. debit Salary Expense, $16,000; credit Salaries Payable, $16,000
d. debit Drawing, $16,000; credit Cash, $16,000
ANS: C
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32. The adjusting entry to record the depreciation of equipment for the fiscal period is
a. debit Depreciation Expense; credit Equipment
b. debit Depreciation Expense; credit Accumulated Depreciation
c. debit Accumulated Depreciation; credit Depreciation Expense
d. debit Equipment; credit Depreciation Expense
ANS: B
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33. Data for an adjusting entry described as "accrued wages, $2,020" means to debit
a. Wages Expense and credit Wages Payable
b. Wages Payable and credit Wages Expense
c. Accounts Receivable and credit Wages Expense
d. Drawing and credit Wages Payable
ANS: A
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34. Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the
adjusting entry is for the amount of supplies
a. that are in the ending balance
b. purchased
c. used
d. either used or remaining
ANS: C
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35. The general term employed to indicate an expense that has not been paid and has not yet
been recognized in the accounts by a routine entry is
a. capital
b. deferral
c. accrual
d. inventory
ANS: C
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36. The cost of office supplies to be used in future periods is ordinarily shown on the balance
sheet as a(n)
a. capital
b. asset
c. contra asset
d. liability
ANS: B
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37. The unearned rent account has a balance of $40,000. If $3,000 of the $40,000 is
unearned at the end of the accounting period, the amount of the adjusting entry is
a.
b.
c.
d.
$3,000
$40,000
$37,000
$43,000
ANS: C
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Chapter 4
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39. When a work sheet is complete, the adjustment columns should have
a. total credits greater than total debits if a net income was earned
b. total debits grater than total credits if a net loss was incurred
c. total debits greater than total credits if a net income was earned
d. total debits equal total credits
ANS: D
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40. The difference between the totals of the debit and credit columns of the Adjusted Trial
Balance columns on a work sheet
a. is the amount of net income or loss
b. indicates there is an error on the work sheet
c. is not unusual when preparing the work sheet
d. is the net difference between revenue, expenses, and drawing
ANS: B
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43. The work sheet at the end of September has $4,000 in the Balance Sheet credit column
for Accumulated Depreciation. The work sheet at the end of October has $4,750 in the
Balance Sheet credit column for Accumulated Depreciation. What was the amount of the
depreciation expense adjustment for the month of October?
a. amount can not be determined
b. $4,750
c. $4,000
d. $750
ANS: D
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44. After all of the account balances have been extended to the Balance Sheet columns of the
work sheet, the totals of the debit and credit columns are $25,250 and $21,825,
respectively. What is the amount of net income or net loss for the period?
a. $3,425 net income
b. $25,250 net loss
c. $3,425 net loss
d. $21,825 net income
ANS: A
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45. After all of the account balances have been extended to the Income Statement columns of
the work sheet, the totals of the debit and credit columns are $87,500 and $98,300,
respectively. What is the amount of the net income or net loss for the period?
a. $10,800 net income
b. $10,800 net loss
c. $98,300 net income
d. $87,500 net loss
ANS: A
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47. Which one of the fixed asset accounts listed below will not have a related contra asset
account?
a. Office Equipment
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b. Land
c. Delivery Equipment
d. Building
ANS: B
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50. Which of the following accounts should be closed to Income Summary at the end of the
fiscal year?
a. Supplies Expense
b. Accumulated Depreciation
c. Prepaid Insurance
d. Unearned Rent
ANS: A
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