ACC111 Final Exam

100 points

1. Amounts owed by a business are referred to as:

a) equities.
b) capital.
c) liabilities.
d) assets.

2. Which of the following is the accounting equation?

a) Assets – Liabilities = Owner’s Equity
b) Assets + Liabilities = Owner’s Equity
c) Assets = Liabilities + Owner’s Equity
d) Assets – Owner’s Equity = Liabilities

3. Revenue earned may be in the form of:

a) checks.
b) credit sales to charge customers.
c) cash.
d) All of the above.

4. Which of the following classifications of accounts has/have a normal credit balance?

a) Revenues and liabilities
b) Drawing
c) Assets
d) Expenses

5. A trial balance is:

a) a list of accounts and their balances.
b) a list of only the assets, liabilities, and capital accounts.
c) a list of only the revenue and expense accounts that have balances.
d) all of these.
6. A business buys office equipment for cash. What effect will this transaction have on the
accounts?
a) Debit an expense account and credit an asset account
b) Debit a liability account and credit an asset account
c) Debit an asset account and credit an asset account
d) Debit an asset account and credit an expense account

7. Which of the following entries record the withdrawal of cash for personal use by D. Bill,
the owner of the business?
a) Debit Salary Expense and credit Cash
b) Debit D. Bill, Drawing and credit Cash
c) Debit Cash and credit Salary Expense
d) Debit Cash and credit D. Bill, Drawing

8. In the process of journalizing, the first thing to do is:

a) to post the information to the ledger accounts.
b) to record the information from a source document.
c) to record the account numbers in the journal.
d) to prepare a trial balance.

9. The primary purpose of a __________ is to prove debits = credits.

a) journal
b) trial balance
c) ledger account
d) general ledger

10. A person wanting to know the balance of an account would refer to the:
a) chart of accounts.
b) journal.
c) ledger.
d) source document.

11. When an entry is posted, the last step in the process is:
a) placing the account number in the Post. Ref. column in the journal.
b) placing the account number in the Post. Ref. column in the ledger.
c) recording the explanation.
d) placing the journal page number in the Post. Ref column of the ledger.
12. Depreciation is:
a) an estimate of the loss of usefulness of equipment during an accounting period.
b) allocation of cost.
c) an expense that is incurred during an accounting period.
d) all of these.

13. Accrued wages are:

a) wages that were earned by employees and have been paid.
b) wages that have been paid.
c) wages that have been earned by employees but not paid.
d) wages that have neither been earned by employees nor paid.

14. The Income Statement Debit column of the worksheet contains:

a) liability account balances.
b) asset account balances.
c) revenue account balances.
d) expense account balances.

15. If an accountant fails to make an adjusting entry at the end of a fiscal period to record
expired insurance, the omission will cause:
a) total revenue to be understated.
b) total assets to be understated.
c) total expenses to be understated.
d) all of these.

16. Which of the following accounts would not be involved in closing entries?
a) Advertising Expense
b) Income from Services
c) Salaries Payable
d) B. Ryan, Drawing

17. The post-closing trial balance is best prepared from:

a) the general ledger and the financial statements.
b) the general ledger.
c) the financial statements.
d) the general journal and the general ledger.

18. If using the worksheet which columns do you use for closing revenues and expenses?
a) Balance Sheet columns
b) Trial Balance columns
c) Adjusted Trial Balance columns
d) Income Statement columns

19. Which of the following sequences of documents or records describes the proper sequence
in the accounting cycle?
a) Work sheet, source documents, financial statements, ledger, journal
b) Source documents, journal, ledger, work sheet, financial statements
c) Source documents, ledger, journal, work sheet, financial statements
d) Source documents, work sheet, journal, ledger, financial statements

20. Cash consists of:

a) coins.
b) checks.
c) money orders.
d) all of the above.

21. When a petty cash fund had been established, the following relationship should be true at
all times:
a) petty cash fund = cash in the petty cash box – petty cash vouchers
b) petty cash fund = cash in the petty cash box
c) petty cash fund = petty cash vouchers
d) petty cash fund = cash in the petty cash box + petty cash vouchers

22. At the end of the fiscal period, the credit balance in Cash Short and Over is reported as:
a) an expense on the income statement.
b) a liability on the balance sheet.
c) an asset on the balance statement.
d) a revenue on the income statement.

23. Which of the following would be added to the bank statement balance of cash?
a) Deposits in transit
b) Service charges
c) Note collected by bank
d) Outstanding checks

24. The record maintained for each employee, listing the current data on that employee’s
earnings for the period, deductions, and accumulated earnings, is:
a) the employee’s wage and tax statement.
b) the payroll register.
c) the employee’s withholding allowance (W-4) certificate.
d) the employee’s individual earnings record.

25. The payroll entry to the record the payroll is:

a) debit Salaries Payable, credit each employee deduction.
b) debit Salaries Expense, credit each employee deduction.
c) debit Salaries Payable, credit Cash.
d) debit Salaries Expense, credit each employee deduction, credit Salaries Payable or Cash

26. The employer records the amount of federal income tax withheld as:
a) a liability.
b) an asset.
c) withdrawal.
d) payroll tax expense.

27. Types of deductions from employees’ earnings include:

a) savings through a company credit union.
b) 401 K savings plan.
c) health insurance premiums.
d) all of these.
28. Generally employers are required to withhold from employees for:
a) Medicare.
b) federal income tax.
c) Social Security.
d) all of these.

29. Lester earns $12 per hour. He worked 43 hours this pay period and receives time-and-a-
half for any hours worked over 40 hours per week. His gross earnings are:
a) $480.
b) $516.
c) $534.
d) $774.

30. Employers taxes include:

a) SUTA.
b) FUTA.
c) both a and c.
d) neither a nor c.

31. Which of the following payroll taxes has a maximum of earnings subject to the tax?
a) Federal unemployment tax
b) FICA Social Security
c) State unemployment tax
d) All of these

32. The Employer’s Annual Federal Unemployment Tax Return is called:

a) Form W-2.
b) Form W-3.
c) Form W-4.
d) Form 940.

33. Payroll tax expenses represent:

a) amount of taxes contributed by the employer plus the gross pay.
b) amount of taxes contributed by the employee and employer combined.
c) amount of taxes contributed by the employer.
d) amount of taxes contributed by the employee.

34. A sales journal may be used to record:

a) sales of goods for cash.
b) sales of goods on account.
c) sales of supplies on account.
d) all of the above.

35. A controlling account can be found in:

a) the general ledger.
b) the accounts receivable subsidiary ledger.
c) the source documents.
d) all of these.

36. The purpose of an accounts receivable ledger is:

a) to provide information to be used in preparing a schedule of accounts payable.
b) to provide detailed information to management concerning accounts receivable accounts.
c) to provide information to post individually to the general ledger.
d) all of these.

37. The total of the schedule of accounts receivable must equal:

a) the balance of the Accounts Receivable controlling account.
b) sales on account less cash sales for the month.
c) the total of the sales on account for the month.
d) the total of all sales for the month.

38. The discount on an invoice for $590 dated July 20 and paid July 29 with terms 2/10, n/30 is:
a) $578.20.
b) zero.
c) $5.90.
d) $11.80.

39. The cash payments journal is used for:

a) transactions involving a debits to Cash and credits to other accounts.
b) transactions involving credits to Cash, regardless of the offsetting debits.
c) transactions involving credits to Cash but not affecting subsidiary ledgers.
d) transactions involving a debit to Cash and debits or credits to other balance sheet
accounts.
e) none of these.

40. Which of the following is not posted daily?

a) A transaction involving a creditor
b) A column total in a special journal
c) A transaction involving a customer
d) A transaction entered into the other Accounts column of a special journal
e) None of these.

41. Which journal would be used for the purchase of Equipment for Cash?
a) the cash payments journal.
b) the sales journal.
c) the purchases journal.
d) the cash receipts journal.

42. An (x) at the bottom of an Other Accounts column indicates that the total:
a) is not to be posted.
b) has been posted to the subsidiary ledger.
c) has been posted to the controlling account.
d) has been posted at the end of the month.

43. The Unearned Revenue account would be used when a company:

a) pays cash for services earned in two fiscal periods.
b) collects cash from a credit customer.
c) collects cash in advance of earning it.
d) pays cash for services not yet earned.
44. A hockey team records ticket revenue received in advance as Unearned Subscriptions. The
required adjusting entry when it is earned is:
a) debit Unearned Subscriptions and credit Cash.
b) debit Subscriptions Income and credit Unearned Subscriptions.
c) debit Unearned Subscriptions and credit Subscriptions Income.
d) debit Cash and credit Unearned Subscriptions.

45. The appropriate journal for recording the adjusting entry for Merchandise Inventory is:
a) the cash payments journal.
b) the purchases journal.
c) the general journal.
d) the sales journal.

46. Earned revenue is classified as:

a) a liability.
b) a revenue.
c) an expense.
d) an asset.

47. Which of the following lists of items is used to compute the goods available for sale?
a) Sales, beginning inventory and ending inventory
b) Gross profit, beginning inventory minus ending inventory
c) Purchases and beginning inventory
d) Net sales, beginning inventory less ending inventory

48. On an income statement, net sales minus cost of goods sold equals:
a) goods available for sale.
b) net income.
c) delivered cost of purchases.
d) gross profit.
49. Assuming Net Sales is $180,000; Cost of Goods Sold is $79,000; Selling Expenses,
$28,500; and General Expenses, $22,800, Gross profit is:
a) $27,700.
b) $207,700.
c) $101,000.
d) $95,300.

50. If ending Merchandise Inventory is $16,000, Purchases are $85,000, Purchases Discounts
are $1,800, Freight In is $3,500, and beginning Merchandise Inventory is $22,000, Cost of
Goods Sold is:
a) $80,700.
b) $79,700.
c) $92,700.
d) $90,300.