1. Which of the following is not a benefit derived from the conceptual framework?

a.Supports the objective of providing information useful for making business and economic decisions
b.Supports the development of a consistent set of accounting standards
c.Provides specific guidance on how transactions should be recorded
d.Provides a logical structure to aid in the understanding of complex accounting standards

2. Which of the following is not a characteristic of useful information?

a.Comparability
b.Relevance
c.Faithful representation
d.Prudence

3. Information that provides feedback about prior expectations is:

Faithfully
Relevant Represented
a. No No
b. Yes Yes
c. Yes No
d. No Yes

4. Relevant information possesses this quality:

Freedom From Predictive
Error Value
a. Yes Yes
b. No Yes
c. Yes No
d. No No

5. Which of the following is not an assumption that underlies accounting?

a.Separate entity
b.Continuity (going concern)
c.Historical cost
d.Periodicity

6. Which of the following requires that expenses be recorded and reported in the same period as the
revenue that they helped generate?
a.Historical cost principle
b.Full disclosure principle
c.Revenue recognition principle
d.Matching process

7. Taylor Company recently purchased a piece of equipment for $2,000 that will be paid for within 30
days after delivery. At what point will the event be recorded in Taylor's accounting system?
a.When Taylor pays $2,000 cash to the seller
b.When Taylor receives the asset from the seller
c.When Taylor receives an invoice (a bill) from the seller
d.When Taylor signs the agreement with the seller

8. The effects of purchasing inventory on credit are to:

a.decrease assets and decrease shareholders' equity.
b.increase assets and increase shareholders' equity.
c.decrease assets and decrease liabilities.
d.increase assets and increase liabilities.

9. The effects of paying salaries for the current period are to:
a.decrease assets and decrease shareholders' equity.
b.decrease assets and decrease liabilities.
c.increase assets and increase shareholders' equity.
d.increase assets and increase liabilities.

10. Which of the following statements is false?

a.Transactions are frequently analyzed using a T-account.
b.The left side of a T-account is called the credit side.
c.The amount in an account at any time is called the balance of the account.
d.All T-accounts have both a debit and a credit side.

11. Which of the following statements is/are true?

I. Debits represent decreases and credits represent increases.
II. Debits must always equal credits.
III. Assets have normal debit balances while liabilities and shareholders' equity have normal credit
balances.
a.II and III
b.I and II
c.I
d.All of these choices are correct.

12. Debits will:

a.decrease liabilities, revenues, and dividends declared.
b.increase assets, liabilities, revenues, expenses, and dividends declared.
c.increase assets, expenses, and dividends declared.
d.decrease assets, liabilities, revenues, expenses, and dividends declared.

13. Which of the following statements are true?

I. A journal provides a chronological record of a transaction.
II. A journal entry contains the complete effect of a transaction.
III. The first step in preparing a journal entry involves analyzing the transaction.
a.II and III
b.I and III
c.I and II
d.All of these choices are correct.

14. Posting:
a.involves transferring information to the trial balance.
b.involves transferring the information in journal entries to the general ledger.
c.is an optional step in the accounting cycle.
d.is performed after a trial balance is prepared.

15. A trial balance:

a.lists all accounts and their balances.
b.lists only revenue and expense accounts.
c.detects all errors that could be made during the journalizing or posting steps of the accounting cycle.
d.will help detect omitted journal entries.

16. Transaction Analysis

Stanfield Inc. entered into the following transactions.
a. Issued common shares to investors in exchange for $50,000 cash
b. Borrowed $15,000 cash from Royal Bank
c. Purchased $8,000 of supplies on credit
d. Paid for the purchase in c
Required:
 Show the effect of each transaction using the following model. For those boxes in which no entry is
required, leave the box blank. Enter decreases in account values as negative numbers.
Assets = Liabilities + Shareholders' Equity
Share Retained
+
Capital Earnings
a. 50,000 - 50,000 -
b. 15,000 15,000 - -
c. 8,000 8,000 - -
d. -8,000 -8,000 - -

17. Transaction Analysis

Four transactions are listed below.
Required:
Prepare three columns labelled assets, liabilities, and shareholders' equity. For each of the
transactions, indicate whether the transaction increased (+), decreased (-), or had no effect (NE) on
assets, liabilities, and shareholders' equity.
Assets Liabilities Shareholders' Equity
a. Sold goods to customers on
Increased (+) No effect (NE) Increased (+)
credit.
b. Collected amounts due from Increase (+) and
No effect (NE) No effect (NE)
customers. Decrease (-)
c. Purchased supplies on account. Increased (+) Increased (+) No effect (NE)
d. Used supplies in operations of the
Decreased (-) No effect (NE) Decreased (-)
business.

18. Accounting Principles

Three statements are given below.
Required:
Give the accounting principle that is most applicable to each of the statements.
a. Quagmire Company recognizes revenue when the goods are delivered to a customer, even though
cash will not be collected from the customer for 30 days.
Revenue recognition
b. Inventory, which was recently damaged by a flood, was considered a significant amount and will
impact decision makers’ decision about investing in this company.
Full disclosure
c. Land, located in a desirable location, is reported at the original acquisition price, even though its
value has increased by over 100% since it was purchased.
Historical cost

19. Accounting Assumptions

Four statements are given below.
Required:
Give the accounting assumption that is most applicable to each of the statements.
a. Pewterschmidt Company values its inventory reported in the financial statements in terms of
dollars instead of units.
Unit-of-measure
b. Property, plant, and equipment is recorded at cost (less any accumulated depreciation) instead of
liquidation value.
Continuity (going-concern)
c. The accounting records of a company are kept separate from those of its owners.
Separate entity
 d. The accountant assigns revenues and expenses to specific years before preparing the financial
statements.
Periodicity

20. Journalize Transactions

Four transactions that occurred during May are listed below.
a. May 5: Borrowed cash of $20,000 from CIBC
b. May 10: Made cash sales of $14,500 to customers
c. May 19: Paid salaries of $8,600 to employees for services performed
d. May 22: Purchased and used $4,100 of supplies in operations of the business
Required:
Prepare journal entries for the transactions.
May 5 Cash 20,000
Notes Payable 20,000
(Record borrowing of
cash from bank)

May 10 Cash 14,500

Sales Revenue 14,500
(Record cash sales)

May 19 Salaries Expense 8,600

Cash 8,600
(Record payment of
salaries)

May 22 Supplies 4,100

Cash 4,100
(Record purchase of
supplies)

May 22 Supplies Expense 4,100

Supplies 4,100

(Record use of supplies)

21. Preparing a Trial Balance

Listed below are the ledger accounts for Borges Inc. at December 31, 2022. All accounts have normal
balances.

$23,15
Service Revenue Dividends Declared $1,500
0
Cash 12,850 Salaries Expense 4,300
Accounts Payable 2,825 Equipment 12,725
Common Shares 15,000 Accounts Receivable 5,700
Rent Expense 2,400 Advertising Expense 1,500
Required:
Prepare a trial balance for Borges at December 31, 2022. For those boxes in which no entry is
required, leave the box blank.
Borges Inc.
 Trial Balance
December 31, 2022
Account Debit Credit
Cash $12,850 -
Accounts Receivable 5,700 -
Equipment 12,725 -
Accounts Payable - 2,825
Common Shares - 15,000
Dividends Declared 1,500 -
Service Revenue - 23,150
Rent Expense 2,400 -
Salaries Expense 4,300 -
Advertising Expense 1,500 -
$40,975 $40,975

22. Journalize Transactions

Galle Inc. entered into the following transactions during January:
a. January 1: Borrowed $50,000 from First Street Bank by signing a note payable.
b. January 4: Purchased $25,000 of equipment for cash.
c. January 6: Paid $500 to landlord for rent for January.
d. January 15: Performed services for customers on account, $10,000.
e. January 25: Collected $3,000 from customers for services performed in transaction d.
f. January 30: Paid salaries of $2,500 for the current month.
Required:
Prepare journal entries for the transactions.
Jan.
Cash 50,000
1
Notes Payable 50,000
(Record issuance of note
payable)

4 Equipment 25,000
Cash 25,000
(Record purchase of
equipment)

6 Rent Expense 500

Cash 500
(Record payment of rent)

15 Accounts Receivable 10,000

Service Revenue 10,000
(Record performance of
services)

25 Cash 3,000
Accounts Receivable 3,000
(Record collection from
customers)

30 Salaries Expense 2,500

 Cash 2,500
(Record payment of salaries)

23. Posting Journal Entries

Listed below are selected T-accounts and their beginning balances for Galle Inc.
Required:
Post the following journal entries to the T-accounts and compute the ending balance for each account.
Jan.
Cash 50,000
1
Notes Payable 50,000
(Record issuance of
note payable)

4 Equipment 25,000
Cash 25,000
(Record purchase of
equipment)

6 Rent Expense 500

Cash 500
(Record payment of
rent)

15 Accounts Receivable 10,000

Service Revenue 10,000
(Record performance
of services)

25 Cash 3,000
Accounts Receivable 3,000
(Record collection
from customers)

30 Salaries Expense 2,500

Cash 2,500
(Record payment of
salaries)
Cash
Beg. Bal. 12,000 Jan. 4 25,000
Jan. 1 50,000 Jan. 6 500
Jan. 25 3,000 Jan. 30 2,500
End. Bal. 37,000
Accounts Receivable
Beg. Bal. 6,300 Jan. 25 3,000
Jan. 15 10,000
End. Bal. 13,300
Equipment
Beg. Bal. 5,000
Jan. 4 25,000
End. Bal. 30,000
Notes Payable
Beg. Bal. 0
Jan. 1 50,000
End. Bal. 50,000
Service Revenue
Beg. Bal. 19,500
Jan. 15 10,000
End. Bal. 29,500
Salary Expense
Beg. Bal. 5,000
Jan. 30 2,500
End. Bal. 7,500
Rent Expense
Beg. Bal. 1,000
Jan. 6 500
End. Bal. 1,500

24. Preparing a Trial Balance

The following trial balance, prepared by the bookkeeper of Mason Company, does not balance.

Mason Company
Trial Balance
December 31, 2022
Debit Credit
Cash $20,000
Accounts Payable $3,000
Insurance Expense 1,500
Supplies 1,200
Accounts Receivable 10,300
Salaries Payable 1,900
Notes Payable 3,100
Common shares 10,000
Dividends 2,000
Retained Earnings 8,000
Service Revenue 19,200
Unearned Service Revenue 2,100
Prepaid Insurance 1,900
Salaries Expense 9,500
Supplies Expense 900
$46,400 $48,200
Required:
Prepare a correct trial balance. Assume all accounts have normal balances. For those boxes in which
no entry is required, leave the box blank.
Mason Company
Trial Balance
December 31, 2022
Account Debit Credit
Cash $20,000 -
Accounts Receivable 10,300 -
Supplies 1,200 -
Prepaid Insurance 1,900 -
Accounts Payable - 3,000
Salaries Payable - 1,900
Unearned Service Revenue - 2,100
Notes Payable - 3,100
Common Shares - 10,000
Dividends 2,000 -
Retained Earnings - 8,000
Service Revenue - 19,200
Insurance Expense 1,500 -
Salaries Expense 9,500 -
Supplies Expense 900 -
$47,300 $47,300

25. Journalizing Transactions

Great Bear Adventures rents and sells snowshoes and dogsledding equipment. During March, Great
Bear engaged in the following transactions:

March 2 Received $41,200 cash from customers for rentals

3 Purchased on credit five new pairs of snowshoes (which Great Bear classifies as inventory) for $140 each
6 Paid wages to employees in the amount of $8,500
9 Paid office rent for the month in the amount of $1,300
12 Purchased a new Ford truck for $37,800; paid $1,000 down in cash and secured a loan from Scotiabank for
the $36,800 balance
13 Collected a $950 account receivable
16 Paid an account payable in the amount of $870
23 Borrowed $15,000 on a six-month, 8% note payable
27 Paid the monthly telephone bill of $145
30 Paid a monthly advertising bill of $1,260
Required:
Prepare a journal entry for each of the above transactions. For a compound transaction, for those
boxes in which no entry is required, leave the box blank.
Mar. 2 Cash 41,200
Service Revenue 41,200
(Record revenue)

Mar. 3 Inventory 700

Accounts Payable 700
(Record purchase of snowshoes)
Mar. 6 Wages Expense 8,500
Cash 8,500
(Record wages)

Mar. 9 Rent Expense 1,300

Cash 1,300
(Record rent)

Mar. 12 Trucks 37,800 -

Cash - 1,000
Notes Payable - 36,800
(Record purchase of truck)

Mar. 13 Cash 950

Accounts Receivable 950
(Record collection of customer
account)

Mar. 16 Accounts Payable 870

Cash 870
(Record payment of account
owed)

Mar. 23 Cash 15,000

Notes Payable 15,000
(Record borrowing of cash)

Mar. 27 Utilities Expense 145

Cash 145
(Record payment of telephone
bill)

Mar. 30 Advertising Expense 1,260

Cash 1,260
(Record payment for advertising)

26. Journalizing Transactions

King Communications has been providing cellular phone service for several years. During November
and December 2022, the following transactions occurred:
Nov
2 King received $2,400 for November phone service from Hanaman Company.
.
6 King purchased $4,750 of supplies from Technology Associates on account.
10 King paid $5,250 to its hourly employees for their weekly wages.
15 King paid $4,750 to Technology Associates in full settlement of the account payable.
28 King paid $2,150 for utilities used during November.
30 King received a bill from Stormont Construction for $1,230 for repairs made to King's loading dock on Novem
15. King plans to pay the bill in early December.
 Dec. 10 King paid $1,230 to Stormont Construction to settle the repair bill received on November 30.
Required:
1. Prepare a journal entry for each of the above transactions.
Nov. 2 Cash 2,400
Service Revenue 2,400
(Record revenue earned)

Nov. 6 Supplies 4,750

Accounts Payable 4,750
(Record purchase of supplies on
account)

Nov. 10 Wages Expense 5,250

Cash 5,250
(Record payment of wages)

Nov. 15 Accounts Payable 4,750

Cash 4,750
(Record payment on account)

Nov. 28 Utilities Expense 2,150

Cash 2,150
(Record payment for utilities)

Repairs and Maintenance

Nov. 30 1,230
Expense
Accounts Payable 1,230
(Record repairs performed on
account)

Dec. 10 Accounts Payable 1,230

Cash 1,230
(To record payment of account)
2. CONCEPTUAL CONNECTION: What accounting principle did you apply in recording the November
10 transaction?
Matching principle

27. Transaction Analysis and Journal Entries

Pasta House Inc. was organized in January 2022. During the year, the following transactions occurred:
a. On January 14, Pasta House sold Martin Halter, the firm's founder and sole owner, 10,000 of its
common shares for $8 per share.
b. On the same day, National Bank loaned Pasta House $45,000 on a 10-year note payable.
c. On February 22, Pasta House purchased a building and the land on which it stands from Frank
Jakubek for $34,000 cash and a 5-year, $56,000 note payable. The land and building had appraised
values of $30,000 and $60,000, respectively.
d. On March 1, Pasta House signed a $15,000 contract with Crosby Renovations to remodel the inside of
the building. Pasta House paid $4,000 down and agreed to pay the remainder when Crosby completed
its work.
e. On May 3, Crosby completed its work and submitted a bill to Pasta House for the remaining $11,000.
f. On May 20, Pasta House paid $11,000 to Crosby Renovations.
g. On June 4, Pasta House purchased restaurant supplies from Goa Supply for $650 cash.
Required:
Prepare a journal entry for each of the above transactions. For a compound transaction, for those
boxes in which no entry is required, leave the box blank.
Jan. 14 Cash 80,000
Common Shares 80,000
(Record issuance of common
shares)

Jan. 14 Cash 45,000

Notes Payable 45,000
(Record borrowing of cash)

Feb. 22 Land 30,000 -

Buildings 60,000 -
Cash - 34,000
Notes Payable - 56,000
(Record purchase of land and
building)

Mar. 1 Buildings 4,000

Cash 4,000
(Record payment for
remodelling)

May 3 Buildings 11,000

Accounts Payable 11,000
(Record amount due for
remodelling)

May 20 Accounts Payable 11,000

Cash 11,000
(Record payment on account)

June 4 Supplies 650

Cash 650
(Record purchase of supplies)

28. Transaction Analysis

Aziz Company entered into the following transactions:
a. Performed services on account, $18,500
b. Collected $7,200 from client related to services performed in a
c. Paid $1,500 dividend to shareholders
d. Paid salaries of $3,500 for the current month
Required:
Show the effect of each transaction using the following model. For those boxes in which no entry is
required, leave the box blank. Enter decreases in account values as negative numbers. If the effect of
a transaction is to increase AND decrease the same item (i.e. Asset, Liability), enter "0" since the net
effect on the item is zero.
Assets = Liabilities + Shareholders' Equity
Share + Retained
 Capital Earnings
a. 18,500 - - 18,500
b. 0 - - 0
c. -1,500 - - -1,500
d. -3,500 - - -3,500

29. Debit and Credit Procedures

Refer to the accounts listed below.
Required:
For each of the accounts, complete the following table by entering the normal balance of the account
(debit or credit) and the word increase or decrease in the debit and credit columns.
Account Normal Balance Debit Credit
a. Accounts Payable Credit Decrease Increase
b. Accounts Receivable Debit Increase Decrease
c. Retained Earnings Credit Decrease Increase
d. Sales Credit Decrease Increase
e. Equipment Debit Increase Decrease
f. Common Shares Credit Decrease Increase
g. Salary Expense Debit Increase Decrease
h. Repair Expense Debit Increase Decrease

30. Journalize Transactions

Four transactions that occurred during June are listed below.
a. June 1: Issued common shares to several investors for $83,000
b. June 8: Purchased equipment for $12,800 cash
c. June 15: Made cash sales of $21,400 to customers
d. June 29: Declared and paid a $6,500 dividend to shareholders
Required:
Prepare journal entries for the transactions.
June 1 Cash 83,000
Common Shares 83,000
(Record issuance of
common shares)

June 8 Equipment 12,800

Cash 12,800
(Record purchase of
equipment)

June 15 Cash 21,400

Sales Revenue 21,400
(Record cash sales)

June 29 Dividends Declared 6,500

Cash 6,500
(Declared and paid cash
dividends)