VNU-IS MDTERM TEST 2

---------- SEMESTER 2_ 2021- 2022

Student name: ……………………………… SUBJECT: PRINCIPLE ACCOUNTING
Time allowance: 90 minutes
Class: …………… Student No.: ………………..
Exam date: 2/6/2022
Instructions to candidates
This is a close-book examination.
___________________________________________________________________________
Problem I – Multiple choices (3 points)
Write down your answer in the Answer sheet.

No Answer No Answer No Answer No Answer

21 24 27 30

22 25 28

23 26 29

No Answer No Answer No Answer No Answer

31 34 37 40

32 35 38

33 36 39

21. An account consists of

a. a title, a debit balance, and a credit balance.

b. a title, a left side, and a debit balance.

c. a title, a debit side, and a credit side.

d. a title, a right side, and a debit balance.

22. The normal balance of any account is the

a. left side.

b. right side.

c. side which increases that account.

d. side which decreases that account.
23. An account will have a credit balance if the

a. credits exceed the debits.

b. first transaction entered was a credit.

c. debits exceed the credits.

d. last transaction entered was a credit.

24. In the first month of operations, the total of the debit entries to the cash account

amounted to $900 and the total of the credit entries to the cash account amounted to

$500. The cash account has a(n)

a. $500 credit balance.

b. $800 debit balance.

c. $400 debit balance.

d. $400 credit balance.

25. At December 1, 2008, Marco Company’s accounts receivable balance was $1,200.

During December, Marco had credit revenues of $5,000 and collected accounts

receivable of $4,000. At December 31, 2008, the accounts receivable balance is

a. $1,200 debit.

b. $2,200 debit.

c. $6,200 debit.

d. $2,200 credit.

26. A journal provides

a. the balances for each account.

b. information about a transaction in several different places.

c. a list of all accounts used in the business.

d. a chronological record of transactions.

27. Tritan Company received a cash advance of $500 from a customer. As a result

of this event,

a. assets increased by $500.

b. owner’s equity increased by $500.

c. liabilities decreased by

$500.

d. both a and b.

28. Anderson Company purchased equipment for $1,800 cash. As a result of

this event,

a. owner’s equity decreased by $1,800.

b. total assets increased by $1,800.

c. total assets remained

unchanged.

d. Both a and b.

29. Franklin Company provided consulting services and billed the client $2,500. As

a result of this event,

a. assets remained

unchanged.

b. assets increased by

$2,500.

c. owner’s equity increased by $2,500.

d. Both b and c.

30. A list of accounts and their balances at a given time is called a(n)

a. journal.
b. posting.
c. trial balance.

d. income statement.

31. A trial balance will not balance if

a. a journal entry is posted twice.

b. a wrong amount is used in journalizing.

c. incorrect account titles are used in

journalizing.

d. a journal entry is only partially posted.

32. Keypress Company collected $6,500 in May of 2008 for 5 months of service which

would take place from October of 2008 through February of 2009. The revenue

reported from this transaction during 2008 would be

a. $0

b. $3,900

c. $6,500

d. $2,600

33. Waterfalls Corporation purchased a one-year insurance policy in January 2008 for

$66,000. The insurance policy is in effect from March 2008 through February

2009. If the company neglects to make the proper year-end adjustment for the

expired insurance

a. Net income and assets will be understated by

$55,000.

b. Net income and assets will be overstated by

$55,000.

c. Net income and assets will be understated by

$11,000.

d. Net income and assets will be overstated by

$11,000.

34. If an adjusting entry is not made for an accrued

revenue,

a. assets will be overstated.

b. expenses will be understated.

c. owner's equity will be

understated.

d. revenues will be overstated.

35. At March 1, 2008, Candy Inc. had supplies on hand of $500. During the month,

Candy purchased supplies of $1,200 and used supplies of $1,500. The March

31 adjusting journal entry should include a

a. debit to the supplies account for $1,500.

b. credit to the supplies account for $500.

c. debit to the supplies account for $1,200.

d. credit to the supplies account for $1,500.

36. Unearned revenue is classified as

a. an asset account.

b. a revenue account.

c. a contra-revenue account.

d. a liability.

37. As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

a. debit to an asset account and a credit to an expense account.

b. debit to an expense account and a credit to an asset account.

c. debit to an asset account and a credit to an asset account.

38. If an adjustment is needed for unearned revenues, the

a. liability and related revenue are overstated before adjustment.

b. liability and related revenue are understated before adjustment.

c. liability is overstated and the related revenue is understated before adjustment.

d. liability is understated and the related revenue is overstated before adjustment.

39. Accrued expenses are

a. paid and recorded in an asset account before they are used or consumed.

b. paid and recorded in an asset account after they are used or consumed.

c. incurred but not yet paid or recorded.

d. incurred and already paid or recorded.

40. An adjusting entry

a. affects two balance sheet accounts.

b. affects two income statement accounts.

c. affects a balance sheet account and an income statement account.

d. is always a compound entry.

Problem II: (7 points)

Question 1 (4 points)
Question 2 (3 points)
Analyze Trusty Company’s trial balance and the additional information provided to determine
the following:c

A. what is causing the trial balance to be out of balance

B. any other errors that require corrections that are identified during your analysis
C. the effect (if any) that correcting the errors will have on the accounting equation.

A review of transactions revealed the following facts:

• A service fee of $18,000 was earned (but not yet collected) by the end of the period but was
accidentally not recorded as revenue at that time.

• A transposition error occurred when transferring the account balances from the ledger to the
trial balance. Salaries expense should have been listed on the trial balance as $64,500 but was
inadvertently recorded as $46,500.

• Two machines that cost $9,000 each were purchased on account but were not recorded in
company accounting records.