A company buys a one-year insurance policy on February 1, 2011, and

immediately pays in cash the $720 insurance premium. The company's

bookkeeper records the transaction by crediting the Cash account for $720
but debits Insurance Expense for $720, instead of debiting Prepaid
Insurance, which would be the correct entry. Based on this information,
which statement concerning the trial balance is correct if the company fails
to correct this bookkeeping error?
Select one:
a.
The total trial balance debits do not equal the total trial balance credits.
b.
The total trial balance debits equal the trial balance credits but one or more account balances are
incorrect.
c.
The trial balance is correct as it is.
d.
The total trial balance debits are higher than the total trial balance credits.
e.
The total trial balance credits are lower than the total trial balance debits.

Family Corporation performed consulting services for a client in December

2019. The client will be billed $5,000. Family Corporation should make the
following adjusting entry on December 31:
Select one:
a.
Debit Services Revenue, $5,000; Credit Cash, $5,000

b.
Debit Cash, $5,000; Credit Services Revenue, $5,000

c.
Debit Services Revenue, $5,000; Credit Accounts Receivable, $5,000

d.
Debit Accounts Receivable, $5,000; Credit Services Revenue, $5,000

GNN Moto Company received a $590 cash from a customer for the balance due. The
transaction was erroneously recorded as a debit to Cash $990 and a credit to Service
Revenue $990. Assuming the incorrect entry is not reversed, the correcting entry is

Select one:
a.
Debit Cash, $990; credit Accounts Receivable, $990.

b.
Debit Service Revenue, $990; credit Cash, $400 and Accounts Receivable, $590.

c.
Debit Cash, $400 and Service Revenue, $590; credit Accounts Receivable, $990.

d.
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Debit Cash, $590 and Accounts Receivable, $590; credit Service Revenue, $1,080.

Understating beginning inventory will understate

Select one:
a.
owner's equity

b.
net income

c.
assets

d.
cost of goods sold

The records for Uptown Pet Shop showed the following: Sales Revenue,
$225,000; Beginning Merchandise Inventory, $40,000; purchases of
Merchandise Inventory during the period, $144,000; and, Cost of Goods Sold,
$172,000. What is the amount of the ending Merchandise Inventory?
Select one:
a.
$15,000.
b.
$12,000.
c.
$144,000.
d.
$212,000.
Which one of the following is not a part of an account?
Select one:
a.
Credit side

b.
Debit side

c.
Trial balance

d.
Title

Net income results when

Select one:
a.
Revenues > Expenses

b.
Assets > Liabilities

c.
Revenues = Expenses

d.
Revenues < Expenses

The adjusted trial balance is prepared

Select one:
a.
after financial statements are prepared

b.
before the trial balance

c.
after adjusting entries have been journalized and posted

d.
to prove the equality of total assets and total liabilities
Company A is taking the end-of-the-year physical inventory. Its accounting
period ends on December 31. Which of the following items would not be
counted in the ending inventory count?
Select one:
a.
Items owned by Company A were delivered to another company on consignment on December 27.
The items are still held by the other company on December 31.
b.
Items Company A ordered from a supplier on December 15 were shipped on December 17th and
received by Company A on December 28 where the seller paid the shipping charges.
c.
Items sold on December 29 and shipped the same day where the purchaser is responsible for
paying the freight charge. The item arrived at its destination on January 3.
d.
Unsold inventory that remains in Company A's warehouse on December 31.

Merchandise inventory is
Select one:
a.
reported as a current asset on the statement of financial position

b.
reported under the classification of Property, Plant, and Equipment on the balance sheet

c.
often reported as a miscellaneous expense on the income statement

d.
generally valued at the price for which the goods can be sold

What are the main purposes of the post-closing trial balance, except?
Select one:
a.
To make sure all transactions have been correctly recorded in the general journal.
b.
To verify that all the temporary or nominal accounts have zero balances.
c.
To verify that only real accounts continue to have a balance in them and that the sum of all the debit
balances in the real accounts is equal to the sum of all the credit balances in the real accounts.

According to the cost principle, it is necessary for managers to report

an approximation of an asset's market value upon purchase. 
Select one:
a.
False

b.
True

A retailer who uses a perpetual inventory system purchased $8,000 of

merchandise on credit. The credit terms were 2/10, n/30, FOB shipping point.
The freight costs were $130. What was the journal entry to record the
purchase?
Select one:
a.
Merchandise Inventory, debit, $8,130; Freight-In, debit, $130; Accounts Payable, credit, $8,130.
b.
Merchandise Inventory, debit, $8,000; Accounts Payable, credit, $8,000.
c.
Merchandise Inventory, debit, $8,130; Accounts Payable, credit, $8,130.
d.
Merchandise Inventory, debit, $7,870; Accounts Payable, credit, $7,870.

Company assets total $150,000 and its liabilities total $30,000. What is the
equity of this company?
Select one:
a.
$150,000.

b.
$180,000.

c.
$120,000.

d.
$100,000.

In a perpetual inventory system, the Cost of Goods Sold account is used

Select one:
a.
only when a cash sale of merchandise occurs

b.
only when a sale of merchandise occurs

c.
only when a credit sale of merchandise occurs

d.
whenever there is a sale of merchandise or a return of merchandise sold

A company purchased inventory as follows: 200 units at $10, 300 units at

$12. The average unit cost for inventory is
Select one:
a.
$10.00

b.
$11.00

c.
$11.20

d.
$12.00

Ogletree Enterprises purchased an 18-month insurance policy on May 31,

2019 for $3,600. The December 31, 2019 balance sheet would report Prepaid
Insurance of
Select one:
a.
$3,600

b.
$1,400

c.
$0 because Prepaid Insurance is reported on the Income Statement

d.
$2,200

Which of the following is not a common time period chosen by businesses as

their accounting period?
Select one:
a.
Monthly

b.
Quarterly

c.
Daily

A merchandising company using a perpetual system will make

Select one:
a.
different types of adjusting entries compared to a service company

b.
one less adjusting entry than a service company does

c.
the same number of adjusting entries as a service company does

d.
one more adjusting entry than a service company does

The first part of the accounting process is

Select one:
a.
communicating

b.
recording

c.
processing

d.
identifying

When the cost of buying an item of inventory from a supplier is steadily increasing or
steadily decreasing, it is possible to make some generalizations as to what will be the
effects on cost of goods sold, given the use of any particular cost flow assumption. In
periods of rising prices, which of the following statements is true?
Select one:
a.
LIFO will assign higher inventory costs to cost of goods sold than will FIFO, and LIFO will
assign higher inventory costs to the ending inventory than will FIFO.
b.
LIFO will assign lower inventory costs to cost of goods sold than will FIFO, and LIFO will
assign lower inventory costs to the ending inventory than will FIFO.
c.
LIFO will assign lower inventory costs to cost of goods sold than will FIFO, and LIFO will
assign higher inventory costs to the ending inventory than will FIFO.
d.
LIFO will assign higher inventory costs to cost of goods sold than will FIFO, and LIFO will
assign lower inventory costs to the ending inventory than will FIFO.

The double-entry system requires that each transaction must be recorded

Select one:
a.
in two sets of books

b.
in a journal and in a ledger
 c.
in at least two different accounts

d.
first as a revenue and then as an expense

After a business transaction has been analyzed and entered in the book of
original entry, the next step in the recording process is to transfer the
information to 
Select one:
a.
ledger accounts

b.
the company's bank

c.
financial statements

d.
owner's equity

An income statement
Select one:
a.
summarizes the changes in owner's equity for a specific period of time

b.
presents the revenues and expenses for a specific period of time

c.
reports the assets, liabilities, and owner's equity at a specific date

d.
reports the changes in assets, liabilities, and owner's equity over a period of time

Office Equipment is classified in the statement of financial position as

Select one:
 a.
an intangible asset

b.
property, plant, and equipment

c.
a long-term investment

d.
a current asset

Disclosures about inventory should include each of the following except the

Select one:
a.
basis of accounting

b.
quantity of inventory

c.
major inventory classifications

d.
costing method

Which of the following statements about the accounting cycle is false?

Select one:
a.
Posting is done after transactions have been analyzed.
b.
Journalizing the transactions is performed before preparing the unadjusted trial balance.
c.
Adjusting the accounts is done prior to preparing the adjusted trial balance.
d.
Financial statements are prepared before preparing the adjusted trial balance.
e.
Preparing the post-closing trial balance is done after the temporary account have been closed

 A current asset is
Select one:
a.
the last asset purchased by a business
 b.
an asset which is currently being used to produce a product or service

c.
usually found as a separate classification in the income statement

d.
an asset that a company expects to convert to cash or use up within one year

If an adjusting entry is not made for an accrued expense

Select one:
a.
expenses will be overstated

b.
liabilities will be understated

c.
net income will be understated

d.
owner's equity will be understated

If Income Summary has a credit balance after revenues and expenses have
been closed into it, the closing entry for Income Summary will include a
Select one:
a.
debit to the retained earnings account

b.
credit to the dividends account

c.
debit to the dividends account

d.
credit to the retained earnings account

The three basic business entities discussed in this chapter include sole
proprietorship, partnership, and corporation. Which of these entities is
considered a legal entity and is also subject to federal income taxation at the
entity level?
Select one:
a.
Corporation.

b.
Partnership.

c.
All three entities satisfy both requirements.

d.
Sole proprietorship.

Quirk Company purchased office supplies costing $6,000 and debited Office
Supplies for the full amount. At the end of the accounting period, a physical
count of office supplies revealed $2,400 still on hand. The appropriate
adjusting journal entry to be made at the  end of the period would be
Select one:
a.
Debit Office Supplies Expense, $2,400; Credit Office Supplies, $2,400

b.
Debit Office Supplies Expense, $3,600; Credit Office Supplies, $3,600

c.
Debit Office Supplies, $3,600; Credit Office Supplies Expense, $3,600

d.
Debit Office Supplies, $2,400; Credit Office Supplies Expense, $2,400

Which of the following events is not recorded in the accounting records?

Select one:
a.
A cash investment is made into the business.

b.
An employee is terminated.

c.
The company pays a cash dividend.

d.
Equipment is purchased on account.

All of the financial statements are for a period of time except the

Select one:
a.
retained earnings Statement

b.
statement of cash flows

c.
statement of financial position

d.
income statement

______________ users of accounting information are not directly involved in

running the organization.
Select one:
a.
Internal

b.
External

c.
None

Which of the following statements related to the adjusted trial balance

is incorrect?
Select one:
a.
It shows the balances of all accounts at the end of the accounting period

b.
It proves the equality of the total debit balances and the total credit balances in the ledger
 c.
It is prepared before adjusting entries have been made

d.
Financial statements can be prepared directly from the adjusted trial balance

If beginning inventory is understated by $15,000, the effect of this error in

the current period is
Select one:
a.
Cost of Goods Sold is Overstated by $15,000, Net Income is Overstated by $15,000

b.
Cost of Goods Sold is understated by $15,000, Net Income is Overstated by $15,000

c.
Cost of Goods Sold is Overstated by $15,000, Net Income is understated by $15,000

d.
Cost of Goods Sold is understated by $15,00000, Net Income is understated by $15,00

Adjusting entries are

Select one:
a.
not necessary if the accounting system is operating properly

b.
made whenever management desires to change an account balance

c.
usually required before financial statements are prepared

d.
made to statement of financial position accounts only

Net sales is sales less

Select one:
a.
sales returns and allowances

b.
sales discounts
 c.
sales discounts and sales returns and allowances

d.
sales returns

In preparing closing entries for a merchandising company, the Income

Summary account will be credited for the balance of
Select one:
a.
sales discounts

b.
freight-out

c.
sales

d.
merchandise inventory

 company buys a new car on February 15, 2011, and immediately pays in
cash the $25,000 purchase price. The company's bookkeeper fails to record
the transaction at all. Based on this information, which statement concerning
the trial balance is correct if the company fails to correct this bookkeeping
error?
Select one:
a.
The trial balance is correct as it is.

b.
The total trial balance debits are higher than the total trial balance credits.

c.
The total trial balance debits are equal to the total trial balance credits, but one or more accounts
have incorrect balances.

d.
The total trial balance debits do not equal the total trial balance credits.

After transaction information has been recorded in the journal, it is

transferred to the
Select one:
a.
trial balance

b.
ledger

c.
income statement

d.
book of original entry

At October 1, 2019, ABC Company had beginning inventory consisting of 80

units with a unit cost of $20. During October, the company purchased
inventory as follows: October 2 purchased 120 units at $22, October 12
purchased 60 units at $23 and October 20 purchased 150 units at $24.
Vanida sold 100 units on October 8 and 200 units on October 28. Vanida uses
a perpetual inventory system. The cost of good sold under the FIFO is
Select one:
a.
$6,580

b.
$7,050

c.
$4,020

d.
$6,040

Income from operations is gross profit less

Select one:
a.
other expenses and losses

b.
operating expenses

c.
administrative expenses

d.
selling expenses
The Baker sole proprietorship started operations on January 1, 2011 and
uses a calendar-year accounting period. On February 7, 2011, the company
purchases an automobile with an invoice cost of $10,000. To settle this
transaction, the company immediately pays $3,000 cash to the automobile
dealership and signs a three-month note payable for the $7,000 purchase
price balance. A partial general journal entry is given below. Which item
accurately describes the partial entry from Baker's viewpoint?
Select one:
a.
The asset account Vehicles is debited for $7,000 and Cash is credited for $3,000.

b.
Cash is credited for $3,000 and Notes Payable is credited for $7,000.

c.
The asset account Vehicles is credited for $10,000 and Cash is credited for $3,000.

d.
Cash is debited for $3,000 and Notes Payable is credited for $7,000.

At the beginning of the year, XYZ had total assets of £500,000 and total
liabilities of £200,000. If total assets increased £60,000 during the year and
equity increased £40,000 during the year, what is the amount of total
liabilities at the end of the year?
Select one:
a.
£800

b.
£750

c.
£220

d.
£660

AC Co  completed its inventory count. It arrived at a total inventory value of

£240,000. However, you have been given the information as follow: The
physical count of the inventory did not include goods costing £20,000 that
were shipped to JNJ, FOB shipping point on December 29 and were still in
transit at year-end. Besides, AC sold goods costing £35,000 to BB Co., FOB
destination, on December 31. The goods were received at BB on January 2.
They were not included in AC’s physical inventory. The correct inventory
amount of AC on December 31 is
Select one:
a.
£295,000

b.
£205,000

c.
£275,000

d.
£240,000

gross profit for a merchandiser is net sales minus

Baden Shoe Store has a beginning merchandise inventory of $30,000. During the
period,  purchases were $140,000; purchase returns, $4,000; and freight-in $10,000. A
physical  count of inventory at the end of the period revealed that $20,000 was still on
hand. The cost  of goods available for sale was
a. $164,000.
b. $156,000.
c. $176,000.
d. $184,000.

Which one of the following represents the expanded basic accounting equation?

a) Assets = Liabilities + Owner's Capital + Owner's Drawings - Revenue - Expenses

b) Assets + Owner's Drawings + Expenses = Liabilities + Owner's Capital + Revenues

c) Assets - Liabilities - Owner's Drawings = Owner's Capital + Revenues - Expenses

d) Assets = Revenues + Expenses - Liabilities