ACCOUNTING-ACG 2001 – Fall 2015- Exam II Matching Identify the following transactions as either:

ACG2001 – Fall 2015- Exam II

Matching

Identify the following transactions as either:

a.	Journal entries
b.	Adjusting journal entries
c.	Closing journal entries

____ 1. Cash 450

Fees Earned 450

____ 2. Income Summary 650

ABC, Capital 650

____ 3. Utilities Expense 430

Cash 430

____ 4. Unearned Revenue 985

Fees Earned 985

____ 5. RS, Drawing 215

Cash 215

Multiple Choice

Identify the choice that best completes the statement or answers the question.

____ 1. The matching concept

a.	determines whether the normal balance of an account is a debit or credit
b.	states that the revenues and related expenses should be reported in the same period
c.	addresses the relationship between the journal and the balance sheet
d.	requires that the dollar amount of debits equal the dollar amount of credits on a trial balance

____ 2. Using accrual accounting, expenses are recorded and reported only

a.	if they are paid before they are incurred
b.	when they are incurred and paid at the same time
c.	when they are incurred, whether or not cash is paid
d.	if they are paid after they are incurred

____ 3. One of the accounting concepts upon which deferrals and accruals are based is

a.	conservatism
b.	cost
c.	price-level adjustment
d.	matching

____ 4. 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.	increases the balance of an asset account
b.	decreases the balance of an owner’s equity account
c.	increases the balance of a liability account
d.	decreases the balance of an expense account

____ 5. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?

a.	increases the balance of a contra asset account
b.	increases the balance of an asset account
c.	increases the balance of an expense account
d.	decreases the balance of an owner’s equity account

____ 6. 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.	accrual
b.	capital
c.	deferral
d.	inventory

____ 7. Generally accepted accounting principles requires that companies use the ____ of accounting.

a.	accrual basis
b.	account basis
c.	deferral basis
d.	cash basis

____ 8. The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

a.	records revenues and expenses when they are incurred.
b.	records revenues when they are earned and expenses when they are paid
c.	records revenues and expenses when the company needs to apply for a loan.
d.	records revenues when cash is received and expenses when they are incurred.

____ 9. The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

a.	$12,900
b.	$2,100
c.	$6,700
d.	$8,300

____ 10. Depreciation Expense and Accumulated Depreciation are classified, respectively, as

a.	expense, contra asset
b.	revenue, asset
c.	contra asset, expense
d.	asset, contra liability

____ 11. The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Unearned Revenue	7,500
Fees earned		7,500
????????????????

a.	Record payment of fees to be earned.
b.	Record fees that have not been earned at the end of the month
c.	Record payment of fees earned
d.	Record fees earned at the end of the month

____ 12. How will the following adjusting journal entry affect the accounting equation?

Unearned Subscriptions	11,500
Subscriptions earned		11,500

a.	Increase liabilities, increase revenues
b.	Decrease liabilities, decrease revenues
c.	Increase assets, increase revenues
d.	Decrease liabilities, increase revenues

____ 13. Which of the following is not true regarding depreciation?

a.	Depreciation expense reflects the decrease in market value each year.
b.	Depreciation is an allocation not a valuation method.
c.	Depreciation allocates the cost of a fixed asset over its estimated life.
d.	Depreciation expense does not measure changes in market value.

____ 14. The net book value of a fixed asset is determined by

a.	Original cost less accumulated depreciation
b.	Original cost plus accumulated depreciation
c.	Original cost less accumulated depreciation plus depreciation expense
d.	Original cost less depreciation expense

____ 15. Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the trial balance?

a.	Accounts Receivable
b.	Unearned Fees
c.	Fees Earned
d.	Depreciation Expense

____ 16. Which of the accounting steps in the accounting process below would be completed last?

a.	preparing the financial statements
b.	preparing the adjusted trial balance
c.	journalizing
d.	posting

____ 17. When is the adjusted trial balance prepared?

a.	Before the adjusting journal entries are journalized.
b.	Before adjusting journal entries are posted
c.	After the adjusting journal entries are journalized
d.	After adjusting journal entries are posted.

____ 18. What is the purpose of the adjusted trial balance?

a.	to verify that no adjusting journal entry has been omitted.
b.	to verify that all of the adjusting entries have been posted
c.	to verify that the debits and credits balance
d.	to verify that the net income (loss) is correctly reported

____ 19. In the accounting cycle, the last step is

a.	journalizing and posting the closing entries
b.	journalizing and posting the adjusting entries
c.	preparing a post-closing trial balance
d.	preparing the financial statements

____ 20. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?

a.	The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the accounts.
b.	Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period processing even if it is not in balance.
c.	The Adjusted Trial Balance will be used to record the adjustments for the period.
d.	The Adjusted Trial Balance will show the net income (loss) as an additional account.

Use the following information in the adjusted trial balance for Stockton Company to answer the following questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX

Cash	$ 6,530
Accounts Receivable	2,100
Prepaid Expenses	700
Equipment	13,700
Accumulated Depreciation		$ 1,100
Accounts Payable		1,900
Notes Payable		4,300
Bob Steely, Capital		12,940
Bob Steely, Withdrawals	790
Fees Earned		9,250
Wages Expense	2,500
Rent Expense	1,960
Utilities Expense	775
Depreciation Expense	250
Miscellaneous Expense	185
Totals	$29,490	$29,490

____ 21. Determine total assets.

a.	$24,130
b.	$15,830
c.	$23,030
d.	$21,930

____ 22. On which financial statement will Income Summary be shown?

a.	Income Statement
b.	No financial statement
c.	Balance Sheet
d.	Statement of Owner’s Equity

____ 23. What is the last account that should be listed in the Post Closing Trial Balance?

a.	Cash
b.	Capital account
c.	Fees Earned
d.	Income Summary

____ 24. Closing entries are dated in the journal as of

a.	the first day of the subsequent accounting period
b.	the last day of the accounting period, although they are actually journalized after the end of the accounting period
c.	the date they are actually journalized, although they are generally prepared after the end of the accounting period
d.	the first day of the accounting period, although they are actually journalized after the end of the accounting period

____ 25. Which of the accounts below would be closed by posting a debit to the account?

a.	Miscellaneous Expense
b.	Unearned Revenue
c.	Josh Morton, Drawing
d.	Fees Earned

____ 26. The post-closing trial balance differs from the adjusted trial balance in that it

a.	does not include balance sheet accounts
b.	does not take into account closing entries
c.	does not include income statement accounts
d.	does not take into account adjusting entries

____ 27. The proper sequence of steps in the accounting cycle is as follows

a.	prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries
b.	analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries
c.	prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger
d.	analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and finally prepare a post-closing trial balance

____ 28. The following are steps to the accounting cycle. Of the following, which step should be done first?

a.	Transactions are posted to the ledger.
b.	Adjusting entries are journalized and posted to the ledger.
c.	Financial statements are prepared.
d.	Closing entries are journalized and posted to the ledger.

____ 29. The following are steps in the accounting cycle. Of the following, which would be prepared last?

a.	An adjusted trial balance is prepared.
b.	Adjusting entries are journalized and posted to the ledger.
c.	Transactions are posted to the ledger.
d.	An unadjusted trial balance is prepared.

____ 30. Net income appears on the work sheet in the

a.	debit column of the Income Statement columns
b.	debit column of the Balance Sheet columns
c.	debit column of the Adjustments columns
d.	credit column of the Income Statement columns

____ 31. A net loss appears on the work sheet in the

a.	credit column of the Balance Sheet columns
b.	credit column of the Adjustments columns
c.	debit column of the Income Statement columns
d.	debit column of the Balance Sheet columns

____ 32. Which of the items below would appear in the Income Statement columns of the work sheet?

a.	Equipment
b.	Prepaid Expense
c.	Unearned Fees
d.	Net Loss

____ 33. On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would

a.	increase a liability account
b.	decrease a revenue account
c.	decrease an asset account
d.	decrease a liability account

____ 34. Which of the following is not an essential part of the accounting records?

a.	The journal
b.	The ledger
c.	The chart of accounts
d.	The work sheet

____ 35. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the adjusted trial balance at December 31, 2014.

	Debit	Credit
Cash	$ 1,500
Accounts receivable	2,000
Interest receivable	100
Prepaid insurance	1,600
Notes receivable (long-term)	2,800
Equipment	15,000
Accumulated depreciation		$3,000
Accounts payable		2,400
Accrued expenses payable		3,920
Income taxes payable		2,700
Unearned rent fees		500
Bob Evans, Capital		7,700
Bob Evans, Drawing	2,000
Rent fees earned		37,000
Furniture rental revenue		1,200
Interest revenue		100
Wages expense	19,000
Depreciation expense	1,800
Utilities expense	320
Insurance expense	700
Maintenance expense	9,000
Income tax expense	2,700
	$58,520	$58,520