ACCT 301 Quiz 1 answers

ACCT 301 Quiz 1

ACCT 301 Quiz 1 Question Which of the following statements is most applicable to the business entity concept?

  1. the owner is part of the business entity
  2. an entity is organized according to state or federal statutes
  3. an entity is organized according to the rules set by the FASB
  4. the entity is an individual economic unit for which data are recorded, analyzed, and reported

2 . Elli Catering Services previously bought equipment with an estimated market value of $45,000 and is now offering it for sale at $65,000. The Trang Restaurant Group acquired it for $10,000 in cash and a note payable of $40,000 due in 30 days. The amount used in Trang’s accounting records to record this acquisition is

  1. $50,000
  2. $65,000
  3. $10,000
  4. $45,000
  5. If Chesapeake Company’s total liabilities decreased by $25,000 during a period of time and owner’s equity increased by $30,000 during the same period, the amount and direction (increase or decrease) of the period’s change in total assets is
  6. $65,000 increase
  7. $5,000 decrease
  8. $5,000 increase
  9. $65,000 decrease
  10. Brielle Financial Services paid $9,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to
  11. increase one asset, decrease another asset
  12. increase an asset, increase a liability
  13. decrease an asset, decrease a liability
  14. increase an asset, increase owner’s equity
  15. When revenue is earned it
  16. increases assets, increases owner’s equity.
  17. increases assets, decreases owner’s equity
  18. increases one asset, decreases another asset
  19. decreases assets, increases liabilities

6 An account is said to have a debit balance if

  1. the amount of the debits exceeds the amount of the credits
  2. there are more entries on the debit side than on the credit side
  3. its normal balance is debit without regard to the amounts or number of entries on the debit side
  4. the last entry of the accounting period was posted on the debit side

7 . According to the rules of debits and credits :

  1. decrease Prepaid Rent with a credit and the normal balance is a credit
  2. increase Unearned Revenue with a credit and the normal balance is a debit
  3. increase Supplies Expense with a debit and the normal balance is a debit
  4. decrease Cash with a debit and the normal balance is a credit

8 . When the accountant at Nottingham Auto makes a payment on an Account payable she will

  1. debit Cash; credit Accounts Payable
  2. debit Accounts Receivable; credit Cash
  3. debit Cash; credit Supplies Expense
  4. debit Accounts Payable; credit Cash
  5. Which of the following entries records the investment of cash by Jakob, owner of a proprietorship?
  6. debit Jakob, Capital; credit Accounts Receivable
  7. debit Cash; credit Jakob, Capital
  8. debit Jakob, Drawing; credit Cash
  9. debit Cash; credit Jakob, Drawing
  10. Which of the following entries records the receipt of a utility bill from Baltimore Water Works ?
  11. debit Utilities Expense; credit Accounts Payable
  12. debit Utilities Payable; credit Accounts Receivable
  13. debit Accounts Payable; credit Cash
  14. debit Accounts Payable; credit Utilities Payable
  15. The primary difference between deferred and accrued expenses is that deferred expenses have
  16. been incurred and accrued expenses have not
  17. not been incurred and accrued expenses have been incurred
  18. been recorded and accrued expenses have not been incurred
  19. not been recorded and accrued expenses have been incurred
  20. The balance in the prepaid rent account before adjustment at the end of the year is $15,000, which represents three months’ rent paid on December 1. The adjusting entry required on December 31 is
  21. debit Rent Expense, $5,000; credit Prepaid Rent, $5,000
  22. debit Prepaid Rent, $10,000; credit Rent Expense, $5,000
  23. debit Rent Expense, $10,000; credit Prepaid Rent, $5,000
  24. debit Prepaid Rent, $5,000; credit Rent Expense, $5,000
  25. Maryland Medical LLC has a balance in the office supplies account on June 1 of $5,200, purchased supplies during June for $2,500, and the supplies on hand at June 30 were $2,000. The adjusting entry will be in the amount of
  26. $4,500
  27. $2,500
  28. $9,700
  29. $5,700

14 . Which of the following statements is true if the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted.

  1. Total assets at the end of the year will be understated.
  2. Owner’s equity at the end of the year will be understated.
  3. Net income for the year will be overstated.
  4. Insurance Expense will be overstated.
  5. Sadie Literary Services pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is
  6. debit Salaries Payable, $16,000; credit Cash, $16,000
  7. debit Salary Expense, $16,000; credit Drawing, $16,000
  8. debit Salary Expense, $16,000; credit Salaries Payable, $16,000
  9. debit Drawing, $16,000; credit Cash, $16,000

16 . A summary of selected ledger accounts appear below for Morgana’s Video Editing Services for the 2014 calendar year end.

Morgana, Capital
12/31 7,000 1/1 5,000
12/31 17,000
Morgana, Drawing
6/30 2,000 12/31 7,000
11/30 5,000
Income Summary
12/31 15,000 12/31 32,000
12/31 17,000

Net income for the period is

  1. $17,000
  2. $22,000
  3. $7,000
  4. $15,000
  5. Select one of the following accounts that will be closed to the Capital account at the end of the fiscal year?
  6. Rent Expense
  7. Fees Earned
  8. Income Summary
  9. Depreciation Expense
  10. The post-closing trial balance includes
  11. Shamina Venkat, Drawing
  12. Supplies Expense
  13. Fees Earned
  14. Unearned Rent
  15. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for Vatsala Bakery LLC:
Accumulated Depreciation $ 2,000
Fees Earned 15,000
Depreciation Expense 1,000
Insurance Expense 500
Prepaid Insurance 4,500
Supplies 1,200
Supplies Expenses 3,500

Net income for the period for Vatsala is

  1. $2,300
  2. $10,000
  3. $4,300
  4. $5,000
  5. Alaska Snow Removal is reporting Net Income of $90,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,700 and accrued salaries of $1,300. Net income, as corrected, for Alaska is
  6. $87,300
  7. $90,000
  8. $88,700
  9. $86,000
  10. What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $15,500, and unexpired amounts per analysis of policies, $4,500?
  11. debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500
  12. debit Insurance Expense, $15,500; credit Prepaid Insurance, $15,500
  13. debit Prepaid Insurance, $11,500; credit Insurance Expense, $11,500
  14. debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000
  15. On November 1 of the current year, the assets and liabilities of Ram Mysore, are as follows: Cash, $10,000; Accounts Receivable, $8,200; Supplies, $1,050; Land, $25,000; Accounts Payable, $6,530. What is the amount of owner’s equity (Ram Mysore’s capital) as of November 1 of the current year?
  16. $37,720
  17. $44,430
  18. $21,500
  19. $50,780
  20. Sue Krebs is the sole owner and operator of Immigrant Relocator Services. As of the end of its accounting period, December 31, 2005, Immigrant Relocator Services has assets of $925,000 and liabilities of $285,000. During 2006, Sue Krebs invested an additional $50,000 and withdrew $30,000 from the business. What is the amount of net income during 2006 for Immigrant Relocator Services , assuming that as of December 31, 2006, assets were $980,000, and liabilities were $255,000?

$ 95,000

$ 65,000

$165,000

$725,000

24.If beginning capital was $65,000, ending capital is $43,000, and the owner’s withdrawals were $16,000, the amount of net income or net loss was

  1. net income of $37,000
  2. net income of $8,000
  3. net loss of $22,000
  4. net loss of $6,000
  5. Which of the following entries records the receipt of cash for two months’ rent? The cash was received in advance of providing the service.
  6. Prepaid Rent, debit; Rent Revenue, credit.
  7. Cash, debit; Unearned Rent, credit.
  8. Cash, debit; Prepaid Rent, credit.

d. Cash, debit; Rent Expense credit.


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