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A transaction has been recorded in the general journal of Todd Company as follows:  Supplies 800 Accounts Payable 800\begin{array}{|l|r|r|}\hline \text { Supplies } & 800 & \\\hline \text { Accounts Payable } & & 800 \\\hline\end{array} Which of the following could be an explanation for this transaction?


A) Incurred supplies expense
B) Purchased supplies on account
C) Used supplies
D) Purchased supplies with cash

E) A) and D)
F) A) and C)

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The following transaction has been recorded in the general journal:  Interest Expense 150 Interest Payable 150\begin{array} { | l | r | r | } \hline \text { Interest Expense } & 150 & \\\hline \text { Interest Payable } & & 150 \\\hline\end{array} How will this transaction affect the company's financial statements after it is posted to the ledger accounts?


A) Decreases Total Liabilities
B) Increases Retained Earnings
C) Decreases Total Assets
D) Decreases Stockholders' Equity

E) A) and B)
F) None of the above

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What is the term that is used to describe the difference between the total debit and credit amounts in a T-account?


A) Net Income
B) Trial Balance
C) Equality
D) Account Balance

E) A) and B)
F) A) and C)

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A trial balance can only be prepared at the end of the fiscal year,as part of the adjusting and closing processes.

A) True
B) False

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On October 1,Year 1,Senegal Company paid $1,200 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $1,200.On December 31,Year 1,the required adjusting entry was recorded.What are the adjusted account balances at December 31,Year 1?


A) Prepaid Rent, $300; Rent Expense, $900
B) Prepaid Rent, $1,200; Rent Expense, $0
C) Prepaid Rent, $0; Rent Expense, $1,200
D) Prepaid Rent, $900; Rent Expense, $300

E) None of the above
F) A) and B)

Correct Answer

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A transaction has been recorded in the T-accounts of Hough Company as follows:  Cash500\begin{array}{cc}\text { Cash}\\\hline\begin{array}{ll|l}&500& \\\end{array}\end{array} Notes Payable 500\begin{array}{cc}\text {Notes Payable }\\\hline\begin{array}{ll|l}&&500 \\\end{array}\end{array} Which of the following reflects how this event affects the company's financial statements?  Asset = Liab. + Stk.  Equity  Rev. − Exp. = Net Inc.  Stmt of  Cash Flows A.+=++NANA−+=−+FAB.+=++NANA−NA=NA+OAC.+=NA+++−NA=++OAD.+=++NANA−+NA=NA+FA\begin{array}{|l|c|c|c|c|c|c|c|c|c|c|c|}\hline &\text { Asset }&=&\text { Liab. }&+ & \begin{array}{c}\text { Stk. } \\\text { Equity }\end{array} & \text { Rev. } & - & \text { Exp. }&=&\text { Net Inc. }& \begin{array}{c}\text { Stmt of } \\\text { Cash Flows }\end{array}\\\hline A.&+&=&+&+&NA&NA&-&+&=&-&+FA\\\hline B.&+&=&+&+&NA&NA&-&NA&=&NA&+OA\\\hline C.&+&=&NA&+&+&+&-&NA&=&+&+OA\\\hline D.&+&=&+&+&NA&NA&-+&NA&=&NA&+FA\\\hline\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

E) A) and C)
F) B) and C)

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Which one of the following would not be included in a closing entry?


A) A credit to Rent Expense
B) A debit to Unearned Revenue
C) A debit to Service Revenue
D) A credit to Dividends

E) None of the above
F) B) and D)

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Which of the following errors would cause the debit side of a trial balance to be larger than the credit side?


A) Revenue earned on account was recorded with a debit to Cash and a credit to Revenue.
B) Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable.
C) Land purchased with cash was recorded with a debit to the Land account and a credit to Accounts Payable.
D) None of these answer choices would cause the debit side of the trial balance to be larger than the credit side.

E) B) and C)
F) A) and D)

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The Youngstown Company recorded the following adjustment in general journal format:  Sugplies Experse 500 Sugplies 500\begin{array} { | l | r | r | } \hline \text { Sugplies Experse } & 500 & \\\hline \text { Sugplies } & & 500 \\\hline\end{array} Which of the following choices accurately reflects how this event would affect the company's financial statements?  Stk.  Stmt of  Asset = Liab. + Equity  Rev. − Exp. = Net Inc.  Cash Flows A−=++NA+−NA=++OAB−=NA+−NA−+=−−OAC−=NA+−−−NA=−+OAD−=NA+−NA−+=−NA\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | } \hline&&&&&\text { Stk. }&&&&&&\text { Stmt of }\\ &\text { Asset }&=&\text { Liab. }&+&\text { Equity }&\text { Rev. }&-&\text { Exp. }&=&\text { Net Inc. }&\text { Cash Flows }\\\hline A&-&=&+&+&NA&+&-&NA&=&+&+OA\\\hline B&-&=&NA&+&-&NA&-&+&=&-&-OA\\\hline C&-&=&NA&+&-&-&-&NA&=&-&+OA\\\hline D&-&=&NA&+&-&NA&-&+&=&-&NA\\\hline\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

E) C) and D)
F) None of the above

Correct Answer

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A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry,which has been posted to the ledger accounts.Which of the following is the result of this error?


A) The trial balance is out of balance by $200.
B) Total assets are understated by $200.
C) Net income is overstated by $200.
D) Total liabilities are overstated by $200.

E) A) and B)
F) None of the above

Correct Answer

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Double entry accounting requires that every entry must include at least one debit and at least one credit.

A) True
B) False

Correct Answer

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The following is a random list of the adjusted account balances of Wyoming Company as of the end of the current accounting period:  Cash 34,000 Accounts Receivable 9,400 Accounts Payable 7,400 Service Revenue 34,400 Land 48,000 Retained Earnings 32,400 Operating Expenses 22,800 Common Stock 40,000\begin{array}{|c|c|c|c|}\hline \text { Cash } & 34,000& \text { Accounts Receivable } & 9,400 \\\hline \text { Accounts Payable } & 7,400& \text { Service Revenue } & 34,400 \\\hline \text { Land } &48,000 & \text { Retained Earnings } & 32,400 \\\hline \text { Operating Expenses } & 22,800 &\text { Common Stock } & 40,000 \\\hline\end{array} What is the total of the credit account balances that will be shown on the adjusted trial balance?


A) $112,200
B) $114,200
C) $116,200
D) $79,800

E) C) and D)
F) A) and C)

Correct Answer

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A business's chart of accounts is prepared to verify the equality of debits and credits.

A) True
B) False

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The following account balances were taken from the adjusted trial balance of Kendall Company: Revenues $22,400 Operating Expenses15,000 Dividends4,500 Retained Earnings17,000\begin{array}{lr}\text {Revenues }&\$22,400\\\text { Operating Expenses}&15,000\\\text { Dividends}&4,500\\\text { Retained Earnings}&17,000\\\end{array} What is the Retained Earnings account balance that will be included on the post-closing trial balance?


A) $19,900
B) $7,400
C) $2,900
D) $24,400

E) A) and B)
F) A) and C)

Correct Answer

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The left side of a T-account is the debit side.

A) True
B) False

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When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.

A) True
B) False

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What is the term used to describe the right side of a T-account?


A) Credit Side
B) Claims Side
C) Debit Side
D) Equity Side

E) C) and D)
F) A) and D)

Correct Answer

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Benson Co.purchased land and paid the full purchase price in cash.Which of the following would be included in the journal entry necessary to record this event?


A) A debit to Land and a debit to Cash
B) A debit to Cash and a credit to Land
C) A credit to Land and a credit to Cash
D) A debit to Land and a credit to Cash

E) B) and D)
F) B) and C)

Correct Answer

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During a company's first year of operations,the asset account,Office Supplies,was debited for $2,300 for the purchases of supplies.At year-end,a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use.How will the related adjusting entry affect the company's financial statements?


A) Expenses will increase and assets will decrease by $1,475.
B) Assets and expenses will both increase by $825.
C) Expenses and assets will both increase by $1,475.
D) The related adjusting entry has no effect on net income or the accounting equation.

E) B) and D)
F) A) and D)

Correct Answer

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Which of the following accounts normally has a debit balance?


A) Prepaid Insurance
B) Unearned Service Revenue
C) Accounts Payable
D) Common Stock

E) C) and D)
F) A) and B)

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