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[Question]
138. On March 3, Cobra Inc. purchased a
desk for $450 on account. On March 22, Cobra purchased another desk for $500
also on account, and then on March 24, Cobra paid $400 on account. At the end
of March, what amount should Cobra report for desks (assuming these two desks
were the only desks they had)?
a. $50.
b. $450.
c. $500.
d. $950.
Answer: d
Learning Objective: 02-05
Difficulty: Hard
AACSB: Analytic
AICPA: FN Reporting
Blooms: Analyze
Topic: Posting Transactions
[Question]
139. Posting transactions to T-accounts involve:
a. Analyzing source documents to determine the effects of
transactions on the company’s accounts.
b. Listing all accounts and their balances at a particular date to
ensure that debits equal credits.
c. Preparing a chronological record of all transactions affecting
the company.
d. Transferring debit and credit information from the journal to the
accounts in the general ledger.
Answer: d
Learning Objective: 02-05
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Posting Transactions
[Question]
140. The Accounts Receivable account has a
beginning balance of $10,000 and the company provides services of $50,000 on
account during the month. The ending balance was $12,000. How much did the
company receive from customers during the month?
a. $50,000.
b. $52,000.
c. $48,000.
d. $62,000.
Answer: c
Feedback: $10,000 + $50,000 
$12,000 = $48,000.
$12,000 = $48,000.
Learning Objective: 02-05
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Posting Transactions
[Question]
141. Posting is the process of:
a. Analyzing the impact of the transaction
on the accounting equation.
b. Obtaining information about external
transactions from source documents.
c. Transferring the debit and credit information from the journal to
individual accounts in the general ledger.
d. Listing all accounts and their balances
at a particular date.
Answer: c
Learning Objective: 02-05
Difficulty: Easy
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Remember
Topic: Posting Transactions
[Question]
142. A trial balance can best be explained
as a list of:
a. The income statement accounts used to
calculate net income.
b. Revenue, expense, and dividend accounts used to show the balances
of the components of retained earnings.
c. The balance sheet accounts used to show
the equality of the accounting equation.
d. All accounts and their balances at a
particular date.
Answer: d
Learning Objective: 02-06
Difficulty: Easy
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Remember
Topic: Trial Balance
[Question]
143. A trial balance represents the:
a. Source documents used to determine the effects of transactions on
the company’s accounts.
b. List of all accounts and their balances at a particular date to
ensure that debits equal credits.
c. Chronological record of all transactions affecting the company.
d. Process of transferring debit and credit information from the
journal to the accounts in the general ledger.
Answer: b
Learning Objective: 02-06
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Trial Balance
[Question]
144. Lithuanian Motors has the following
balance sheet accounts:
Land $170,000
Equipment 66,000
Salaries
Payable ?
Notes
Payable 88,000
Supplies 14,000
Cash 26,000
Common
Stock 100,000
Retained
Earnings 40,000
Accounts
Payable ?
Prepaid
Rent 12,000
If the company has total assets of
$288,000, what is the balance of the company’s Salaries Payable account?
a. $15,000.
b. $25,000.
c. $12,000.
d. Cannot be determined given the
information provided.
Answer: d
Feedback: Total liabilities + Stockholders’
equity = ($288,000) = Accounts Payable (?) + Salaries Payable (?) + Notes
Payable ($88,000) + Common Stock ($100,000) + Retained Earnings ($40,000); therefore,
with two unknowns there is not enough information to solve the problem.
Learning Objective: 02-06
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Trial Balance
[Question]
145. Finnish Motors has the following balance
sheet accounts:
Land $150,000
Equipment 90,000
Salaries
Payable 12,000
Notes
Payable 99,000
Supplies 10,000
Cash 25,000
Common
Stock 40,000
Retained
Earnings 100,000
Accounts
Payable ?
Prepaid
Rent ?
If the company has total liabilities and stockholders’
equity of $290,000, what is the balance of the company’s Prepaid Rent account?
a. $15,000.
b. $25,000.
c. $12,000.
d. $39,000.
Answer: a
Feedback: Total assets ($290,000) = Land
($150,000) + Equipment ($90,000) + Supplies ($10,000) + Cash ($25,000) +
Prepaid Rent (?); therefore, Prepaid Rent = $15,000.
Learning Objective: 02-06
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Trial Balance
Problems
[Question]
146. Below are the steps in the measurement
process of external transactions. Arrange them from first (1) to last (6).
_____ (a) Post the transaction to the T-accounts in the general ledger.
_____ (b)
Assess whether the impact of the transaction results in a debit or credit to
the account balance.
_____ (c) Use source documents to identify
accounts affected by external transactions.
_____ (d) Analyze the impact of the transaction on
the accounting equation.
_____ (e) Prepare a trial balance.
_____ (f) Record transactions using debits and
credits.
Answer: (a) 5; (b) 3; (c) 1; (d) 2; (e) 6;
(f) 4
Learning Objective: 02-01
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: FN Measurement Process for External
Transactions
[Question]
147. A company received a utility bill of
$600 but did not pay it. Indicate the amount of increases and decreases in the
accounting equation.
Answer:
Learning Objective: 02-02
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Effect of Transactions on Accounting
Equation
[Question]
148. A company purchases supplies on
account for $1,700. Indicate the amount of increases and decreases in the
accounting equation.
Answer:
Learning Objective: 02-02
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Effect of Transactions on Accounting
Equation
[Question]
149. A company provides services to
customers on account for $2,400. Indicate the amount of increases and decreases
in the accounting equation.
Answer:
Learning Objective: 02-02
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Effect of Transactions on Accounting
Equation
[Question]
150. A company pays $800 dividends to
stockholders. Indicate the amount of increases and decreases in the accounting
equation.
Answer:
Learning Objective: 02-02
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Effect of Transactions on Accounting
Equation
[Question]
151. A company pays $1,300 on account for
supplies previously purchased on account. Indicate the amount of increases and
decreases in the accounting equation.
Answer:
Learning Objective: 02-02
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Effect of Transactions on Accounting
Equation
[Question]
152. The following transactions occur for
the Hamilton Manufacturers.
(a) Provide services to customers on account
for $4,500.
(b) Purchase equipment by signing a note
with the bank for $10,000.
(c) Pay advertising of $1,500 for the
current month.
Analyze each transaction and indicate the
amount of increases and decreases in the accounting equation.
Answer:
Learning Objective: 02-02
Difficulty: Hard
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Apply
Topic: Effect of Transactions on Accounting
Equation
[Question]
153. Using the notion that the accounting
equation (Assets = Liabilities + Stockholders’ Equity) must remain in balance,
indicate whether each of the following transactions is possible.
(a) Cash decreases; Accounts Payable
decreases.
(b) Salaries Expense increases; Salaries Payable
decreases.
(c) Accounts Receivable decreases; Service Revenue
increases.
Answer: (a) Yes; (b) No; (c) No
Learning Objective: 02-02
Difficulty: Hard
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Apply
Topic: Effect of Transactions on Accounting
Equation
[Question]
154. Suppose a company has the following
balance sheet accounts:
|
Accounts
|
Balances
|
|
Land
|
$ 9,000
|
|
Building
|
?
|
|
Salaries payable
|
3,700
|
|
Common stock
|
?
|
|
Accounts payable
|
2,600
|
|
Cash
|
5,300
|
|
Retained earnings
|
11,600
|
|
Supplies
|
3,200
|
|
Equipment
|
4,500
|
Calculate the missing amounts assuming the
company has total assets of $40,000.
Answer: Building = $18,000; Common stock =
$22,100.
Feedback: $40,000 = Land ($9,000) +
Building (?) + Cash ($5,300) + Supplies ($3,200) + Equipment ($4,500);
therefore, Building = $18,000.
$40,000 = Salaries Payable ($3,700) +
Common Stock (?) + Accounts Payable ($2,600) + Retained Earnings ($11,600);
therefore, Common Stock = $22,100
Learning Objective: 02-02
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Effect of Transactions on Accounting
Equation
[Question]
155. For each of the following accounts,
indicate whether a debit or credit is used to increase (+) or decrease (–)
the balance of the account.
Answer: (a) ,+; (b) ,+; (c) +,; (d) ,+; (e) +,; (f) ,+; (g) +,
,+; (b) ,+; (c) +,; (d) ,+; (e) +,; (f) ,+; (g) +,
Learning Objective: 02-3
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Debits and Credits
[Question]
156. For each of the following accounts,
indicate whether we use a debit or a credit to increase the balance of the
account.
(a) Accounts Receivable
(b) Accounts Payable
(c) Salaries Expense
(d) Service Revenue
(e) Supplies
(f) Common Stock
(g) Advertising Expense
(h) Dividends
Answer: (a) debit; (b) credit; (c) debit;
(d) credit; (e) debit; (f) credit; (g) debit; (h) debit
Learning Objective: 02-03
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Debits and Credits
[Question]
157. For each of the following accounts,
indicate whether we use a debit or a credit to decrease the balance of the
account.
(a) Accounts Receivable
(b) Accounts Payable
(c) Salaries Expense
(d) Service Revenue
(e) Supplies
(f) Common Stock
(g) Advertising Expense
(h) Dividends
Answer: (a) credit; (b) debit; (c) credit;
(d) debit; (e) credit; (f) debit; (g) credit; (h) credit
Learning Objective: 02-03
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Debits and Credits
[Question]
158. A company sells common stock for
$20,000 cash. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
159. A company purchases a building for
$100,000, paying $20,000 cash and signing a note payable for the remainder.
Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
160. A company purchases machinery for
$15,000 cash. Record the transaction.
Answer:
Equipment 15,000
Cash 15,000
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
161. A company purchases office supplies on
account for $7,500. Record the transaction.
Answer:
Office Supplies 7,500
Accounts Payable 7,500
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
162. A company provides services to
customers on account, $3,500. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
163. A company provides services to
customers for $2,400 cash. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
164. A company incurs employee salaries of
$4,200 but does not pay them. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
165. A company pays $2,000 dividends to its
stockholders. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
166. A company collects $4,000 cash from
customers for services previously provided on account. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
167. A company receives $6,500 cash in
advance from customers for services to be provided next year. Record the
transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
168. A company pays $5,400 for maintenance
in the current period. Record the transaction.
Answer:
Repairs and Maintenance Expense 5,400
Cash 5,400
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
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