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[Question]
109. Which
of the following statements is incorrect?
A. Higher financial leverage involves higher risk
B. Risk is higher if a company has more liabilities
C. Risk is higher if a company has higher assets
D. The debt ratio is one measure of financial risk
E. Lower financial leverage involves lower risk
A. Higher financial leverage involves higher risk
B. Risk is higher if a company has more liabilities
C. Risk is higher if a company has higher assets
D. The debt ratio is one measure of financial risk
E. Lower financial leverage involves lower risk
Answer: C
Bloom’s
Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2
[Question]
110. Stride
Rite has total assets of $425 million. Its total liabilities are $110 million.
Its equity is $315 million. Calculate the debt ratio.
A. 38.6%
B. 13.4%
C. 34.9%
D. 25.9%
E. 14.9%
A. 38.6%
B. 13.4%
C. 34.9%
D. 25.9%
E. 14.9%
Answer: D
Feedback: $110/$425
= 25.9%
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2
[Question]
111. A
company has total assets of $385 million. Its total liabilities are $100
million and its equity is $285 million. Calculate its debt ratio.
A. 35.1%
B. 26.0%
C. 38.5%
D. 28.5%
E. 58.8%
A. 35.1%
B. 26.0%
C. 38.5%
D. 28.5%
E. 58.8%
Answer: B
Feedback: $100/$385
= 26.0%
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2
[Question]
112. A
company has total liabilities of $550 million and total equity of $300 million.
Calculate this company's debt ratio.
A. 64.7%
B. 100%
C. 54.5%
D. 1.83 to 1
E. The debt ratio cannot be determined without additional information
A. 64.7%
B. 100%
C. 54.5%
D. 1.83 to 1
E. The debt ratio cannot be determined without additional information
Answer: A
Feedback: $550/($550
+ $300) = 64.7%
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A2
[Question]
113. Which
of the following statements is false with regard to the debt ratio?
A. It is of use to both internal and external users of accounting information
B. A relatively high ratio is always desirable
C. The dividing line for a high and low ratio varies from industry to industry
D. Many factors such as the company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio
E. The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt
A. It is of use to both internal and external users of accounting information
B. A relatively high ratio is always desirable
C. The dividing line for a high and low ratio varies from industry to industry
D. Many factors such as the company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio
E. The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt
Answer: B
Bloom’s
Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A2
[Question]
114. The
process of transferring general journal information to the ledger is:
A. Double-entry accounting
B. Posting
C. Balancing an account
D. Journalizing
E. Not required unless debits do not equal credits
A. Double-entry accounting
B. Posting
C. Balancing an account
D. Journalizing
E. Not required unless debits do not equal credits
Answer: B
Bloom’s
Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
[Question]
115. A
column in journals and ledger accounts used to cross reference journal and
ledger entries is the:
A. Account balance column
B. Debit column
C. Posting reference column
D. Credit column
E. Description column
A. Account balance column
B. Debit column
C. Posting reference column
D. Credit column
E. Description column
Answer: C
Bloom’s
Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
[Question]
116. The
record in which transactions are first recorded is the:
A. Account balance
B. Ledger
C. Journal
D. Trial balance
E. Cash account
A. Account balance
B. Ledger
C. Journal
D. Trial balance
E. Cash account
Answer: C
Bloom’s
Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
[Question]
117. What
is another name for the general journal?
A. The
book
B. The ledger
C. The book of original entry
D. The record
E. The account book
B. The ledger
C. The book of original entry
D. The record
E. The account book
Answer: C
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1
[Question]
118. A
balance column ledger account is:
A. An account entered on the balance sheet
B. An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted
C. An alternate name for the retained earnings account
D. An account used to record the transfers of assets from a business to its stockholders
E. A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction
A. An account entered on the balance sheet
B. An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted
C. An alternate name for the retained earnings account
D. An account used to record the transfers of assets from a business to its stockholders
E. A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction
Answer: B
Bloom’s
Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P1
[Question]
119. A
general journal is:
A. A ledger in which amounts are posted from a balance column account
B. Not required if T-accounts are used
C. A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts
D. Not necessary in electronic accounting systems
E. A book of final entry because financial statements are prepared from it
A. A ledger in which amounts are posted from a balance column account
B. Not required if T-accounts are used
C. A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts
D. Not necessary in electronic accounting systems
E. A book of final entry because financial statements are prepared from it
Answer: C
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P1
[Question]
120. According
to IFRS, comparative information on financial statements is:
A. Not required
B. Required for publicly traded companies only
C. Required for the preceding period only
D. Required for the last five years
E. Not required, but considered a hallmark for companies of excellence
A. Not required
B. Required for publicly traded companies only
C. Required for the preceding period only
D. Required for the last five years
E. Not required, but considered a hallmark for companies of excellence
Answer: C
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Global
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Global
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P1
[Question]
121. A
company had the following account balances at year-end:
Cash…………………………………………$30,000
Accounts receivable………………………… 32,000
Accounts payable…………………………… 20,000
Fees earned…………………………………. .65,000
Rent expense…………………………………15,000
Insurance expense……………………………..4,800
Supplies………………………………………..5,000
Common Stock……………………………….. 5,000
Retained Earnings………………………… ..14,800
Dividends…………………………………… 18,000
If all of the accounts have normal balances, what are the totals for the trial balance?
A. $45,200
B. $67,000
C. $104,800
D. $209,600
E. $186,600
Answer: C
Feedback:
|
Debits
|
Credits
|
||
|
Cash
|
$ 30,000
|
Accounts payable
|
$ 20,000
|
|
Accounts receivable
|
32,000
|
Fees earned
|
65,000
|
|
Rent expense
|
15,000
|
Common stock
|
5,000
|
|
Insurance expense
|
4,800
|
Retained earnings
|
14,800
|
|
Supplies
|
5,000
|
|
$104,800
|
|
Dividends
|
18,000
|
|
|
|
|
$104,800
|
|
|
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
Learning Objective: 02-P2
[Question]
122. Listed
below are two pieces of information. Where is the best place to locate this
information, in the journal or the ledger?
Details of a transaction which took place on October 3rd
All of the sales activity which took place during the current month
A. 1. Journal 2. Journal
B. 1. Journal 2. Ledger
C. 1. Ledger 2. Ledger
D. 1. Ledger 2. Journal
E. This information is only available on the financial statements
Details of a transaction which took place on October 3rd
All of the sales activity which took place during the current month
A. 1. Journal 2. Journal
B. 1. Journal 2. Ledger
C. 1. Ledger 2. Ledger
D. 1. Ledger 2. Journal
E. This information is only available on the financial statements
Answer: B
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
[Question]
123. A
report that lists accounts and their balances, in which the total debit
balances should equal the total credit balances is called a(n):
A. Account balance
B. Trial balance
C. Ledger
D. Chart of accounts
E. General Journal
A. Account balance
B. Trial balance
C. Ledger
D. Chart of accounts
E. General Journal
Answer: B
Bloom’s
Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P2
[Question]
124. Which
of the following statements are true?
A. If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions
B. The trial balance is a book of original entry
C. Another name for trial balance is chart of accounts
D. The trial balance is a list of all accounts from the ledger with their balances at a point in time
E. The trial balance is another name for the balance sheet as long as debits balance with credits
A. If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions
B. The trial balance is a book of original entry
C. Another name for trial balance is chart of accounts
D. The trial balance is a list of all accounts from the ledger with their balances at a point in time
E. The trial balance is another name for the balance sheet as long as debits balance with credits
Answer: D
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P2
[Question]
125. A
company failed to post a $50 debit to the Office Supplies account. The effect
of this error will be that:
A. The Office Supplies account balance will be overstated
B. The trial balance will not balance
C. The error will overstate the debits listed in the journal
D. The total debits in the trial balance will be larger than the total credits
E. All of the above effects will be caused by the error
A. The Office Supplies account balance will be overstated
B. The trial balance will not balance
C. The error will overstate the debits listed in the journal
D. The total debits in the trial balance will be larger than the total credits
E. All of the above effects will be caused by the error
Answer: B
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
[Question]
126. A
$15 credit to Sales was posted as a $150 credit. By what amount is Sales in
error?
A. $150 understated
B. $135 overstated
C. $150 overstated
D. $15 understated
E. $135 understated
A. $150 understated
B. $135 overstated
C. $150 overstated
D. $15 understated
E. $135 understated
Answer: B
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
[Question]
127. A
trial balance taken at year-end showed total credits exceeding total debits by
$4,950. This discrepancy could have been caused by:
A. An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash
B. A net income of $4,950
C. The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950
D. The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550
E. An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable
A. An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash
B. A net income of $4,950
C. The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950
D. The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550
E. An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable
Answer: D
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
[Question]
128. In
which of the following situations would the trial balance not balance?
A. A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash
B. The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable
C. A $50 cash receipt for the performance of a service was not recorded at all
D. The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200
E. The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750
A. A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash
B. The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable
C. A $50 cash receipt for the performance of a service was not recorded at all
D. The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200
E. The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750
Answer: E
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Decision Making
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Decision Making
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
[Question]
129. The
credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as
a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would
this error have on the trial balance?
A. The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700
B. The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700
C. The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400
D. The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400
E. The total of the Debit column of the trial balance will equal the total of the Credit column
A. The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700
B. The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700
C. The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400
D. The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400
E. The total of the Debit column of the trial balance will equal the total of the Credit column
Answer: C
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Decision Making
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Decision Making
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
[Question]
130. If
the Debit and Credit column totals of a trial balance are equal, then:
A. All transactions have been recorded correctly
B. All entries from the journal have been posted to the ledger correctly
C. All ledger account balances are correct
D. The total debit entries and total credit entries are equal
E. The balance sheet would be correct
A. All transactions have been recorded correctly
B. All entries from the journal have been posted to the ledger correctly
C. All ledger account balances are correct
D. The total debit entries and total credit entries are equal
E. The balance sheet would be correct
Answer: D
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2
[Question]
131. Accountants
at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase
as a debit to Buildings. This error was not discovered before the journal entry
was posted. What is the correcting entry?
A. Debit Buildings and Credit Equipment for $50,000 each
B. Debit Equipment and Credit Buildings for $50,000 each
C. Debit Buildings and Credit Equipment for $100,000 each
D. Debit Equipment and Credit Buildings for $100,000 each
E. Debit Equipment for $100,000 and Credit Buildings for $50,000
A. Debit Buildings and Credit Equipment for $50,000 each
B. Debit Equipment and Credit Buildings for $50,000 each
C. Debit Buildings and Credit Equipment for $100,000 each
D. Debit Equipment and Credit Buildings for $100,000 each
E. Debit Equipment for $100,000 and Credit Buildings for $50,000
Answer: B
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
[Question]
132. A
$72,000 receipt of cash from a customer paying on their account was recorded as
a $72,000 debit to Accounts Receivable. Assuming this journal entry was posted,
what correcting entry (if any) is needed?
A. Debit Cash and Credit Accounts Receivable for $72,000 each
B. Debit Cash and Credit Accounts Receivable for $144,000 each
C. Credit Cash and Debit Accounts Receivable for $72,000 each
D. Credit Cash and Debit Accounts Receivable for $144,000 each
E. No correcting entry is needed for this transaction
A. Debit Cash and Credit Accounts Receivable for $72,000 each
B. Debit Cash and Credit Accounts Receivable for $144,000 each
C. Credit Cash and Debit Accounts Receivable for $72,000 each
D. Credit Cash and Debit Accounts Receivable for $144,000 each
E. No correcting entry is needed for this transaction
Answer: B
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
[Question]
133. Of
the following errors, which one on its own will cause the trial balance to be
out of balance?
A. A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense
B. A $100 cash receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable
C. A $75 cash receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75 credit to Cash
D. A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash
E. An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash
A. A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense
B. A $100 cash receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable
C. A $75 cash receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75 credit to Cash
D. A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash
E. An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash
Answer: B
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Decision Making
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Decision Making
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
[Question]
134. A
$130 credit to Office Equipment was credited to Fees Earned by mistake. By what
amounts are the accounts under or overstated as a result of this error?
A. Office Equipment, understated $130; Fees Earned, overstated $130
B. Office Equipment, understated $260; Fees Earned, overstated $130
C. Office Equipment, overstated $130; Fees Earned, overstated $130
D. Office Equipment, overstated $130; Fees Earned, understated $130
E. Office Equipment, overstated $260; Fees Earned, understated $130
A. Office Equipment, understated $130; Fees Earned, overstated $130
B. Office Equipment, understated $260; Fees Earned, overstated $130
C. Office Equipment, overstated $130; Fees Earned, overstated $130
D. Office Equipment, overstated $130; Fees Earned, understated $130
E. Office Equipment, overstated $260; Fees Earned, understated $130
Answer: C
Bloom’s
Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P2
[Question]
135. Which
of the following accounts is a balance sheet account?
A. Wages Payable
B. Operating Activities
C. Revenues
D. Dividends
E. Expenses
A. Wages Payable
B. Operating Activities
C. Revenues
D. Dividends
E. Expenses
Answer: A
Bloom’s
Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P3
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P3
[Question]
136. Which
of the following is a TRUE statement concerning a company's financial
statements?
A. Balance Sheet and Income Statement data combined contain the complete financial picture of a given company
B. A Trial Balance is another name for a Balance Sheet
C. Another name for the Income Statement is the Earnings Statement
D. Dividends paid to a company's shareholders are shown on the Income Statement
E. The Balance Sheet shows the financial position of a company for a period of time
A. Balance Sheet and Income Statement data combined contain the complete financial picture of a given company
B. A Trial Balance is another name for a Balance Sheet
C. Another name for the Income Statement is the Earnings Statement
D. Dividends paid to a company's shareholders are shown on the Income Statement
E. The Balance Sheet shows the financial position of a company for a period of time
Answer: C
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P3
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P3
[Question]
137. Which
of the following is the appropriate journal entry if a company performs a
service and then bills the customer?
A. Debit
to Cash, Debit to Revenue
B. Debit to Cash, Credit to Revenue
C. Debit to Accounts Receivable, Credit to Cash
D. Debit to Revenue, Credit to Accounts Receivable
E. Debit to Accounts Receivable, Credit to Revenue
B. Debit to Cash, Credit to Revenue
C. Debit to Accounts Receivable, Credit to Cash
D. Debit to Revenue, Credit to Accounts Receivable
E. Debit to Accounts Receivable, Credit to Revenue
Answer: E
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
[Question]
138. Which
of the following is the appropriate journal entry if a company performs a
service and is paid immediately?
A. Debit
to Cash, Debit to Revenue
B. Debit to Cash, Credit to Revenue
C. Debit to Accounts Receivable, Credit to Cash
D. Debit to Revenue, Credit to Accounts Receivable
E. Debit to Accounts Receivable, Credit to Revenue
B. Debit to Cash, Credit to Revenue
C. Debit to Accounts Receivable, Credit to Cash
D. Debit to Revenue, Credit to Accounts Receivable
E. Debit to Accounts Receivable, Credit to Revenue
Answer: B
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
[Question]
139. Which
of the following is the appropriate journal entry if a company hires a new
employee?
A. Debit
to Cash, Credit to Revenue
B. No entry should be made
C. Debit to Wages Expense, Credit to Cash
D. Debit to Cash, Credit to Wages Expense
E. Debit to Wages Payable, Credit to Wages Expense
B. No entry should be made
C. Debit to Wages Expense, Credit to Cash
D. Debit to Cash, Credit to Wages Expense
E. Debit to Wages Payable, Credit to Wages Expense
Answer: B
Bloom’s
Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1
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