Question 1

Formally recording the transaction in the accounting system is an example of ________.
A) posting
B) journalizing
C) preparing
D) closing

Accepted Answer

The answer of Formally recording the transaction in the accounting...

Question 2

A numerical listing of account names and numbers is called the ________.
A) chart of accounts
B) general journal
C) general ledger
D) chart of journals

Accepted Answer

The chart of accounts is a numerical listing of account names and numbers. It is used to organize and track the financial transactions of a business.

Question 3

ABC Corporation issued no-par common stock to its investors for $125,000. The journal entry to record this transaction includes a ________.
A) debit to Investments
B) credit to Revenue
C) credit to Common Stock
D) debit to Expense

Accepted Answer

The issuance of no-par common stock for cash is recorded by crediting the Common Stock account to reflect the increase in equity.

Question 4

The process of transferring information into individual ledger accounts is called ________.
A) ledgering
B) transferring
C) journalizing
D) posting

Accepted Answer

Posting is the process of transferring information from the journal to individual ledger accounts.

Question 5

The issuance of common stock for cash would be recorded by a ________.
A) credit to Retained Earnings
B) credit to Common Stock
C) debit to Investments
D) credit to Revenues

Accepted Answer

Issuing common stock for cash increases the equity of the company, which is recorded as a credit to the Common Stock account.

Question 6

Accounts are presented in the general ledger in the same order as they are presented in the balance sheet.

Accepted Answer

Accounts are presented in the general ledger in the same order as they are presented in the balance sheet because the general ledger is the source document for the balance sheet. The general ledger contains all of the accounts that are used in the balance sheet, and the accounts are listed in the same order in both documents.

Question 7

Orlando Company began operations on December 1. The company had the following transactions during December. Record these transactions in proper form, including explanations. If an entry is not required, please write "No Entry."
a. Issued 50,000 shares of no par common stock and received $350,000 cash.
b. Extended an offer of employment to a sales manager who will begin work on January 1.
c. Purchased machinery on account for $450,000 from Tampa Company.
d. Purchased a two-year insurance policy for $4,800. Paid cash. This policy will become effective on January 1.
e. Paid $2,500 in office rent for the month of January.
f. Purchased office furniture for $50,000 with a 10% down payment and a six month note payable for the balance.
g. Paid wages of $15,000 to employees.
h. Provided services to customers on account for $85,000.
i. Paid $200,000 to Tampa Company on account.
j. Received payment in full for services rendered in part (h).
k. Paid a telephone bill for $525.

Accepted Answer

The answer of Orlando Company began operations on December 1....

Question 8

All of the following accounts have a normal debit balance except ________.
A) Dividends
B) Loss on Sale of Land
C) Additional Paid in Capital
D) Land

Accepted Answer

Additional Paid in Capital is a permanent equity account that increases with credits and decreases with debits.

Question 9

The posting reference in the general ledger is the general journal page number.

Accepted Answer

The posting reference in the general ledger is the general journal page number because it is the reference to the original entry in the general journal.

Question 10

Bay City Corporation received $27,000 for 12 months' rent in advance. What entry is used to record this transaction?
A) $$\begin{array} { l } 
\text { Cash }&27,000 \
\quad \text { Prepaid Rent }&&27,000
\end{array}$$
B) $\begin{array}{l}
\text { Rent Expense }&27,000 \
\text { Cash }&&27,00
\end{array}$

C) $$\begin{array} { l } 
\text { Cash } &27,000\
\quad \text { Unearned Rent Revenue }&&27,000
\end{array}$$
D) $\begin{array}{ll}
\text { Unearned Rent Revenue } & 27,000 \
\quad \text { Rent Revenue } && 27,000
\end{array}$

Accepted Answer

The correct entry is to debit Cash and credit Unearned Rent Revenue, as the rent is received in advance and not yet earned.

Question 11

A simplified version of a ledger account is known as a ________.
A) t-account
B) debit account
C) credit account
D) GL account

Accepted Answer

A t-account is a simplified version of a ledger account used to visualize the effects of transactions on accounts, showing debits on the left and credits on the right.

Question 12

Significant Technologies Corporation had the following transactions in the month of August. Record these transactions in proper form, including explanations. If an entry is not required, please write "No Entry."
a. Significant Technologies received $100,000 cash in exchange for shares of Significant Technologies' common stock.
b. Purchased store equipment for $11,000 cash
c. Provided services for cash of $9,000.
d. Provided services on credit for $20,000.
e. Received bill and paid utilities of $5,000
f. Paid sales salaries of $8,000. Ignore withholding and related payroll taxes.
g. Incurred legal fees of $6,000 to be paid later.
h. Declared and paid dividends to stockholders of $2,000.
i. Collected $15,000 for services to be provided over the coming year but has not yet provided those services
j. Paid $12,000 for a three-year insurance policy with coverage starting on September 1.
k. Paid $1,000 for rental of some servers which will be returned to the leasing company on August 30th.
l. Collected $10,000 from the transaction described in part d.
m. Paid $6,000 of the amount owed for legal fees incurred in the transaction described in part g.

Accepted Answer

The answer of Significant Technologies Corporation had the following transactions...

Question 13

The general journal presents transactions ________.
A) by account
B) chronologically
C) by normal balance
D) None of the above

Accepted Answer

The general journal presents transactions chronologically.

Question 14

When a company receives a utility bill for electricity used this past month and payable next month, the entry includes a ________.
A) debit to a liability
B) credit to an asset
C) debit to an expense
D) debit to an asset

Accepted Answer

The utility bill represents an expense incurred for electricity used, so it is recorded as a debit to an expense account.

Question 15

Cameron Diaz Corporation purchased a computer system for $19,000. The company paid $4,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes a ________.
A) debit to Equipment for $19,000
B) credit to Accounts Payable for $15,000
C) debit to Expense for $19,000
D) credit to Cash for $19,000

Accepted Answer

The purchase of the computer system is recorded as a debit to Equipment for $19,000, reflecting the increase in assets.

Question 16

Mobile Corporation had the following transactions for the month of January. Record these transactions along with explanations. If no entry is required, state "No Entry."
a. Issued 10,000 shares of no-par common stock for $250,000.
b. Signed an agreement with CompuSource to purchase three new computers costing a total of $6,000 in 10 days. Computers will be used by employees of Mobile.
c. Purchased office furniture for $70,000 on account from Birmingham Company.
d. Purchased a two-year insurance policy for $3,600. Paid cash. This policy will become effective February 1.
e. Paid $1,500 in office rent for the month of January.
f. Accepted delivery of the new computers and paid cash.
g. Paid wages of $5,000 to employees.
h. Provided services on account for $80,000.
i. Paid $50,000 to Birmingham Company on account.
j. Received payment in full from customers in part (h).
k. Paid an electricity bill for $325.

Accepted Answer

The answer of Mobile Corporation had the following transactions for...

Question 17

Realistic Rentals collected $10,000 in payment of advance rent for 6 months. This an example of ________.
A) an accrued receivable
B) a prepaid expense
C) an unearned revenue
D) an accrued liability

Accepted Answer

The $10,000 collected for advance rent represents unearned revenue because the service (rental period) has not yet been provided. The company has an obligation to provide the rental service in the future.

Question 18

Smith Corporation purchased $68,000 of merchandise on credit. The company uses the perpetual method of recording inventory purchases. What would be the correct journal entry to record the purchase?
A) $\begin{array}{lrr}
  \text {Merchandise Inventory   } &68,000\
 \text {Accounts Payable  } &&68,000\
\end{array}$

B) $\begin{array}{lrr}
  \text {Purchases } &68,000\
 \text {Accounts Payable  } &&68,000\
\end{array}$

C) $\begin{array}{lrr}
  \text {Merchandise Inventory   } &68,000\
 \text { Cash  } &&68,000\
\end{array}$

D) $\begin{array}{lrr}
  \text {Purchases } &68,000\
 \text { Interest  Payable  } &&68,000\
\end{array}$

Accepted Answer

In the perpetual inventory system, purchases of merchandise are recorded by debiting the Merchandise Inventory account and crediting Accounts Payable when bought on credit.

Question 19

Which of the following accounts has a normal credit balance?
A) Interest Expense
B) Deferred Revenue
C) Investments
D) Loss on Sale of Equipment

Accepted Answer

Deferred Revenue is a liability account, and liability accounts typically have a normal credit balance.

Question 20

Jones Company sold merchandise on account for $70,000. This merchandise cost $52,000. The company uses the perpetual method of accounting for inventory. What would be the correct journal entry or entries to record the transaction?
A) $\begin{array}{lrr}
  \text {Accounts Receivable  } &70,000\
 \text {Sales Revenue  } &&70,000\
\end{array}$

B) $\begin{array}{ll}
\text { Accounts Receivable } & 70,000 \
\quad \text { Sales Revenue } & &70,000\
\text { Cost of Goods Sold } & 52,000 \
\quad \text { Merchandise Inventory } &&52,000
\end{array}$

C) $$\begin{array} { l l l } 
\text { Accounts Receivable } & 70,000 & \
\text { Merchandise Inventory } && 52,000 \
\text { Gain on Sale } && 18,000
\end{array}$$
D) $\begin{array} { l l } \text { Accounts Receivable } & 18,000 \ \text { Cost of Goods Sold } & 52,000\\text { Sales Revenue }&&70,000 \end{array}$

Accepted Answer

The correct entries include recording the sale at $70,000 and recognizing the cost of goods sold at $52,000, reducing inventory by the same amount.

Quiz 4: Review of the Accounting Cycle

Formally recording the transaction in the accounting system is an example of ________.

A numerical listing of account names and numbers is called the ________.

ABC Corporation issued no-par common stock to its investors for $125,000. The journal entry to record this transaction includes a ________.

The process of transferring information into individual ledger accounts is called ________.

The issuance of common stock for cash would be recorded by a ________.

Accounts are presented in the general ledger in the same order as they are presented in the balance sheet.

All of the following accounts have a normal debit balance except ________.

The posting reference in the general ledger is the general journal page number.

Bay City Corporation received $27,000 for 12 months' rent in advance. What entry is used to record this transaction?

A simplified version of a ledger account is known as a ________.

The general journal presents transactions ________.

When a company receives a utility bill for electricity used this past month and payable next month, the entry includes a ________.

Cameron Diaz Corporation purchased a computer system for $19,000. The company paid $4,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes a ________.

Realistic Rentals collected $10,000 in payment of advance rent for 6 months. This an example of ________.

Smith Corporation purchased $68,000 of merchandise on credit. The company uses the perpetual method of recording inventory purchases. What would be the correct journal entry to record the purchase?

Which of the following accounts has a normal credit balance?

Jones Company sold merchandise on account for $70,000. This merchandise cost $52,000. The company uses the perpetual method of accounting for inventory. What would be the correct journal entry or entries to record the transaction?