Question 1

The following information is for Sunny Day Real Estate:  The total dollar amount of assets to be classified as property, plant, and equipment is
A) $200,000.
B) $220,000.
C) $285,000.
D) $305,000.

Accepted Answer

The answer of The following information is for Sunny Day...

Question 2

Jawbreaker Company paid $940 on account to a creditor. The transaction was erroneously recorded as a debit to Cash of $490 and a credit to Accounts Receivable, $490. The correcting entry is

Accepted Answer

The answer of Jawbreaker Company paid $940 on account to...

Question 3

The two optional steps in the accounting cycle are preparing
A) a post-closing trial balance and reversing entries.
B) a worksheet and post-closing trial balances.
C) reversing entries and a worksheet.
D) an adjusted trial balance and a post-closing trial balance.

Accepted Answer

The two optional steps in the accounting cycle are preparing reversing entries and a worksheet. Reversing entries are made at the beginning of the new accounting period to reverse or cancel out adjusting entries made at the end of the previous period, and they are optional because not all businesses find them necessary. A worksheet is a tool used for planning and is not mandatory for the accounting cycle.

Question 4

Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $280 and a credit to Service Revenue $280. The correcting entry is
A) debit Cash, $820; credit Accounts Receivable, $820.
B) debit Cash, $540 and Accounts Receivable, $280; credit Service Revenue, $820.
C) debit Cash, $540 and Service Revenue, $280; credit Accounts Receivable, $820.
D) debit Accounts Receivable, $820; credit Cash, $540 and Service Revenue, $280.

Accepted Answer

The correcting entry should reverse the initial erroneous entry and record the correct transaction. The correct transaction is a debit to Cash for $820 and a credit to Accounts Receivable for $820. The correcting entry should correct the debit side by increasing it by $540 (820 - 280), and correct the credit side by decreasing it by $280. Therefore, the correcting entry should be a debit to Cash for $540 and a debit to Service Revenue for $280, and a credit to Accounts Receivable for $820, which is represented in choice C.

Question 5

On March 8, Black Candy Company bought supplies on account from the Arcade Fire Company for $550. Black Candy Company incorrectly debited Equipment for $500 and credited Accounts Payable for $500. The entries have been posted to the ledger. the correcting entry should be:

Accepted Answer

The answer of On March 8, Black Candy Company bought...

Question 6

The following information is for Sunny Day Real Estate:  The total dollar amount of assets to be classified as investments is
A) $0.
B) $70,000.
C) $85,000.
D) $155,000.

Accepted Answer

The code "TB3198" corresponds to the balance sheet of Sunny Day Real Estate, and the asset section shows $70,000 in cash and $15,000 in investments. Therefore, the total dollar amount of assets to be classified as investments is $15,000, making option C the correct answer.

Question 7

Which of the following steps in the accounting cycle may be performed most frequently?
A) Prepare a post-closing trial balance
B) Journalize closing entries
C) Post closing entries
D) Prepare a trial balance

Accepted Answer

Preparing a trial balance is frequently performed in the accounting cycle, as it is typically done at the end of each accounting period to ensure that the debits and credits in the general ledger are equal and accurate. The other options (preparing a post-closing trial balance, journalizing closing entries, and posting closing entries) are only done at the end of the accounting period, typically after the financial statements have been prepared.

Question 8

An unacceptable way to make a correcting entry is to
A) reverse the incorrect entry.
B) erase the incorrect entry.
C) compare the incorrect entry with the correct entry and make a correcting entry to correct the accounts.
D) correct it immediately upon discovery.

Accepted Answer

Erasing the incorrect entry leaves no record of the mistake and can lead to confusion and inability to track errors in the future.

Question 9

If errors occur in the recording process, they
A) should be corrected as adjustments at the end of the period.
B) should be corrected as soon as they are discovered.
C) should be corrected when preparing closing entries.
D) cannot be corrected until the next accounting period.

Accepted Answer

Errors should be corrected as soon as they are discovered to ensure accurate financial reporting. Waiting until the end of the period or until closing entries are prepared could result in incorrect financial statements being released to stakeholders. Additionally, errors should not be carried forward into the next accounting period as this would further compound the issue.

Question 10

Which of the following depicts the proper sequence of steps in the accounting cycle?
A) Journalize the transactions, analyze business transactions, prepare a trial balance
B) Prepare a trial balance, prepare financial statements, prepare adjusting entries
C) Prepare a trial balance, prepare adjusting entries, prepare financial statements
D) Prepare a trial balance, post to ledger accounts, post adjusting entries

Accepted Answer

The proper sequence of steps in the accounting cycle are:
1. Analyze business transactions
2. Journalize the transactions
3. Post to ledger accounts
4. Prepare a trial balance
5. Prepare adjusting entries
6. Prepare financial statements.

Therefore, option C is the correct sequence of steps.

Question 11

A lawyer collected $710 of legal fees in advance. He erroneously debited Cash for $170 and credited Accounts Receivable for $170. The correcting entry is

Accepted Answer

The answer of A lawyer collected $710 of legal fees...

Question 12

Correcting entries
A) always affect at least one balance sheet account and one income statement account.
B) affect income statement accounts only.
C) affect balance sheet accounts only.
D) may involve any combination of accounts in need of correction.

Accepted Answer

Correcting entries may involve any combination of accounts in need of correction. They can affect both balance sheet and income statement accounts depending on the nature of the error.

Question 13

On May 25, Yellow House Company received a $650 check from Grizzly Bean for services to be performed in the future. The bookkeeper for Yellow House Company incorrectly debited Cash for $650 and credited Accounts Receivable for $650. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should:
A) debit Cash $650 and credit Unearned Service Revenue $650.
B) debit Accounts Receivable $650 and credit Service Revenue $650.
C) debit Accounts Receivable $650 and credit Cash $650.
D) debit Accounts Receivable $650 and credit Unearned Service Revenue $650.

Accepted Answer

Since the payment was received for services to be performed in the future, it should be recorded as Unearned Service Revenue, which is a liability account. Therefore, the bookkeeper should debit Accounts Receivable to correct the mistake and credit Unearned Service Revenue for the same amount. So, the correct entry would be debit Accounts Receivable $650 and credit Unearned Service Revenue $650.

Question 14

The following information is for Sunny Day Real Estate:  The total dollar amount of assets to be classified as current assets is
A) $105,000.
B) $175,000.
C) $190,000.
D) $260,000.

Accepted Answer

The answer of The following information is for Sunny Day...

Question 15

The following information is for Sunny Day Real Estate:  The total dollar amount of liabilities to be classified as current liabilities is
A) $15,000.
B) $60,000.
C) $75,000.
D) $160,000.

Accepted Answer

The answer of The following information is for Sunny Day...

Question 16

The following information is for Bright Eyes Auto Supplies:  The total dollar amount of assets to be classified as current assets is
A) $140,000.
B) $220,000.
C) $360,000.
D) $500,000.

Accepted Answer

The answer of The following information is for Bright Eyes...

Question 17

A correcting entry
A) must involve one balance sheet account and one income statement account.
B) is another name for a closing entry.
C) may involve any combination of accounts.
D) is a required step in the accounting cycle.

Accepted Answer

A correcting entry can involve any combination of accounts, not just one balance sheet account and one income statement account. It is not the same as a closing entry, which is a separate step in the accounting cycle. Correcting entries are made when there is an error discovered in a previous transaction or entry.

Question 18

The first required step in the accounting cycle is
A) reversing entries.
B) journalizing transactions in the book of original entry.
C) analyzing transactions.
D) posting transactions.

Accepted Answer

Analyzing transactions is the first step in the accounting cycle to understand and identify the nature of transactions and to classify them based on accounts. This helps in later steps such as journalizing, posting, preparing financial statements, etc.

Question 19

Zen Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $47,000. The accountant preparing the payroll entry overlooked the fact that Salaries and Wages Expense of $27,000 had been accrued at year end on December 31. The correcting entry is

Accepted Answer

The answer of Zen Arcade paid the weekly payroll on...

Question 20

Which of the following steps in the accounting cycle would not generally be performed daily?
A) Journalize transactions
B) Post to ledger accounts
C) Prepare adjusting entries
D) Analyze business transactions

Accepted Answer

Adjusting entries are typically made at the end of an accounting period, such as monthly or annually, rather than daily. Daily tasks in the accounting cycle include analyzing transactions, journalizing them, and posting them to ledger accounts.

Quiz 4: Completing the Accounting Cycle

The following information is for Sunny Day Real Estate: The total dollar amount of assets to be classified as property, plant, and equipment is

Jawbreaker Company paid $940 on account to a creditor. The transaction was erroneously recorded as a debit to Cash of $490 and a credit to Accounts Receivable, $490. The correcting entry is

The two optional steps in the accounting cycle are preparing

Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $280 and a credit to Service Revenue $280. The correcting entry is

On March 8, Black Candy Company bought supplies on account from the Arcade Fire Company for $550. Black Candy Company incorrectly debited Equipment for $500 and credited Accounts Payable for $500. The entries have been posted to the ledger. the correcting entry should be:

The following information is for Sunny Day Real Estate: The total dollar amount of assets to be classified as investments is

Which of the following steps in the accounting cycle may be performed most frequently?

An unacceptable way to make a correcting entry is to

If errors occur in the recording process, they

Which of the following depicts the proper sequence of steps in the accounting cycle?

A lawyer collected $710 of legal fees in advance. He erroneously debited Cash for $170 and credited Accounts Receivable for $170. The correcting entry is

Correcting entries

The following information is for Sunny Day Real Estate: The total dollar amount of assets to be classified as current assets is

The following information is for Sunny Day Real Estate: The total dollar amount of liabilities to be classified as current liabilities is

The following information is for Bright Eyes Auto Supplies: The total dollar amount of assets to be classified as current assets is

A correcting entry

The first required step in the accounting cycle is

Zen Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $47,000. The accountant preparing the payroll entry overlooked the fact that Salaries and Wages Expense of $27,000 had been accrued at year end on December 31. The correcting entry is

Which of the following steps in the accounting cycle would not generally be performed daily?