Question 1

Interim statements are prepared to:
A)notify management of the company's current financial position.
B)notify investors of the company's current financial position.
C)allow management to make changes to the business before processing year-end financial statements.
D)All of the above are correct.

Accepted Answer

Interim statements are prepared to notify both management and investors of the company's current financial position. They also allow management to make changes to the business before processing year-end financial statements. Therefore, all of the above options are correct.

Question 2

The entry to record completing a financial lecture and immediately collecting payment from customers would be:
A) 
B) 
C) 
D)

Accepted Answer

The answer of The entry to record completing a financial...

Question 3

Antonio's catered a reception. The total price was $500. The customer paid half of the fee in cash and placed the remainder on account. The journal entry to record this transaction is:
A) 
B) 
C) 
D)

Accepted Answer

The answer of Antonio's catered a reception. The total price...

Question 4

Which of the following accounts would be debited in a proper journal entry?
A)Accounts Payable when it is increased
B)Accounts Receivable when it is increased
C)Cash when it is decreased
D)Capital when it is increased

Accepted Answer

The answer of Which of the following accounts would be...

Question 5

A calendar year is:
A)any 12-month period that a business chooses for its accounting year.
B)the 12-month period beginning with January.
C)the period for when a interim financial statement would be completed.
D)All of these answers are correct.

Accepted Answer

A calendar year is the 12-month period beginning with January.

Question 6

The general journal does not have a column titled:
A)Date.
B)Account Titles & Descriptions.
C)Dr. and Cr.
D)Balance.

Accepted Answer

The general journal does not have a column for balance, as it is used to record raw transactions and does not involve computing balances. The other columns, including date, account titles & descriptions, and Dr. and Cr., are commonly found in a general journal.

Question 7

The journal entry to record an investment by the owner would most commonly include:
A)a debit to Cash and a credit to Fees Earned.
B)a debit to Capital and a credit to Cash.
C)a debit to Fees Earned and a credit to Capital.
D)a debit to Cash and a credit to Capital.

Accepted Answer

When the owner makes an investment in the business, the journal entry would involve a debit to Cash (as the owner is giving money to the business) and a credit to Capital (as the owner's equity in the business is increasing). Therefore, option D is the correct answer. Option A (debit to Cash and credit to Fees Earned) does not make sense, as Fees Earned is a revenue account and would not be impacted by an investment by the owner. Option B (debit to Capital and credit to Cash) is incorrect, as it would imply that the owner is taking money out of the business rather than putting money in. Option C (debit to Fees Earned and credit to Capital) is also incorrect, as it would again imply that revenue is being earned from the owner's investment, which is not the case.

Question 8

Riley's Book Review billed customers $450. The journal entry to record this transaction is:
A)Accounts Receivable debit $450; Editing Fees credit $450
B)Editing Fees debit $450; Riley, Capital credit $450
C)Accounts Payable debit $450; Editing Fees credit $450
D)Accounts Payable debit $450; Riley, Capital credit $450

Accepted Answer

This transaction involves billing customers for editing services, which means that the business is expecting to receive payment from them. Therefore, the Accounts Receivable account should be debited for $450 to reflect the increase in expected cash inflow. At the same time, the Editing Fees account should be credited for $450 to recognize the revenue earned from these services. Therefore, choice A is the best option. Choice B does not make sense because it credits the owner's capital account, which does not reflect the nature of this transaction. Choices C and D do not apply because the company is not paying anyone for any service or product, but rather receiving payment from customers.

Question 9

Renzi's Volleyball Gym purchased equipment for $1,200. It made a down payment of $600 with the remainder on account. The journal entry to record this transaction is:
A) 
B) 
C) 
D)

Accepted Answer

The answer of Renzi's Volleyball Gym purchased equipment for $1,200....

Question 10

The trial balance lists the accounts:
A)alphabetically.
B)in the same order as in the ledger.
C)all debits first and then credits.
D)all credits first and then debits.

Accepted Answer

The trial balance follows the same order as in the ledger to allow for easy comparison between the two.

Question 11

During the month of January, Katelyn invested $11,000 in starting her legal practice. The proper journal entry would be:
A)Cash, debit $11,000; Katelyn's Capital, credit $11,000
B)Accounts Payable, debit $11,000; Cash, credit $11,000
C)Cash, debit $11,000; Revenue, credit $11,000
D)Katelyn's Capital, debit $11,000; Cash, credit $11,000

Accepted Answer

When Katelyn invests $11,000 in her legal practice, it increases the cash asset of the business, which is debited, and simultaneously increases her equity in the business, represented by the credit to Katelyn's Capital account. This reflects the basic accounting principle that for every transaction, debits must equal credits.

Question 12

A transaction completed by Norton Company caused a $4,000 increase in both the total assets and the total liabilities. This transaction could have been:
A)purchase of office equipment for $12,000, paying $8,000 cash, with the rest on account.
B)investment by the owner of an additional $4,000.
C)purchase of office equipment, paying $4,000 cash, and $8,000 on account.
D)None of these answers are correct.

Accepted Answer

The transaction described in option A increases assets (office equipment) by $12,000 and increases liabilities (amount owed on account) by $4,000, while also decreasing another asset (cash) by $8,000. The net effect is an increase in assets and liabilities by $4,000, matching the scenario described.

Question 13

Which of the following entries records the acquisition of office supplies for cash?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Which of the following entries records the...

Question 14

As Withdrawals increase:
A)owner's equity decreases.
B)owner's equity increases.
C)Cash increases.
D)expense increases.

Accepted Answer

Withdrawals are when the owner takes out money or assets from the business for personal use. Since this decreases the resources available for the business, it also reduces the owner's equity (which represents the owner's share of the business assets after all liabilities are paid).

Question 15

BNL completed a performance and collected revenue of $8,000 not previously billed or recorded. The journal entry to record the collection would be:
A) 
B) 
C) 
D)

Accepted Answer

The journal entry to record the collection of revenue would be a debit to the cash account for $8,000 and a credit to the revenue account for $8,000. The correct journal entry is: 
Cash (debit) $8,000 
Revenue (credit) $8,000 
Choice B is the only option that includes both the correct accounts and a valid journal entry number.

Question 16

On July 1, Hill's Construction paid six months' insurance in advance. The journal entry to record this transaction is:
A)Debit Prepaid Insurance; Credit Cash
B)Debit Insurance Expense; Credit Cash
C)Debit Cash; Credit Prepaid Insurance
D)Debit Cash; Credit Insurance Expense

Accepted Answer

Hill's Construction paid six months' insurance in advance, which means that they now have prepaid insurance. The journal entry to record this transaction would be to debit Prepaid Insurance (an asset account) and credit Cash (an asset account) for the amount paid. Therefore, choice A is the correct answer. Choice B is incorrect because it would increase the expense account, rather than the asset account. Choice C and D are incorrect because they do not properly account for the prepaid insurance.

Question 17

If Accounts Payable has been debited, it is most likely that:
A)the company made a payment to a creditor.
B)a customer made a payment.
C)the company made a purchase on account.
D)None of these are possible.

Accepted Answer

When Accounts Payable is debited, it indicates a reduction in the liability, which typically occurs when a company makes a payment to a creditor, thus settling or reducing the amount owed.

Question 18

During the month of October, Ford advertised on the Internet. Ford received the bill for $600 in October, but waited until November to pay the advertising expense. The journal entry to record the payment in November is:
A)Accounts Payable debit; Cash credit
B)Advertising Expense debit; Accounts Payable credit
C)Advertising Expense debit; Cash credit
D)The journal entry is not made in November.

Accepted Answer

The answer of During the month of October, Ford advertised...

Question 19

Conner Sales' total assets and total liabilities increased $400. The transaction could have been:
A)purchase of supplies for cash, $400.
B)purchase of supplies for $600 with a down payment of $200 and the remainder on account.
C)paid the rent for the month, $700.
D)None of these answers are correct.

Accepted Answer

Option B involves an increase in both assets (supplies) and liabilities (accounts payable), which could explain the increase in both categories by $400. The other options only affect one category of either assets or liabilities.

Question 20

If Accounts Payable has been credited, it is most likely that:
A)a collection from a customer was made.
B)a service was provided to a cash customer.
C)the company made a purchase on account.
D)None of these are possible.

Accepted Answer

Accounts Payable is a liability account used to record purchases made on credit, so if it has been credited, it means the company has made a purchase on account. A collection from a customer or service provided to a cash customer would result in a credit to a different account, such as Accounts Receivable or Cash. Therefore, the only possible choice is C.

Quiz 3: Beginning the Accounting Cycle

Interim statements are prepared to:

The entry to record completing a financial lecture and immediately collecting payment from customers would be:

Antonio's catered a reception. The total price was $500. The customer paid half of the fee in cash and placed the remainder on account. The journal entry to record this transaction is:

Which of the following accounts would be debited in a proper journal entry?

A calendar year is:

The general journal does not have a column titled:

The journal entry to record an investment by the owner would most commonly include:

Riley's Book Review billed customers $450. The journal entry to record this transaction is:

Renzi's Volleyball Gym purchased equipment for $1,200. It made a down payment of $600 with the remainder on account. The journal entry to record this transaction is:

The trial balance lists the accounts:

During the month of January, Katelyn invested $11,000 in starting her legal practice. The proper journal entry would be:

A transaction completed by Norton Company caused a $4,000 increase in both the total assets and the total liabilities. This transaction could have been:

Which of the following entries records the acquisition of office supplies for cash?

As Withdrawals increase:

BNL completed a performance and collected revenue of $8,000 not previously billed or recorded. The journal entry to record the collection would be:

On July 1, Hill's Construction paid six months' insurance in advance. The journal entry to record this transaction is:

If Accounts Payable has been debited, it is most likely that:

During the month of October, Ford advertised on the Internet. Ford received the bill for $600 in October, but waited until November to pay the advertising expense. The journal entry to record the payment in November is:

Conner Sales' total assets and total liabilities increased $400. The transaction could have been:

If Accounts Payable has been credited, it is most likely that: