Question 1

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

Accepted Answer

The answer of A $72,000 receipt of cash from a...

Question 2

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

Accepted Answer

The discrepancy could be caused by entering $5,500 as $550, resulting in a $4,950 difference on the debit side.

Question 3

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

Accepted Answer

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Question 4

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

Accepted Answer

The trial balance is a list of all accounts from the ledger with their balances at a point in time. It serves as a tool for detecting errors in the recording and posting of transactions, but it does not guarantee that there are no errors. The trial balance is not a book of original entry or a chart of accounts, and it is not the same thing as the balance sheet.

Question 5

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 3^rd 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

Accepted Answer

The details of a specific transaction are recorded in the journal, while the summary of all sales activity for the month is found in the ledger.

Question 6

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

Accepted Answer

The Income Statement is also known as the Earnings Statement, as it reflects the company's earnings over a specific period.

Question 7

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

Accepted Answer

When a company performs a service and then bills the customer, it is not immediately collecting cash, so there should not be a debit to cash. Instead, the company should debit accounts receivable (as the customer owes the company money) and credit revenue (as the company has earned revenue from the service provided). Therefore, the appropriate journal entry is Debit to Accounts Receivable, Credit to Revenue.

Question 8

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

Accepted Answer

The answer of Of the following errors,which one on its...

Question 9

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

Accepted Answer

The error made was posting a $150 credit instead of the correct $15 credit, resulting in Sales being overstated by the difference between the two amounts, which is $135.

Question 10

Which of the following is the appropriate journal entry if a company purchases equipment costing $100,000 by paying cash of $10,000?
A)Debit to Cash,Debit to Equipment,Credit to Accounts Payable
B)No entry should be made
C)Debit to Equipment,Credit to Notes Payable,Credit to Cash
D)Debit to Cash,Debit to Notes Payable,Credit to Equipment
E)Debit to Equipment,Debit to Notes Payable,Credit to Cash

Accepted Answer

The correct entry is to debit Equipment for $100,000, credit Cash for $10,000, and credit Notes Payable for $90,000 (the remaining balance).

Question 11

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

Accepted Answer

The trial balance will not balance because the $50 debit was not posted, causing the total debits to be less than the total credits.

Question 12

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

Accepted Answer

The answer of The credit purchase of a delivery truck...

Question 13

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

Accepted Answer

The answer of A $130 credit to Office Equipment was...

Question 14

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

Accepted Answer

When a company hires a new employee, no journal entry is made until the employee begins working and earns wages.

Question 15

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

Accepted Answer

The answer of In which of the following situations would...

Question 16

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

Accepted Answer

A trial balance is a report that lists accounts and their balances, which is used to ensure that the total debit balances equal the total credit balances. The other options listed are not specifically related to the purpose of reconciling credits and debits in this way.

Question 17

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

Accepted Answer

The equality of debit and credit column totals in a trial balance only ensures that the total debit entries and total credit entries are equal. It does not guarantee the accuracy of individual transactions, the correct posting of all journal entries to the ledger, the correctness of all ledger account balances, or the accuracy of the balance sheet.

Question 18

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

Accepted Answer

Since the original entry was made with a debit to Buildings rather than Equipment, the correcting entry should be made with a debit to Equipment and a credit to Buildings for the same amount of $50,000. This will correct the error without overcorrecting or duplicating the entry. Choices A and C would result in duplicating the purchase and overinflating the assets. Choice D would result in overstating the cost of the equipment and understating the value of the building. Choice E would also overstate the cost of the equipment and is not necessary to correct the error.

Question 19

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

Accepted Answer

When a company performs a service and is paid immediately, the journal entry should include a debit to cash as the company receives cash, and a credit to revenue as the service performed generates revenue for the company. Therefore, the correct option is B, which includes a debit to cash and a credit to revenue.

Question 20

Which of the following accounts is a balance sheet account?
A)Wages Payable
B)Operating Activities
C)Revenues
D)Dividends
E)Expenses

Accepted Answer

Wages Payable is a liability account that appears on the balance sheet.

Quiz 2: Analyzing and Recording Transactions

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 trial balance taken at year-end showed total credits exceeding total debits by $4,950.This discrepancy could have been caused by:

Which of the following statements are true?

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 3^rd All of the sales activity which took place during the current month

Which of the following is a TRUE statement concerning a company's financial statements?

Which of the following is the appropriate journal entry if a company performs a service and then bills the customer?

Of the following errors,which one on its own will cause the trial balance to be out of balance?

A $15 credit to Sales was posted as a $150 credit.By what amount is Sales in error?

Which of the following is the appropriate journal entry if a company purchases equipment costing $100,000 by paying cash of $10,000?

A company failed to post a $50 debit to the Office Supplies account.The effect of this error will be that:

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 $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?

Which of the following is the appropriate journal entry if a company hires a new employee?

In which of the following situations would the trial balance not balance?

A report that lists accounts and their balances,in which the total debit balances should equal the total credit balances is called a(n) :

If the Debit and Credit column totals of a trial balance are equal,then:

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?

Which of the following is the appropriate journal entry if a company performs a service and is paid immediately?

Which of the following accounts is a balance sheet account?