1. The owner’s equity in a business amounted to $56,000 at the beginning of the year and $100,000 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to
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$76,000. |
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b. |
$67,000. |
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c. |
$63,000. |
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d. |
$188,000.
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ANS: __________
2. The total assets amount to $24,000 and the total liabilities amount to $18,000. The amount of the owner’s equity is
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a. |
$16,000. |
|
b. |
$42,000. |
|
c. |
$18,000. |
|
d. |
$6,000. |
ANS: __________
3. The total revenue of the month of June amounted to $6,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to
|
a. |
$6,000. |
|
b. |
$2,400. |
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c. |
$3,000. |
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d. |
$3,500.
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ANS: __________
4. Changes in owner’s equity that result from investments or withdrawals of assets by the owner are included in the
|
a. |
statement of owner’s equity. |
|
b. |
income statement. |
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c. |
balance sheet. |
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d. |
chart of accounts.
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ANS: __________
5. Owner’s equity can be increased through
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a. |
withdrawals by the owner. |
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b. |
investments by the owner. |
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c. |
expenses exceeding revenues. |
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d. |
purchases of assets for cash. |
ANS: __________
6. The balance in an expense account is closed to a(n)
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a. |
capital account. |
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b. |
revenue account. |
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c. |
drawing account. |
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d. |
income summary account.
|
ANS: __________
7. The order in which financial statements should be prepared is
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a. |
balance sheet, income statement, statement of owner’s equity. |
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b. |
income statement, balance sheet, statement of owner’s equity. |
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c. |
statement of owner’s equity, balance sheet, income statement. |
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d. |
income statement, statement of owner’s equity, balance sheet.
|
ANS: __________
8. After the closing entries are journalized and posted, which of the following accounts would NOT have a balance?
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a. |
Cash |
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b. |
Office Equipment |
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c. |
Notes Payable |
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d. |
Delivery Fees
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ANS: __________
9. To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the
|
a. |
balance sheet. |
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b. |
income statement. |
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c. |
adjustments. |
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d. |
post-closing trial balance.
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ANS: __________
10. The journal entry to close the income summary account (showing a net loss) includes
|
a. |
debiting the drawing account and crediting Income Summary. |
|
b. |
debiting Income Summary and crediting the drawing account. |
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c. |
debiting the owner’s capital account and crediting Income Summary. |
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d. |
debiting Income Summary and crediting the owner’s capital account.
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ANS: __________
11. The Income Summary account is used to
|
a. |
close the revenue accounts only. |
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b. |
close the revenue accounts and expense accounts only. |
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c. |
close the drawing account. |
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d. |
close revenue accounts and expense accounts and update the owner’s capital account. |
|
|
|
ANS: __________
12. The journal entry to close the drawing account includes
|
a. |
debiting the owner’s capital account and crediting the drawing account. |
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b. |
debiting the drawing account and crediting the owner’s capital account. |
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c. |
debiting Income Summary and crediting the drawing account. |
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d. |
debiting the drawing account and crediting Income Summary.
|
ANS: __________
13. What is the purpose of the post-closing trial balance?
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a. |
to prove no errors were made while recording entries in the journal |
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b. |
to prove the equality of the debit and credit balances in the general ledger accounts |
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c. |
to prove the closing entries were recorded correctly in the journal |
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d. |
to prove the balances in the general ledger accounts are correct
|
ANS: __________
14. A check involves three parties. The person who orders the bank to pay a certain amount of money is called the
|
a. |
drawer. |
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b. |
drawee. |
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c. |
payee. |
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d. |
endorser.
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ANS: __________
15. A check involves three parties. The person directed to receive the money is called the
|
a. |
drawer. |
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b. |
drawee. |
|
c. |
payee. |
|
d. |
endorser.
|
ANS: __________
16. To use an ATM machine, the depositor must have a
|
a. |
Bank number. |
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b. |
PIN number. |
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c. |
BIN number. |
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d. |
TIN number.
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ANS: __________
17. The process of bringing the book and the bank balance into agreement is called
|
a. |
reconciling the bank statement. |
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b. |
proving the cash. |
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c. |
preparing a statement of payment. |
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d. |
preparing a statement of disbursements.
|
ANS: __________
18. On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as
|
a. |
NSF checks. |
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b. |
outstanding checks. |
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c. |
deposits in transit. |
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d. |
dishonored checks.
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ANS: __________
19. Whenever the bank mails a credit memo to the depositor indicating the amount of interest credited to the account, the transaction that would be entered in the accounting records of the depositor would include
|
a. |
debiting Interest Earned and crediting Cash. |
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b. |
debiting Interest Expense and crediting Cash. |
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c. |
debiting Cash and crediting Interest Earned. |
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d. |
debiting Cash and crediting Interest Expense.
|
ANS: __________
20. In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include
|
a. |
debiting Cash and crediting Miscellaneous Expense. |
|
b. |
debiting Cash and crediting Owner’s Capital. |
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c. |
debiting Accounts Payable and crediting Cash. |
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d. |
debiting Miscellaneous Expense and crediting Cash.
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ANS: __________
21. To reconcile the bank statement, which of the following amounts would be added to the checkbook balance?
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a. |
service charge |
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b. |
outstanding checks |
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c. |
deposits in transit |
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d. |
amounts collected by the bank for the depositor’s account
|
ANS: __________
22. To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?
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a. |
service charge |
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b. |
outstanding checks |
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c. |
deposits in transit |
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d. |
amounts collected by the bank for the depositor’s account
|
ANS: __________
23. The balance sheet reports
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a. |
assets. |
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b. |
revenue. |
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c. |
expenses. |
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d. |
net income.
|
ANS: __________
24. The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the
|
a. |
Income Statement columns. |
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b. |
Adjustments columns. |
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c. |
Balance Sheet columns. |
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d. |
Adjusted Trial Balance columns.
|
ANS: __________
25. The third pair of columns on a 10-column work sheet prepared at the end of the period would be the
|
a. |
Income Statement columns. |
|
b. |
Adjustments columns. |
|
c. |
Balance Sheet columns. |
|
d. |
Adjusted Trial Balance columns.
|
ANS: __________
26. The second pair of columns on a 10-column work sheet prepared at the end of the period would be the
|
a. |
Income Statement columns. |
|
b. |
Trial Balance columns. |
|
c. |
Adjustments columns. |
|
d. |
Adjusted Trial Balance columns.
|
ANS: __________
27. The time an asset is expected to last is called its
|
a. |
depreciation. |
|
b. |
fiscal period. |
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c. |
net loss value. |
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d. |
useful life.
|
ANS: __________
28. Matching the cost of an asset with the revenue it is expected to produce is called
|
a. |
adjusting. |
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b. |
expensing. |
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c. |
depreciation. |
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d. |
contra-valuing.
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ANS: __________
29. The cost of an asset that is subject to depreciation is called
|
a. |
salvage value. |
|
b. |
depreciable cost. |
|
c. |
revenue. |
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d. |
trade-in value.
|
ANS: __________
30. An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)
|
a. |
contra-account. |
|
b. |
expense account. |
|
c. |
adjusting account. |
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d. |
revenue account.
|
ANS: __________
31. If the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset is
|
a. |
$16,000. |
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b. |
$9,500. |
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c. |
$9,000. |
|
d. |
$7,500.
|
ANS: __________
32 To record wages earned but not paid under the modified cash accounting method,
|
a. |
debit Wages Payable and credit Wages Expense. |
|
b. |
debit Cash and credit Wages Expense. |
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c. |
debit Wages Expense and credit Wages Payable. |
|
d. |
no entry is required.
|
ANS: __________
33. When posting an adjusting entry to the general ledger, write
|
a. |
“adjusting” in the Posting Reference column. |
|
b. |
“adjusting” in the Item column. |
|
c. |
“ledger” in the general ledger. |
|
d. |
“balance” in the work sheet.
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ANS: __________
34. If a business records revenue when it is received and records the purchase of a building as an asset and makes adjustments to allocate the cost of the building over many accounting periods, the business accounting system is a(n)
|
a. |
accrual basis of accounting. |
|
b. |
adjustment basis of accounting. |
|
c. |
cash basis of accounting. |
|
d. |
modified cash basis of accounting.
|
ANS: __________
35. Joel Trump is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Trump’s regular rate is $8 per hour. During the week ended October 10, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Trump’s total earnings for the week ended October 10 are
|
a. |
$110. |
|
b. |
$320. |
|
c. |
$430. |
|
d. |
$516.
|
ANS: __________
36. Sandra Wilson is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Wilson’s regular rate is $10 per hour. During the week ended July 3, she worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Wilson’s overtime earnings for the week ended July 3 are
|
a. |
$110. |
|
b. |
$245. |
|
c. |
$320. |
|
d. |
$430.
|
ANS: __________
37. Cameron Tiller is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Tiller’s regular rate is $12 per hour. During the week ended March 15, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Tiller’s total regular earnings for the week ended March 15 are
|
a. |
$110. |
|
b. |
$216. |
|
c. |
$480. |
|
d. |
$430.
|
ANS: __________
38. Jillian Diaz receives a regular salary of $1,500 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Diaz’s overtime pay rate is
|
a. |
$6.92. |
|
b. |
$12.98. |
|
c. |
$276.92. |
|
d. |
$1,800.
|
ANS: __________
39. Any person who agrees to perform a service for a fee and is not subject to the control of those for whom the service is performed is called a(n)
|
a. |
manager. |
|
b. |
employee. |
|
c. |
independent contractor. |
|
d. |
executive.
|
ANS: __________
40. The Fair Labor Standards Act provides which of the following minimum rates to be paid to employees for all hours worked over 40 hours per week?
|
a. |
one and one-half times the regular rate |
|
b. |
same rate as the regular rate |
|
c. |
two and one-half times the regular rate |
|
d. |
two times the regular rate
|
ANS: __________
41. Compensation normally expressed in biweekly, monthly, or annual terms for managerial or administrative services is called
|
a. |
supplements. |
|
b. |
commission. |
|
c. |
salary. |
|
d. |
wages.
|
ANS: __________
42. Examples of employees include all of the following EXCEPT
|
a. |
secretaries. |
|
b. |
public accountants. |
|
c. |
accounting clerks. |
|
d. |
plant supervisors.
|
ANS: __________
43. An amount of an employee’s gross pay which is exempt from federal income tax withholding is a(n)
|
a. |
additional withholding allowance. |
|
b. |
withholding allowance. |
|
c. |
zero bracket amount. |
|
d. |
special withholding allowance.
|
ANS: ____________
44. Employers usually prepare which of the following types of payroll records?
|
a. |
payroll register, employee earnings record, and payroll check |
|
b. |
payroll register, payroll ledger, and employee earnings record |
|
c. |
payroll journal, employee earning record, and payroll ledger |
|
d. |
employee earning record, payroll check, and payroll ledger
|
ANS: __________
45. Compensation for managerial or administrative services is called ____________________.
46. ____________________ are compensation for skilled or unskilled labor.
47. An employee’s total earnings are also known as ____________________.
48. Gross pay less mandatory and voluntary deductions is called ____________________.
49. Someone who performs a service for a fee and does not work under the control and direction of the
company paying for the service is known as a(n) ____________________.
50. Payroll taxes withheld to provide Social Security and Medicare benefits are called
____________________.
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