Miami Dade College, Miami - ACG 2021 ACG2021 Exam 1 on Chapters 1 through 3 QUESTION1)Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services

Question

Miami Dade College, Miami - ACG 2021

ACG2021 Exam 1 on Chapters 1 through 3

QUESTION1)Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

True

False

QUESTION 2

According to the measurement (cost) principle, it is necessary for managers to report an approximation of an asset's market value upon purchase.

True

False

QUESTION 3

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000.

Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000.

Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.

There would be no effect on the accounts because the accounts are affected by the same amount.

Assets would increase $38,000 and liabilities would decrease $38,000.

QUESTION 4

Every business transaction leaves the accounting equation in balance.

True

False

QUESTION 5

A limited partnership:

Includes a general partner with unlimited liability.

Is subject to double taxation.

Has owners called stockholders. Is the same as a corporation.

May only have two partners.

QUESTION 6

The four basic financial statements include the balance sheet, income statement, statement of retained earnings, and statement of cash flows.

True

False

QUESTION 7

The income statement reports all of the following except:

Revenues earned by a business. Expenses incurred by a business. Assets owned by a business.

Net income or loss earned by a business.

The time period over which the earnings occurred.

QUESTION 8

Accounting is an information and measurement system that does all of the following except:

Identifies business activities. Records business activities.

Communicates business activities.

Eliminates the need for interpreting financial data.

Helps people make better decisions.

QUESTION 9

The first step in the processing of a transaction is to analyze the transaction and source documents.

True

False

QUESTION 10

Identify the accounts that would normally have balances in the credit column of a business's trial balance.

Liabilities and expenses.

Assets and revenues.

Revenues and expenses.

Revenues and liabilities.

Dividends and liabilities.

QUESTION 11

Geraldine Parker, the sole stockholder of Gi Gi’s Dance Studio, started the business by investing $10,000 cash and donating a building worth $20,000 in exchange for common stock. Identify the general journal entry below that Gi Gi’s will make to record the transaction.

Cash 10,000

Common Stock 30,000

Cash 10,000

Building 20,000

Cash 10,000

Building 20,000

Common Stock 30,000

Owner’s Investments 30,000

Common Stock 30,000

Cash & Building 30,000

Common Stock 30,000

QUESTION 12

At the beginning of January of the current year, Little Mikey's Catering ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

$54,70 0.

$49,70 0.

$2,300

.

$54,30 0.

$49,30 0.

QUESTION 13

A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

True

False

QUESTION 14

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

True

False

QUESTION 15

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

Journal. Posting.

Trial balance. Account.

Chart of accounts.

QUESTION 16

Identify the account below that is classified as an asset account:

Unearned

Revenue

Accounts Payable

Supplies

Common Stock

Service Revenue

QUESTION 17

Adjusting entries:

Affect only income statement accounts.

Affect only balance sheet accounts.

Affect both income statement and balance sheet accounts.

Affect cash accounts.

Affect only equity accounts.

QUESTION 18

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.

True

False

QUESTION 19

The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.

True

False

QUESTION 20

The adjusting entry to record an accrued revenue is:

Increase an expense; increase a liability.

Increase an asset; increase revenue.

Decrease a liability; increase revenue.

Increase an expense; decrease an asset.

Increase an expense; decrease a liability.

QUESTION 21

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 3 On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. Assuming the company does not prepare reversing entries, the January 31 and February 9 journal entries are:

1/31 Salaries Expense 1,400

Salaries Payable 1,400

2/9 Salaries Payable 7,000

Salaries Expense 1,400

Cash 8,400

1/31 Salaries Payable 1,400

Salaries Expense 1,400

2/9 Salaries Expense 5,600

Salaries Payable 1,400

Cash 7,000

1/31 Salaries Expense 1,400

Cash 1,400

2/9 Salaries Expense 7,000

Cash 7,000

1/31 Salaries Expense 1,400

Salaries Payable 1,400

2/9 Salaries Expense 7,000

Cash 7,000

1/31 Salaries Expense 1,400

Salaries Payable 1,400

2/9 Salaries Expense 5,600

Salaries Payable 1,400

Cash 7,000

QUESTION 22

Flagg records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

Debit Salaries expense $12,000; credit Salaries payable $12,000. Debit Salaries expense $18,000; debit Salaries payable $12,000;

credit Cash $30,000.

Debit Salaries payable $18,000; credit Cash $18,000.

Debit Salaries payable $12,000, credit Salaries expense $12,000. Debit Salaries expense $18,000; credit Salaries payable $18,000.

QUESTION 23

Which of the following statements about a company's operating cycle is not true:

Non-current items are those expected to come due within one year or the company's operating cycle.

The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services.

The length of a company's operating cycle depends on its activities.

For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers.

Most operating cycles are less than one year.

QUESTION 24

Current liabilities are cash and other resources that are expected to be sold, collected or used within one year or the company's operating cycle whichever is longer.

True

False

QUESTION 25

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

True

False