Homework answers / question archive / University of Florida - ACG 2021 1)At the end of the current accounting period, account balances were as follows: Cash, $180,000; Accounts Receivable, $75,000; Common Stock, $20,000; Retained Earnings, $65,000

University of Florida - ACG 2021 1)At the end of the current accounting period, account balances were as follows: Cash, $180,000; Accounts Receivable, $75,000; Common Stock, $20,000; Retained Earnings, $65,000

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University of Florida - ACG 2021

1)At the end of the current accounting period, account balances were as follows: Cash, $180,000; Accounts Receivable, $75,000; Common Stock, $20,000; Retained Earnings, $65,000. Assuming other than liabilities these are the only accounts the company has, liabilities for the period were:

A)

 

 

$210,000

B)

 

 

$70,000

C)

 

 

$190,000

D)

 

 

$170,000

E)

 

 

There is not enough information to answer the question.

 

2.Trading securities purchased for $400,000 were valued at $380,000 at the end of the year. The adjusting entry to record this difference included a credit to:

A)

 

 

Unrealized Gain on Investments.

B)

 

 

Retained Earnings.

C)

 

 

Short-term Investments.

D)

 

 

Cash

E)

 

none of the accounts. No adjusting entry is required.

3.A liability that arises from an expense that has not yet been paid is a(n)

: A)

 

 

accrued expense.

B)

 

 

accrued revenue.

C)

 

 

deferred expense

D)

 

 

prepaid expense.

E)

 

 

unearned expense.

4.Failure to make an adjusting entry to recognize accrued interest payable would cause an: A)

 

 

Overstatement of expenses, liabilities, and stockholders' equity B)

 

 

Understatement of expenses, liabilities, and stockholders' equity.

C)

 

 

Understatement of assets and stockholders' equity D)

 

 

Understatement of expenses and stockholders' equity and an overstatement of liabilities.

E)

 

 

None of the above.

 

5.

 

Stock investments that are to be sold in the near future with the intent of generating profits on the sale are: A)

 

 

investments.

B)

 

 

debt securities.

C)

 

 

Stockholders' Equity.

D)

 

 

available-for-sale investments.

E)

 

 

trading investments.

6.

 

The Last Bank lends money to a customer on a six month note. The entry Last Bank will record for the issuance of the note is:

A)

 

 

debit Cash and credit Notes Payable.

B)

 

 

debit Note Receivable and credit Service Revenue.

C)

 

 

debit Note Receivable and credit Cash.

D)

 

 

debit Service Revenue and credit Note Receivable.

E)

 

 

debit Cash and credit Note Receivable.

 

 

7.

 

Which of the following statements regarding accounts is TRUE?

A)

 

 

An asset is increased by a debit and decreased by a credit.

B)

 

 

Revenue is increased by a debit; an expense is increased by a credit.

C)

 

 

A liability is increased by a debit and decreased by a credit.

D)

 

 

Dividends are decreased by debits and increased by credits.

E)

 

 

None of the above.

8.

 

Which of the following transactions would increase total assets?

I.             Borrowed cash on a note payable, $80,000

II.            Provided services on account, $10,000

III.           Received cash from a customer as payment on account, $8,000

IV.           Received a utility bill, $1,200

A)

 

 

I and III

B)

 

 

All of these answers are correct.

C)

 

 

I and II

D)

 

I, II, and III

E)

 

 

None of the above.

9.

 

Performing services on account would:

A)

 

 

increase net income and stockholders' equity.

B)

 

 

decrease revenues and decrease stockholders' equity.

C)

 

 

decrease liabilities and increase stockholders' equity.

D)

 

 

decrease both assets and liabilities.

E)

 

 

increase assets and decrease stockholders' equity.

10.

 

The following accounts are up-to-date and need no adjustment at the end of the period: A)

 

 

cash, dividends and unearned rent.

B)

 

 

cash, common stock and prepaid rent.

C)

 

 

prepaid rent, supplies and unearned rent.

D)

 

 

cash, land and common stock.

 

E)

 

 

All of the above accounts require adjustments at the end of the period.

11.

 

Accounting information is subject to the constraint(s) of: A)

 

 

relevance and faithful representation

B)

 

 

comparability and consistency.

C)

 

 

comparability and verifiability.

D)

 

 

timeliness.

E)

 

 

cost.

 

 

 

 

 

 

 

 

 

 

12.

 

The Houston Rockets basketball team receives $5,000 for season tickets on August 1. By December 31, they have earned $2,000 of the revenue. The adjusting entry to be made on December 31 by the Houston Rockets includes a:

A)

 

 

credit to Prepaid Revenue of $2,000.

B)

 

 

credit to Unearned Revenue of $2,000.

 

C)

 

 

debit to Unearned Revenue of $2,000.

D)

 

 

debit to Service Revenue of $2,000.

E)

 

 

debit to Prepaid Revenue of $2,000.

 

13.

 

Revenues are recorded when: A)

 

 

cash is received from the customer.

B)

 

 

the company signs a contract.

C)

 

 

the work is completed on the job, whether or not the cash is received.

D)

 

 

work is begun on the job.

E)

 

 

None of the above.

14.

 

Which of the following is a false statement regarding a trial balance: A)

 

 

A trial balance lists all accounts with their debit or credit balance.

B)

 

 

A trial balance shows whether debits equal credits.

C)

 

A trial balance ensures the financial statements are free of all errors.

D)

 

 

On a trial balance assets are listed first, then liabilities, and then stockholders' equity.

E)

 

 

All of the above are true statements.

 

15.

 

Which section of the Statement of Cash Flows is the most important?

A)

 

 

Operating Activities

B)

 

 

Financing Activities

C)

 

 

Investing Activities

D)

 

 

All sections are equally important.

E)

 

 

The most important section is determined by the type of business.

 

16.

 

On September 1, 2009, Beard Entertainment paid $4,000 for September, October, November and December's rent in advance. The company recorded this transaction by increasing the balance in the Prepaid Rent account. The balance in the Prepaid Rent account as of October 31, 2009, will be

A)

 

 

$1,000.

B)

 

 

$-0-.

C)

 

$3,000.

D)

 

 

$4,000.

E)

 

 

$2,000.

 

 

 

 

 

 

 

 

17.

 

Bigg and Talle Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $5,000,000, and management estimates 2% will be uncollectible. Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $16,000. The amount of expense reported on the income statement will be:

A)

 

 

$116,000

B)

 

 

$100,000

C)

 

 

$84,000

D)

 

 

$16,000

E)

 

 

None of the above.

18.

 

Anderson Company receives their utility bill for the month of April in the amount of $1,000. What journal

 

entry should Anderson Company record when the bill is received, assuming they will not pay the bill until its due date two weeks after the bill is received?

A)

 

 

Utility Expense    $1,000

                                Accounts Payable               $1,000 B)

 

Cash       $1,000

Utility Expense    $1,000 C)

 

Utility Expense    $1,000

Cash       $1,000

 

D)

 

 

Accounts Payable               $1,000

Utility Expense    $1,000 E)

 

No entry is recorded until the bill is paid.

 

19.

 

On September 1, Banger Bros. Company paid $9,000 for one year of rent, in advance. Which of the following accounts and amounts will appear on an adjusted trial balance prepared on December 31?

A)

 

 

Rent Expense, $3,000

B)

 

 

Rent Expense, $6,000

C)

 

 

Rent Expense, $9,000

D)

 

Prepaid Rent, $3,000

E)

 

 

Prepaid Rent, $9,000 20.

In what order are financial statements generally prepared?

A)

 

 

Income Statement, Statement of Retained Earnings, and Balance Sheet B)

 

 

Balance Sheet, Income Statement, and Statement of Retained Earnings C)

 

 

Statement of Retained Earnings, Balance Sheet, and Income Statement D)

 

 

Statement of Retained Earnings, Income Statement, and Balance Sheet E)

 

 

Income Statement, Balance Sheet, and Statement of Retained Earnings

 

 

 

 

 

 

21.

 

The CEO of a business owns a residence in Flagstaff. The company the CEO works for owns a factory in Chandler. Which of these properties is considered an asset(s) of the business?

A)

 

 

The Chandler factory only B)

 

 

Both the Flagstaff and Chandler properties

 

The Flagstaff residence only D)

 

 

Neither the Flagstaff nor Chandler properties E)

 

 

There is not enough information to answer the question.

22.

 

Which financial statement would you look at to determine if a company can pay its liabilities?

A)

 

 

Balance Sheet

B)

 

 

Statement of Retained Earnings

C)

 

 

Income Statement

D)

 

 

Statement of Cash Flows

E)

 

 

None of the above.

23.

 

The balance in Accounts Receivable was $650,000 at the beginning of the year and $350,000 at the end of the year. Sales for the year totaled $4,100,000. During the year, $400,000 in customer accounts were written off. How much cash was collected from customers during the period?

A)

 

 

$4,400,000

B)

 

 

$4,000,000

 

$3,750,000

D)

 

 

$4,800,000

E)

 

 

None of the above.

 

24.

 

When a company receives a cash dividend from a trading investment, the journal entry includes: A)

 

 

a debit to cash and credit to trading investment.

B)

 

 

a debit to dividend revenue and credit to cash.

C)

 

 

a debit to cash and credit to dividend revenue.

D)

 

 

a debit to dividend revenue and a credit to trading investment.

E)

 

 

none of the above.

25.

 

Using the aging-of-receivables method to estimate uncollectibles, Avidity Corporation estimates that $3,550 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a credit balance of $800. Uncollectible account expense to be reported on the income statement is:

A)

 

 

$800.

B)

 

 

$3,550.

 

$2,200

D)

 

 

$2,750.

E)

 

 

$4,350.

 

 

 

 

 

 

26.

 

If liabilities increase by $8,000 during a given period and stockholders' equity decreases by $4,000 during the same period, assets must have

A)

 

 

increased by $4,000.

B)

 

 

decreased by $12,000.

C)

 

 

increased by $12,000.

D)

 

 

decreased by $4,000.

E)

 

 

There is not enough information to answer the question.

27.

 

On July 25, Hamilton Bey Company’s accountant prepared a check for August’s rent payment. Hamilton Bey Company mails the check on July 27 to the landlord. The landlord receives the check on July 31 and cashes the check on August 2. When should Hamilton Bey Company record the rent expense associated with this transaction?

A)

 

August 2nd

B)

 

 

July 27th

C)

 

 

July 25th

D)

 

 

July 31st

E)

 

 

August 31st

28.

 

Assume the beginning balance in the Retained Earnings account is zero. If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of the current period, it indicates:

A)

 

 

an increase in cash of $5,000.

B)

 

 

the company had a net loss of $5,000.

C)

 

 

a decrease in cash of $5,000.

D)

 

 

the company had net income of $5,000.

E)

 

 

None of the above.

29.

 

The entry to record the payment of salaries to employees would include a: A)

 

debit to Accounts Receivable.

B)

 

 

debit to Salary Expense.

C)

 

 

credit to Salary Payable.

D)

 

 

debit to Accounts Payable.

E)

 

 

credit to Salary Expense.

30.

 

Calside Company signed a 15-month, $50,000, 6% note on June 1, 2011. The amount of interest to be accrued on December 31, 2011, is:

A)

 

 

$3,000

B)

 

 

$1,400

C)

 

 

$1,500

D)

 

 

$1,750

E)

 

 

$1,141

 

31.

 

An Oklahoma City business paid $15,000 cash for equipment used in the business. At the time of purchase, the equipment had a list price of $20,000. When the balance sheet was prepared, the value of the equipment was

$22,000. What is the relevant measure of the value of the equipment?

A)

 

 

Fair market cost, $20,000

B)

 

 

List price, $20,000

C)

 

 

$15,000 on the day of purchase, $22,000 on balance sheet date D)

 

 

Current market cost, $22,000 E)

 

 

Historical cost, $15,000 32.

An expense incurred in 2010 is not paid until 2011. Using the accrual basis of accounting, the expense should appear on:

A)

 

 

the 2010 income statement.

B)

 

 

either the 2010 or 2011 income statement at the discretion of the company.

C)

 

 

the 2011 income statement.

D)

 

 

both the 2010 and 2011 income statements.

E)

 

neither the 2010 nor the 2011 income statement.

33.

 

The closing entry for the dividends account would include a debit to: A)

 

 

Dividends and a credit to Retained Earnings.

B)

 

 

Retained Earnings and a credit to Dividends.

C)

 

 

Net Income and a credit to Dividends.

D)

 

 

Dividends and a credit to Net Income.

E)

 

 

None of the above.

 

34.

 

On December 1, 2011, Debbie’s Plantscape receives $2,400 in advance for an agreement to care, in equal monthly efforts, for a client’s office plants during the months of December, January, and February. As of December 31, 2011, Debbie’s Plantscape would have:

A)

 

 

recognized $800 cash under accrual accounting, or $2,400 cash under cash-basis accounting.

B)

 

 

a $0 liability to its client under accrual accounting, or a $1,600 liability to its client under cash-basis accounting.

C)

 

 

recognized $800 revenue under accrual accounting, or $2,400 revenue under cash-basis accounting.

D)

 

 

a $1,600 liability to its client under accrual accounting, or a $2,400 liability to its client under cash-basis

 

accounting.

E)

 

 

None of the above.

 

35.

 

ABC Company had total sales for the period of $20,000 and total expenses for the period of $7,000. ABC Company began the period with a beginning cash balance of $10,000, received cash of $8,000 and ended the period with a cash balance of $6,000. Cash payments for the period:

A)

 

 

were $24,000.

B)

 

 

were $32,000.

C)

 

 

were $6,000.

D)

 

 

were $12,000.

E)

 

 

There is not enough information to answer the question.

36.

 

The most important internal control over cash is to: A)

 

 

separate cash-handling duties from cash-accounting duties.

B)

 

 

have one high level employee responsible for both cash-handling and cash-accounting duties.

C)

 

 

have all customers pay by check.

D)

 

separate cash-handling from the mailroom.

E)

 

 

none of the above.

37.

 

Graham Company has a total accounts receivable balance of $175,000 and total allowance for uncolectible accounts of $22,000 just prior to writing off a $2,500 accounts receivable. What is the net realizable value before and after the write-off?

Before   After A)

 

 

$150,500              $153,000

B)

 

 

$153,000              $150,500

C)

 

 

   $153,000           $153,000

D)

 

 

$150,500              $150,500

E)

 

 

None of the above.

38.

 

A company has total assets of $150,000, current assets of $45,000, long-term liabilities of $25,000, and total stockholders' equity of $95,000. The current ratio is:

A)

 

 

1.36

B)

 

 

1.22

C)

 

 

1.50

 

D)

 

 

.66

E)

 

 

There is not enough information to answer the question.

 

39.

 

All of the following are true statements about the Accumulated Depreciation account EXCEPT that it: A)

 

 

is a contra asset account with a normal credit balance.

B)

 

 

is directly related to an asset account.

C)

 

 

always has a normal balance opposite that of its companion account.

D)

 

 

shows the sum of all depreciation expense from using the asset.

E)

 

 

is a contra asset account with a normal debit balance.

 

40.

 

Advantages of a corporation include:

A)

 

 

limited liability of the stockholders.

B)

 

 

a single owner.

C)

 

 

the double taxation of distributed profits.

 

D)

 

 

mutual agency.

E)

 

 

None of the above.