Chapter - 4

A firm purchased telephone equipment for cash. By mistake, the person who recorded the
transaction debited Utilities Expense instead of Office Equipment. The error was discovered after
the data posted. The correcting entry should contain
a debit to Office Equipment and a credit to Utilities Expense.
a debit to Office Equipment and a credit to Cash.
a debit to Cash and a credit to Office Equipment.
a debit to Utilities Expense and a credit to Cash.
On June 1, XYZ Inc. paid $400 to its landlord for rent for the current month. The journal entry to
record this transaction is:

On December 5, Honor Consulting Services issued a check to purchase $800 in office supplies.
The journal entry to record this transaction is:

Business papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a
transaction has taken place are called
accounts.
debit entries.
source documents.

ledgers.
The journal entry to record a payment made in January for rent for the months of February and
March would include
a debit to Sue Snow, Capital, and a credit to Cash.
a debit to Sue Snow, Drawing and a credit to Rent Expense.
a debit to Rent Expense and a credit to Cash.
a debit to Prepaid Rent and a credit to Cash.
The Accounts Payable account has a $3,000 credit balance. An entry for the payment of $1,000
on the amount owed is recorded and posted. The new balance of the Accounts Payable account is
a $2,000 debit balance.
a $2,000 credit balance.
a $4,000 credit balance.
a $4,000 debit balance.
$3,000 credit - $1,000 debit = $2,000 credit
The account numbers from the ledger are recorded in the Posting Reference column of the
general journal
after all entries on the journal page have been posted.
as the first amount written in the journal.
as the transaction is journalized.
after each amount is posted.
The journal entry to record $2,450 of revenue earned and received in cash by Agatha Panthis
Landscape Architect Company is:
Debit Fees Income; Credit Cash
Debit Cash; Credit Fees Income
Debit Accounts Receivable; Credit Fees Income
Debit Fees Income; Credit Accounts Receivable
On December 10, Yummy Catering purchased a new oven costing $10,000. They issued a check
a check for $2,000 and promised to pay the balance in 30 days. The journal entry to record this
transaction is:
rev: 10_16_2014_QC_56542

The first place a transaction is recorded is in the:

source document
trial balance
general ledger
journal
When recording a business transaction into the general ledger, certain steps are followed.
Identify the statement below that is NOT CORRECTregarding this process.
After posting a transaction, the new balance in an account can be seen in the general ledger.
All transactions are recorded first in the general journal and then they are transferred to the
general ledger.
All transactions are recorded first in the general ledger and then they are transferred to the
journal.
The process of transferring data from the journal to the ledger is called posting.
The Posting Reference column of a journal is used to
record the number of amounts posted to that ledger account since the beginning of the current
accounting period.
record the number of the ledger account to which the information is posted.
record the date on which an amount is posted to a ledger account.
record the page number of the ledger account.
Bertrand Inc. purchased some shop equipment for $4,500 in cash. By mistake, the journal entry
debited the Office Equipment account rather than the Shop Equipment account. What correcting
entry would be necessary?
Debit Cash $4,500; credit Shop Equipment $4,500
Debit Office Equipment $4,500; credit Cash $4,500
Debit Shop Equipment $4,500; credit Office Equipment $4,500
Debit Office Equipment $4,500; credit Shop Equipment $4,500
Anna Conda Landscaping service received a bill for the utilities used during September. The bill
will be paid in October. The journal entry to record the utility bill received is:
Debit Utilities Expense; Credit Accounts Payable
Debit Utilities Expense; Credit Cash
Debit Cash; Credit Utilities Expense

Debit Accounts Payable; Credit Cash

The general ledger accounts are usually arranged in the following order:
first the accounts with debit balances, then the accounts with credit balances.
first the balance sheet accounts, then the income statement accounts.
first the accounts used most often, then those used less frequently.
first the temporary accounts, then the permanent accounts.
The owner of the business would like to see both the debit and credit entry for a specific
transaction, he would look in
the ledger.
the journal.
the chart of accounts.
the source document.
A company purchased equipment costing $15,000. They paid $1,000 right away and agreed to
pay the balance in 30 days, the journal entry to record the purchase of equipment would include
a debit to Equipment for $15,000, a credit to Cash for $1,000 and a credit to Accounts Payable
for $14,000.
a debit to Equipment for $14,000 and a credit to Accounts Payable for $14,000.
a debit to Equipment for $1,000 and a credit to Cash for $1,000.
a debit to Equipment for $15,000 and a credit to Cash for $15,000.
On July 3, the ABC Company received $865 in cash on account from customers. The correct
journal entry is
debit Accounts Receivable, $865; credit Cash, $865
debit Cash, $865; credit Accounts Receivable, $865
debit Cash, $865; credit Accounts Payable, $865
debit Cash, $865; credit Income from Services, $865
Which of the following statements is NOT correct?
A firm should be able to trace amounts through the accounting records and back to their source
documents.
If goods are purchased on credit, the supplier's invoice number is used as the source document
for the transaction.
The description of a journal entry should include a reference to the source of the information
contained in the entry.
The credit portion of a general journal entry is always recorded first.
Which of the following statements is CORRECT?
The general ledger contains the accounts that are used to prepare the financial statements.

When entries are posted from the general journal to the general ledger, the page number is
written in the Posting Reference column in the general journal.
Some companies use the general ledger instead of a general journal.
When entries are posted from the general journal to the general ledger, the account number is
written in the Posting Reference column in the general ledger.
When an entry is made in the general journal,
accounts to be increased should be listed first.
accounts may be listed in any order.
assets should be listed first.
accounts to be debited should be listed first.
A purchase of office equipment for $380 cash is journalized as:
Debit Equipment Expense; Credit Cash
Debit Office Equipment; Credit Accounts Payable
Debit Cash; Credit Office Equipment
Debit Office Equipment; Credit Cash
Chapter -5
Equipment costing $13,500 with an estimated salvage value of $1,020 and an estimated life of 4
years was purchased on November 1, 2016. Using the straight-line depreciation method, what is
the amount of depreciation expense to be recorded at December 31, 2016?
$520
$260
$1,020
$3,120
($13,500 $1,020)/48 months = $260 per month * 2 months = $520
A total of $4,000 in supplies was purchased during the year. By the end of the year, the company
had used up $1,300 of the supplies. The adjusting entry needed at the end of the year is:
debit Supplies $1,300; credit Supplies Expense $1,300
debit Supplies Expense $1,300; credit Supplies $1,300
debit Supplies Expense $4,000; credit Supplies $4,000
debit Supplies Expense $2,700; credit Supplies $2,700
Since the problem stated that $1,300 had been used up that is the amount that needs to be
credited from the supplies account and recognized as an expense.
Which of the following statements is correct?
Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet.
At the time of their acquisition, prepaid expenses are recorded in expense accounts.
The cost of supplies used represents an operating expense of the business.

The cost of supplies used is reported on the statement of owner's equity.

The adjusting entry to account for the expiration of prepaid advertising consists of
a debit to Advertising Expense and a credit to Prepaid Advertising.
a debit to Advertising Expense and a credit to Accumulated Depreciation.
a debit to Prepaid Advertising and a credit to Advertising Expense.
a debit to Prepaid Advertising and a credit to Accumulated Depreciation.
On January 1, ABC Catering purchased an oven for $2,000. The oven was expected to last five
years and have no salvage value. Select the adjusting entry made on December 31, to record the
depreciation of the oven for one year.

$2,000/5 years = $400

On a worksheet, a net loss is
recorded in the Balance Sheet Debit column.
not recorded.
recorded in the Income Statement Debit column.
recorded in the Balance Sheet Credit column.
On December 31, Treats Catering Inc.'s trial balance shows a $1,000 balance in
the Supplies account. However, a physical count of the supplies determined that only $400 of
supplies actually remain in the supply cabinet. Select the adjusting entry made on December 31,
to record the amount of supplies that had been used during the year.

$1,000 - $400 = $600 of supplies had been used.

Adjusting Entries are
will always affect cash.
corrections of errors.
updating entries for previously unrecorded expenses or revenues.
not required.
Accumulated Depreciation, Equipment, is shown as:
a reduction of Capital on the Statement of Owner's Equity
a contra asset on the Balance Sheet
an expense on the Income Statement
a liability on the Balance Sheet
When a trial balance is in balance,
the company has earned a net income.
adjusting entries are not required.
the debit account balances equal the credit account balances.
the general ledger is free of errors.
On a worksheet, the adjusted balance of the Supplies Expense account is extended to:
the Income Statement Credit column.
the Income Statement Debit column.
the Balance Sheet Debit column.
the Balance Sheet Credit column.
On Jan. 1, 2016 Johnson Consulting purchased a truck for $12,000. The truck was expected to
last 60 months and have no salvage value. Calculate the book value of the truck after two years?
$12,000
$7,200
$11,600
$4,800
$12,000/5 years = $2,400; (2 years * $2,400 = $4,800); $12,000 - $4,800 = $7,200
On a worksheet, the adjusted balance of a contra asset account would be extended to

the Balance Sheet Credit column.

the Balance Sheet Debit column.
the Income Statement Credit column.
the Income Statement Debit column.
Which of the following need not be completed separately if a worksheet is prepared?
a statement of owner's equity
an income statement
a trial balance
a balance sheet
A consecutive, twelve-month accounting period is called a(n)
adjusted year.
accounting year.
accrual year.
fiscal year.
On a worksheet, the adjusted balance of the Supplies account is extended to:
the Balance Sheet Credit column.
the Income Statement Credit column.
the Income Statement Debit column.
the Balance Sheet Debit column.
A total of $3,200 in supplies was purchased during the year. At the end of the year $700 of the
supplies were left. The adjusting entry needed at the end of the year is:
debit Supplies Expense $700; credit Supplies $700
debit Supplies $2,500; credit Supplies Expense $2,500
debit Supplies Expense $2,500; credit Supplies $2,500
debit Supplies Expense $3,200; credit Supplies $3,200
$3,200 - $700 = $2,500
On the worksheet, the Balance Sheet columns should balance
after the net income amount is added to the Balance Sheet Credit column.
before the net income amount is added to the Balance Sheet Debit column.
after the net income amount is added to the Balance Sheet Debit column.
before the net income amount is added to the Balance Sheet Credit column.
J. B. Consulting purchased a machine for $6,000 on November 1, 2016. The company expects
the useful life of the machine to be 5 years and have no salvage value. If the company uses the
straight-line method to depreciate the machine, what will be the depreciation adjustment for the
year ending December 31, 2016?
Debit Accumulated Depreciation $200 and Credit Depreciation Expense $200.

Debit Depreciation Expense $200 and Credit Equipment $200.

Debit Depreciation Expense $1,200 and Credit Accumulated Depreciation $1,200.
Debit Depreciation Expense $200 and Credit Accumulated Depreciation $200.
($6,000 $0)/60 months = $100; 2 months * $100 = $200
On a worksheet, the adjusted balance of the Prepaid Rent account is extended to the:
Balance Sheet Debit column.
Balance Sheet Credit column.
Income Statement Credit column.
Income Statement Debit column.
Which of the following statements is not correct?
If an account has a debit balance in the Trial Balance section of the worksheet and there is a
credit entry in the Adjustments section, the credit amount is added when computing the balance
to be shown in the Adjusted Trial Balance section of the worksheet.
Only the balances of accounts that are affected by adjustments must be recalculated before they
are recorded in the Adjusted Trial Balance section of the worksheet.
Net income is recorded on the worksheet in the Income Statement Debit column and the Balance
Sheet Credit column.
The difference between the total of the Income Statement Debit column and the total of the
Income Statement Credit column of the worksheet represents either net income or net loss.
The adjusting entry to account for the expiration of prepaid insurance consists of
a debit to Accumulated Depreciation and a credit to Prepaid Insurance.
a debit to Prepaid Insurance and a credit to Accumulated Depreciation.
a debit to Insurance Expense and a credit to Prepaid Insurance.
a debit to Insurance Expense and a credit to Accumulated Depreciation.
Chapter 6
During the closing process, Accumulated Depreciation, Equipment will
be closed to the drawing account.
be closed to the income summary account.
not be used.
be closed to the capital account.
Identify the accounts below that are ALL classified as temporary accounts.
rev: 08_07_2014_QC_52157
Owner's Drawing, Depreciation Expense, Income Summary
Owner's Drawing, Owner's Capital, Income Summary
Accounts Receivable, Depreciation Expense, Fees Income
Wages Expense, Accumulated Depreciation, Fees Income

The entry to close the Depreciation Expense account may include a debit to
the Accumulated Depreciation account and a credit to the Income Summary account.
the Depreciation Expense account and a credit to the Accumulated Depreciation account.
the Depreciation Expense account and a credit to the Income Summary account.
the Income Summary account and a credit to the Depreciation Expense account.
Which of the following statements is not correct?
At the end of each accounting period, asset and liability account balances are reduced to zero.
A post-closing trial balance will not contain revenue and expense account balances.
After closing entries are posted, the revenue, expense, and drawing accounts will have zero
balances.
Adjusting entries must be journalized and posted before the closing entries are journalized and
posted.
After the closing entries are posted to the ledger, each expense account will have
a credit balance.
a negative balance.
a zero balance.
a debit balance.
The revenue account Fees Income is closed by debiting
the owner's capital account and crediting Fees Income.
Income Summary and crediting Fees Income.
Fees Income and crediting Income Summary.
Cash and crediting Fees Income.
When done properly, how many journal entries are involved in the closing process?
3
2
5
4
The entry to close the Income Summary account may include
a debit to Income Summary and a credit to Cash.
a debit to Income Summary and a credit to the owner's drawing account.
a debit to Income Summary and a credit to the owner's capital account.
a debit to Cash and a credit to Income Summary.
Which of the following accounts would be closed?
Accumulated Depreciation

Accounts Receivable
Joan Wilson, Capital
Supplies Expense
Which of the following accounts is a permanent account?
Owner's drawing
Fees Income
Supplies Expense
Supplies
Which of the following entries records the closing of Penny Pincher, Drawing at the end of the
accounting period?
Debit Penny Pincher, Capital; credit Income Summary
Debit Income Summary; credit Penny Pincher, Drawing
Debit Penny Pincher, Capital; credit Penny Pincher, Drawing
Debit Penny Pincer, Drawing; credit Penny Pincher, Capital
Which of the following accounts has a normal debit balance?
T. Stark, Capital
Accounts Payable
Accounts Receivable
Fees Income
Which of the following accounts would not be involved in any of the closing entries?
Fred Sanford, Drawing
Advertising Expense
Accounts Payable
Income from Services
Use the following account balances from the adjusted trial balance of Gees Catering

Select the correct closing entry that Gees Catering would make to close the owner's withdrawal
account at the end of the accounting period.

Entries required to zero the balances of the temporary accounts at the end of the year are called
correcting entries.
posting entries.
closing entries.
adjusting entries.
After the closing entries are posted to the ledger, each revenue account will have
a credit balance.
a debit balance.
either a debit or a credit balance.
a zero balance.
All of the following accounts will appear on the post-closing trial balance except
Equipment.

Depreciation Expense-Equipment.
Accumulated Depreciation-Equipment.
Accounts Payable.
Use the following account balances from the adjusted trial balance of ABC Consulting

Select the correct closing entry that ABC Consulting would make to close the owner's withdrawal
account at the end of the accounting period.
debit B. Conway, Drawing $500 and credit Income Summary for $500.
debit Income Summary $500 and credit B. Conway, Drawing for $500.
debit B. Conway, Capital $500 and credit B. Conway, Drawing for $500.
debit B. Conway, Drawing $500 and credit B. Conway, Capital for $500.
The owner's drawing account is closed by debiting
the owner's capital account and crediting the owner's drawing account.
the owner's drawing account and crediting the owner's capital account.
Income Summary and crediting the owner's drawing account.
the owner's drawing account and crediting Income Summary.
The entry to close the Depreciation Expense account would include a debit to
Cash and a credit to the Income Summary account.
the Depreciation Expense account and a credit to the Income Summary account.
the Income Summary and a credit to Cash.
the Income Summary account and a credit to the Depreciation Expense account.
Use the following account balances from the adjusted trial balance of ABC Consulting

Select the correct closing entry that ABC Consulting would make to close their revenue
account(s) at the end of the accounting period.
debit Fees Revenue and credit Cash for $15,000.
debit Fees Revenue and credit B. Conway, Capital for $15,000.
debit Income Summary and credit Fees Revenue for $15,000.
debit Fees Revenue and credit Income Summary for $15,000.
Which of the following statements is not correct?
Before the Income Summary account is closed, its balance represents the net income or net loss
for the accounting period.
The Income Summary account is used only at the end of an accounting period to help with the
closing procedure.
The Income Summary account is a temporary owner's equity account.
The owner's drawing account is closed to the Income Summary Statement.