Sub-topics: Operation on Service , Adjustments and Misstatements, Accounting Cycle Completion, Statement of Owner's Equity Analysis

1. REVIEWER ACCTG 1
Multiple Choice
Identify thechoice thatbest completesthe statementoranswersthequestion.
1. Profitisthe differencebetween
a. assetsand liabilities
b. the incomingcashand outgoingcash
c. the assetspurchasedwithcash contributedbythe ownerandthe cash spenttooperate
the business
d. the assetsreceivedforgoodsandservicesandthe amountsusedtoprovide the goods
and services
2. Publicaccountantsare normally
a. CertifiedPublicAccountants
b. Forensicaccountants
c. CertifiedInternal Auditors
d. CertifiedManagementAccountants
3. Whichof the followingisthe bestdescriptionof accounting’srole inbusiness?
a. Accountingprovidesstockholderswithinformationregardingthe marketvalue of the
company’sstocks.
b. Accountingprovidesinformationtomanagerstooperate the businessandtoother
stakeholderstomake decisionsregardingthe economicconditionof the company.
c. Accountingprovidescreditorsandbankswithinformationregarding the creditriskrating
of the company.
d. Accountingisnotresponsibleforprovidinganyformof informationtostakeholders.
That is the role of the InformationSystemsDepartment.
4. The businessentityconceptmeansthat
a. the ownerispart of the businessentity
b. an entityisorganizedaccordingtostate or federal statutes
c. an entityisorganizedaccordingtothe rulessetby the FASB
d. the entityisan individual economicunitforwhichdataare recorded,analyzed,and
reported
5. The objectivityprinciplerequiresthat
a. businesstransactionsmustbe consistentwiththe objectivesof the entity
b. the Financial AccountingStandardsBoardmustbe fairand unbiasedinitsdeliberations
overnewaccountingstandards
c. accountingprinciplesmustmeetthe objectivesof the SecurityandExchange Commission
d. amountsrecordedinthe financial statementsmustbe basedonindependentlyverifiable
evidence
6. If total liabilitiesdecreasedby$25,000 duringa periodof time andowner'sequityincreasedby$30,000 during
the same period,the amountanddirection(increase ordecrease)of the period'schange intotal assetsis
a. $65,000 increase
b. $5,000 decrease
c. $5,000 increase
d. $65,000 decrease

2. 7. A businesspaid $9,000 to a creditorinpaymentof an amountowed.The effectof the transactiononthe
accountingequationwasto
a. increase one asset,decrease anotherasset
b. increase anasset,increase aliability
c. decrease anasset,decrease aliability
d. increase anasset,increase owner'sequity
8. The monetaryvalue chargedto customersforthe performance of servicessoldiscalleda(n)
a. asset
b. netincome
c. capital
d. revenue
9. Goodspurchasedon account forfuture use inthe business, suchassupplies,are called
a. prepaidliabilities
b. revenues
c. prepaidexpenses
d. liabilities
10. The asset createdbya businesswhenitmakesasale on accountis termed
a. accounts payable
b. prepaidexpense
c. unearnedrevenue
d. accounts receivable
11. Owner'sequityisincreasedby
a. cash
b. revenue
c. accounts receivable
d. all are correct
12. How doesthe ownerwithdrawingcashfromthe businessaffectthe accountingequation?
a. assetsdecrease;owner'sequity decreases
b. assetsdecrease;owner'sequityincreases
c. assetsincrease;liabilitiesdecrease
d. no effectonthe assets,liabilities,orowner'sequity
13. On November1of the currentyear,the assetsand liabilitiesof JimChu,M.D.,are as follows:Cash,$10,000;
AccountsReceivable,$8,200; Supplies,$1,050; Land, $25,000; AccountsPayable,$6,530. What isthe amountof
owner'sequity(JimChu'scapital) asof November1of the currentyear?
a. $37,720
b. $44,430
c. $21,500
d. $50,780
14. Al Sheais the sole ownerandoperatorof SawToothCompany. Asof the endof itsaccountingperiod,December
31, 2007, SawToothCompanyhasassetsof $925,000 and liabilitiesof $285,000. During2008, Al Sheainvested
an additional $50,000 and withdrew$30,000 fromthe business.Whatisthe amountof netincome during2008,
assumingthatas of December31, 2008, assetswere $980,000, and liabilitieswere $255,000?
a. $ 95,000
b. $ 65,000
c. $165,000
d. $725,000

3. 15. If beginningcapital was $65,000, endingcapital is$43,000, and the owner'swithdrawalswere$16,000, the
amountof netincome ornet losswas
a. netincome of $37,000
b. netincome of $8,000
c. netlossof $22,000
d. netlossof $6,000
16. RiversComputerMakeoverCompany purchased$15,000 of ComputerandOffice Equipment. The companypaid
$3,000 in cash at the time of the purchase and signedapromissorynote forthe remaindertobe paidin six
monthlyinstallments. Howwill thistransactionaffectthe accountingequation?
a. Increase Assets(ComputerandOffice Equipment$15,000) and decrease Liabilities
(AccountsPayable $15,000)
b. Increase Total Assetsbya netamount of $12,000 (increase ComputerandOffice
Equipment$15,000 and decrease Cash$3,000) and increase Liabilities(NotesPayable
$12,000)
c. Increase Total Assetsbya netamount of $15,000 (increase ComputerandOffice
Equipment$12,000 and increase Cash$3,000) and decrease Liabilities(AccountsPayable
$15,000)
d. Increase Assets(ComputerandOffice Equipment$12,000) and increase Liabilities
(AccountsPayable $12,000)
17. There are fourtransactionsthataffectOwner’sequity. Whichare the twotransactionsthatincrease Owner’s
equity?
a. Revenuesandexpenses
b. Expensesandowner’s withdrawals
c. RevenuesandOwner’sinvestments
d. Owner’sInvestmentsandExpenses
18. There are fourtransactionsthatdirectlyaffectOwner’sEquity. Whichare the two transactionsthatdecrease
Owner’sEquity?
a. Owner’swithdrawalsandexpenses
b. Revenuesandexpenses
c. Owner’sinvestmentsandrevenues
d. Owner’sinvestmentsandexpenses
19. The financial statementthatpresentsasummaryof the revenuesandexpensesof abusinessforaspecificperiod
of time,suchas a monthor year, is calleda(n)
a. priorperiodstatement
b. statementof owner'sequity
c. income statement
d. balance sheet
20. All of the followingare financial statement(s) of aproprietorshipexceptthe
a. statementof retainedearnings
b. statementof owner'sequity
c. income statement
d. statementof cashflows
21. Whichof the followingfinancial statementsreportsinformationasof a specificdate?
a. income statement
b. statementof owner'sequity
c. statementof cashflows
d. balance sheet

4. 22. Cash investmentsmade bythe ownertothe businessare reportedonthe statementof cashflowsinthe
a. financingactivitiessection
b. investingactivitiessection
c. operatingactivitiessection
d. supplemental statement
23. A financial statementuserwoulddetermine if acompanywasprofitable ornotduringa specificperiodof time by
reviewing
a. the Income Statement.
b. the Balance Sheet.
c. the Statementof CashFlows.
d. cannot be determined.
24. If the ownerwantedtoknow howmoneyflowedintoandoutof the company,whatfinancial statementwould
she use?
a. Income Statement
b. Statementof CashFlows
c. Balance Sheet
d. None are correct.
25. The statementof cash flowsisseparatelyinthree majorsections. They are asfollows:
a. Operating,Investing,andFinancing
b. Revenues,Expenses,andNetIncome
c. Assets,Liabilities,andOwner’sEquity
d. Investments,Withdrawals,andIncome
26. Accounts
a. do notreflectmoneyamounts
b. are notusedby entities thatmanufacture products
c. are recordsof increasesanddecreasesinindividual financial statementitems
d. are onlyusedbylarge entitieswithmanytransactions
27. A groupof relatedaccountsthatcomprise a complete unitiscalleda
a. journal
b. liability
c. ledger
d. transaction
28. Revenue shouldbe recognizedwhen
a. cash isreceived
b. the service isperformed
c. the customerplacesan order
d. the customerchargesan order
29. The gross increasesinowner'sequity attributabletobusinessactivitiesare called
a. assets
b. liabilities
c. revenues
d. netincome
30. An accountis saidto have a debitbalance if
a. the amountof the debitsexceedsthe amountof the credits
b. there are more entriesonthe debit side thanonthe creditside
c. itsnormal balance isdebitwithoutregardtothe amountsor numberof entriesonthe

5. debitside
d. the firstentryof the accountingperiodwaspostedonthe debitside
31. Whichof the followingtypesof accounts have a normal creditbalance?
a. assetsand liabilities
b. liabilitiesandexpenses
c. revenuesandliabilities
d. capital and drawing
32. Whichone of the statementsbelow is nota purpose forthe journal?
a. to showincreasesanddecreasesin accounts
b. to showa chronological orderbydate
c. to showa complete transactioninone place
d. to helplocate errors
33. Whichof the followingapplicationsof the rulesof debitandcreditistrue?
a. decrease PrepaidInsurance withacredit and the normal balance isa credit
b. increase AccountsPayable withacreditandthe normal balance isa debit
c. increase SuppliesExpense withadebitandthe normal balance isa debit
d. decrease Cashwitha debitandthe normal balance isa credit
34. Whichof the followingdescribesthe classificationandnormal balance of the feesearnedaccount?
a. asset,credit
b. liability,credit
c. owner'sequity,debit
d. revenue,credit
35. The classificationandnormal balance of the drawing accountis
a. an expense withacreditbalance
b. an expense withadebitbalance
c. a liabilitywithacreditbalance
d. owner'sequitywithadebitbalance
36. In whichof the followingtypesof accountsare increasesrecordedbydebits?
a. assets,liabilities
b. drawing,liabilities
c. expenses,liabilities
d. assets,expenses
37. A creditbalance inwhichof the followingaccountswouldindicate alikelyerror?
a. FeesEarned
b. SalaryExpense
c. PeterPenn,Capital
d. Accounts Payable
38. A debitbalance inwhichof the followingaccountswouldindicate alikelyerror?
a. SalariesExpense
b. NotesPayable
c. N.McGee, Drawing
d. Supplies
39. Whichof the followingentriesrecordsthe withdrawalof cashby Joe,owner of a proprietorship,forpersonal
use?
a. debitJoe,Capital;creditCash
b. debitJoe,Drawing;creditCash

6. c. debitSalariesExpense;creditCash
d. debitSalariesExpense;creditSalariesPayable
40. Office suppliespurchasedbyJ'sAppliance Repaironaccountwere returned. Whichof the followingentriesfor
J's Appliance Repairrecordsthistransaction?
a. Cash,debit;Office Supplies,credit
b. Office Supplies,debit;AccountsReceivable,credit
c. AccountsPayable,debit;Office Supplies,credit
d. Office Supplies,debit;AccountsPayable,credit
41. Cash waspaidby J's Appliance Repairtocreditorsonaccount. Whichof the followingentriesforJ'srecordsthis
transaction?
a. Cash,debit;J's,Capital,credit
b. Accounts Payable,debit;Cash,credit
c. AccountsReceivable,debit;Cash,credit
d. AccountsPayable,debit;AccountReceivable,credit
42. Whichof the followingentriesrecordsthe acquisitionof officesuppliesonaccount?
a. Office Supplies,debit;Cash, credit
b. Cash,debit;Office Supplies,credit
c. Office Supplies,debit;AccountsPayable,credit
d. AccountsReceivable,debit;Office Supplies,credit
43. Whichof the followingentriesrecordsthe paymentof rentforthe currentmonth?
a. Cash, debit;RentExpense,credit
b. RentExpense,debit;Cash,credit
c. RentExpense,debit;AccountsReceivable,credit
d. AccountsPayable,debit;RentExpense,credit
44. Whichof the followingentriesrecordsthe receiptof cashfrompatientson account?
a. AccountsPayable,debit;FeesEarned,credit
b. AccountsReceivable,debit;FeesEarned,credit
c. AccountsReceivable,debit;Cash,credit
d. Cash,debit;AccountsReceivable,credit
45. Whichof the followingentriesrecordsthe billingof patientsforservicesperformed?
a. AccountsReceivable,debit;FeesEarned,credit
b. AccountsPayable,debit;Cash,credit
c. FeesEarned,debit;AccountsReceivable,credit
d. FeesEarned,debit;Cash,credit
46. Whichof the following entriesrecordsthe collectionof cashfromcash customers?
a. FeesEarned,debit;Cash,credit
b. FeesEarned,debit;AccountsReceivable,credit
c. Cash,debit;FeesEarned,credit
d. AccountsReceivable,debit;FeesEarned,credit
47. Whichof the followingentriesrecordsthe receiptof cashfortwo months'rent?The cash was receivedin
advance of providingthe service.
a. PrepaidRent,debit;RentRevenue,credit.
b. Cash,debit;UnearnedRent,credit.
c. Cash,debit;PrepaidRent,credit.
d. Cash,debit;RentExpense credit.
48. A patienthasa physical examinationandasksthe bookkeepertomail the bill. The bookkeepershould

7. a. make no entryuntil the cashis received
b. Cash,debit;AccountsReceivable,credit
c. Cash,debit;FeesEarned,credit
d. AccountsReceivable,debit;FeesEarned,credit
49. Whenamountsof a transactionsare enteredinanaccount on the righthand side,theyare saidto be
a. credited
b. debited
c. added
d. subtracted
50. The balance of the account isdeterminedby
a. addingall of the debitstoall of the credits.
b. alwayssubtractingthe debitsfromthe credits.
c. alwayssubtractingall of the creditsfromthe debit.
d. addingall of the debits,addingall of the credits,andthen subtractingthe smallersum
fromthe largersum.
51. A listof the accounts iscalled
a. ledger
b. chart of accounts
c. T-Account
d. Debit
52. In whichorderare the accountslistedinthe chart of accounts?
a. assets,expenses,liabilities, owners’equity,revenues
b. owners’equity,assets,liabilities,revenues,expenses
c. assets,liabilities,owner’equity,revenues,expenses
d. assets,liabilities,revenues,expenses,owners’equity
53. Whichare the parts of the T account?
a. title,date,total
b. date,debitside,creditside
c. title,debitside,creditside
d. title,debitside,total
54. Whichof the followingis nota correctrule of debitsandcredits?
a. assets,expensesandwithdrawalsare increasedbydebits
b. assetsare decreasedbycreditsandhave a normal debitbalance
c. liabilities,revenuesandowner’sequityare increasedbycredits
d. the normal balance for revenuesandexpensesisacredit
55. XYZ Hospital purchased X-rayequipmentfor$3,000, paid$750 down,withthe remaindertobe paidlater. The
correct entrywouldbe
a. Equipment 750
Cash 750
b. Cash 750
AccountsPayable 2,250
Equipment 3,000
c. EquipmentExpense 3,000
Accounts Payable 750
Cash 2,250
d. Equipment 3,000

8. Accounts Payable 2,250
Cash 750
e. Cash 750
Equipment 750
56. Of the followingwhichis trueaboutassets
a. Assetsinclude physical andintangibleassets.
b. Assetsinclude onlyphysical assets.
c. Assetsare ownedsolelybythe ownerof the company
d. Assetsare the resultof sellingproductsorservicestocustomers.
57. The owner’sequitywillbe reducedbyall of the followingaccountsexcept:
a. Revenues
b. Expenses
c. Drawingaccount
d. All are true.
58. Expensescanbestbe definedas
a. assetswithnofuture value tothe company.
b. servicesthathave beenconsumedinthe processof generatingrevenues.
c. costs that have beenincurredduring the course of business.
d. all are true.
59. The chart of accounts classifythe accountsto make identificationof the accountseasier.Thisisdone bywayof
assigninganumberto eachaccount. The firstnumberidentifiesthe classificationof the type of account. Which
of the followingindicatesthe use of thisclassification?
a. 1-Assets,2-Liabilities,3-Owner’sEquity,4-Expenses,5-Revenues
b. 1-Assets,2-Liabilities,3-Owner’sEquity,4-Revenues,5-Expenses
c. 1-Assets,2-Owner’sEquity,3-Revenues,4-Expenses,5-Drawing
d. 1-Owner’sEquity,2-Drawing,3-Revenues,4-Expenses
60.
July 14 AccountsPayable 1,000
Cash 1,000
Paidcreditorsonaccount
What effectdoesthisjournal have onthe accounts?
a. Decrease accountspayable,increase cash
b. Increase cash,decrease accountspayable
c. Increase accountspayable,increase cash
d. Decrease accountspayable,decrease cash
61. Whichof the followingaccountswouldbe increasedwithacredit?
a. Land, AccountsPayable,Drawing
b. AccountsPayable,Unearnedrevenue,BKCapital
c. BK Capital,AccountsReceivable,UnearnedRevenue
d. Cash,AccountsReceivable,BKCapital
62. All exceptone of the followingaccountswillbe increasedwithadebit:
a. UnearnedRevenues
b. Land
c. AccountsReceivable
d. Cash

9. 63. Expensesfollowthe same debitandcreditrulesas
a. Revenues
b. DrawingAccount
c. Capital Account
d. Liabilities
64. Netincome will resultwhen
a. revenues(credits) >expenses (debits)
b. revenues(debits) >expenses(credits)
c. expenses(credits) <revenues(debits)
d. revenues(credits) =expenses(debits)
65. Whichof the followingsituationsincreaseowner’sequity?
a. Suppliesare purchasedonaccount.
b. Services are providedonaccount.
c. Cash isreceivedfromcustomers.
d. Utilitybill willbe paidnextmonth.
66. Whichof the followingistrue regardingnormal balancesof accounts?
a. All accountshave a normal debitbalance.
b. The normal balance of all accountswill have eitherapositive ornegativebalance.
c. Accountsthat have a normal debitbalance will onlyhave debitentries,nevercredit
entries.
d. The normal balance is the side of the account that increasesthe account.
67.
June 26 Cash 450
UnearnedFees 450
????????????
a. Receivedcashforservicesperformed
b. Receivedcashforservicestobe performedinthe future.
c. Paidcash inadvance for servicestobe done.
d. Paidcash for servicestobe performed.
68.
June 26 Equipment 14,000
Cash 4,000
Note Payable 10,000
????????????
Whichis the bestexplanationforthisjournal entry?
a. Purchasedequipment,paidcashof $4,000, withthe remaindertobe paidin payments
b. Purchasedequipment,paidcashof $4,000, withthe remaindertobe receivedinthe
future.
c. Purchasedequipment,paidcashforthe entire amount
d. Purchasedequipmentoncredit.
69. The processof rewritingthe information fromthe journal intothe ledgeriscalled
a. sliding
b. transposing
c. journalizing

10. d. posting
70. The accounts inthe ledgerof MickeysParkCo.are listedinalphabetical order. All accountshave normal
balances.
AccountsPayable 500 FeesEarned 2,000
AccountsReceivable 800 Insurance Expense 300
Investment 1,000 Land 2,000
Cash 1,600 WagesExpense 400
Withdrawals 200 Owner’sEquity 1,800
The total of all the assetsis:
a. 4,400
b. 5,300
c. 5,200
d. 4,700
e. 5,700
71. The accounts inthe ledgerof MickeysParkCo.are listedinalphabetical order. All accountshave normal
balances.
AccountsPayable 500 FeesEarned 2,000
AccountsReceivable 800 Insurance Expense 300
Investment 1,000 Land 2,000
Cash 1,600 WagesExpense 400
Withdrawals 200 Owner’sEquity 1,800
Prepare a trial balance. The total of the debitsis
a. $5,300
b. $10,600
c. $4,100
d. $10,400
e. $4,700
72. An overpaymenterrorwasdiscoveredincomputingandpayingthe wagesof aBartson RepairShopemployee.
WhenBartson receivescashfromthe employee forthe amountof the overpayment,whichof the following
entrieswill Bartsonmake?
a. Cash,debit;WagesExpense,credit
b. WagesPayable,debit;WagesExpense,credit
c. WagesExpense,debit,Cash,credit
d. Cash,debit;WagesPayable,credit
73. Whichof the followingerrors,eachconsideredindividually,wouldcause the trial balance totalstobe unequal?
a. a transactionwas notposted
b. a paymentof $96 for insurance was postedasa debitof $46 to PrepaidInsurance anda
creditof $46 to Cash
c. a paymentof $311 to a creditorwaspostedasa debitof $3,111 to AccountsPayable and
a debitof $311 to AccountsReceivable
d. cash receivedfromcustomersonaccountwas postedas a debitof $140 to Cash anda
creditof $140 to AccountsPayable
74. Suppliespurchasedonaccountwere incorrectlyrecordedasOffice Equipment. The correctingentrywouldbe
a. Supplies,debit;Office Equipment,credit.
b. AccountsReceivable,debit;Supplies,credit.

11. c. Office Equipment,debit;SuppliesExpense,credit.
d. Supplies,debit;AccountsPayable,credit.
75. The trial balance isoutof balance andthe accountantsuspectsthata transpositionorslide errorhasoccurred.
What will the accountantdoto findthe error?
a. Determine the amountof the errorand lookforthat amounton the trial balance.
b. Determine the amountof the errorand divide bytwo,thenlookforthatamounton the
trial balance.
c. Determine the amountof the errorand refertothe journal entriesforthatamount
d. Determine the amountof the errorand divide bynine.If the resultisevenlydivided,then
thistype of error is likely.
76. The matchingconcept
a. addressesthe relationship betweenthe journal andthe balance sheet
b. determineswhetherthe normal balance of anaccount isa debitor credit
c. requiresthatthe dollaramountof debitsequal the dollaramountof creditsona trial
balance
d. determinesthatexpensesrelated torevenuebe reportedatthe same time the revenue
isreported
77. Usingaccrual accounting,revenue isrecordedandreportedonly
a. whencash isreceivedwithoutregardtowhenthe servicesare rendered
b. whenthe servicesare renderedwithoutregardtowhencashisreceived
c. whencash isreceivedatthe time servicesare rendered
d. if cash is receivedafterthe servicesare rendered
78. Usingaccrual accounting,expensesare recordedandreportedonly
a. whentheyare incurred,whetheror notcash is paid
b. whentheyare incurredandpaid at the same time
c. if theyare paidbefore theyare incurred
d. if theyare paidaftertheyare incurred
79. One of the accountingconceptsuponwhichdeferralsandaccrualsare basedis
a. matching
b. cost
c. price-leveladjustment
d. conservatism
80. If the effectof the creditportionof an adjustingentryistoincrease the balance of a liabilityaccount,whichof
the followingdescribesthe effectof the debitportionof the entry?
a. increasesthe balance of a contra assetaccount
b. increasesthe balance of anassetaccount
c. decreasesthe balance of anowner'sequityaccount
d. increasesthe balance of anexpense account
81. The primarydifference betweendeferred andaccruedexpensesisthatdeferredexpenseshave
a. beenincurredandaccruedexpenseshave not
b. not beenincurredandaccruedexpenseshave beenincurred
c. beenrecordedandaccruedexpenseshave notbeenincurred
d. not beenrecordedandaccrued expenseshave beenincurred
82. Priorto the adjustingprocess,accruedexpenseshave
a. not yetbeenincurred,paid,orrecorded
b. beenincurred,notpaid,buthave beenrecorded

12. c. beenincurred,notpaid,andnotrecorded
d. beenpaidbuthave not yetbeenincurred
83. Priorto the adjustingprocess,accruedrevenue has
a. beenearnedandcash received
b. beenearnedandnotrecordedas revenue
c. not beenearnedbutrecordedasrevenue
d. not beenrecordedasrevenue butcashhasbeen received
84. Adjustingentriesare
a. the same as correctingentries
b. neededtobringaccountsup to date and match revenue andexpense
c. optional undergenerallyacceptedaccountingprinciples
d. rarelyneededinlarge companies
85. Adjustingentriesaffectatleastone
a. income statementaccountandone balance sheetaccount
b. revenue andthe drawingaccount
c. assetand one owner'sequityaccount
d. revenue andone capital account
86. The general termemployedtoindicate anexpensethathasnot beenpaidandhas notyet beenrecognizedinthe
accounts bya routine entryis
a. capital
b. deferral
c. accrual
d. inventory
87. Generallyacceptedaccountingprinciplesrequiresthatcompaniesuse the ____ of accounting.
a. cash basis
b. deferral basis
c. accrual basis
d. account basis
88. Whichof the followingsupportsthe accrual basisof accounting?
a. revenue recognitionconcept
b. cash concept
c. matchingconcept
d. revenue recognitionandmatchingconcepts
89. Prepaidexpensesare eventuallyexpectedto
a. become expenseswhentheirfuture economicvalue expires.
b. become revenueswhenservicesare performed.
c. become expensesinthe periodwhentheyare paid.
d. become revenueswhenthe liability isnolongerowed.
90. Whichof the followingisconsideredtobe unearnedrevenue?
a. Concertticketssoldfortonight’sperformance.
b. Concertticketssoldyesterdayoncredit.
c. Concertticketsthatwere not soldforthe current performance.
d. Concertticketssoldfornextmonth’sperformance.
91. Whichof the followingisanexample of accruedrevenue?
a. Swimmingpool cleaningthathasbeenforthree monthsinadvance.
b. Swimmingpool cleaningthathasbeenprovidedbuthasnotbeenbilledorpaid.

13. c. An agreementhasbeensignedforswimmingpool cleaningforthe nextthree months.
d. Swimmingpool cleaningthathasbeenprovidedandpaidonthe same day.
92. Whichaccount wouldnormally notrequire anadjustingentry?
a. WagesExpense
b. AccountsReceivable
c. AccumulatedDepreciation
d. Smith,Capital
93. The balance in the prepaidrentaccountbefore adjustmentatthe endof the yearis $15,000, whichrepresents
three months'rentpaidon December1. The adjusting entryrequiredonDecember31 is
a. debitRentExpense,$5,000; creditPrepaidRent,$5,000
b. debitPrepaidRent,$10,000; creditRentExpense,$5,000
c. debitRentExpense,$10,000; creditPrepaidRent,$5,000
d. debitPrepaidRent,$5,000; credit Rent Expense,$5,000
94. The balance in the office suppliesaccountonJune 1 was$5,200, suppliespurchasedduringJune were $2,500,
and the suppliesonhandatJune 30 were $2,000. The amountto be usedforthe appropriate adjustingentryis
a. $4,500
b. $2,500
c. $9,700
d. $5,700
95. What isthe properadjustingentryatJune 30, the endof the fiscal year,basedona prepaidinsurance account
balance before adjustment,$15,500, and unexpiredamountsperanalysisof policies,$4,500?
a. debitInsurance Expense,$4,500; creditPrepaidInsurance,$4,500
b. debitInsurance Expense,$15,500; creditPrepaidInsurance,$15,500
c. debitPrepaidInsurance,$11,500; creditInsurance Expense,$11,500
d. debitInsurance Expense,$11,000; credit PrepaidInsurance,$11,000
96. A businesspaysweeklysalariesof $20,000 on Fridayfora five-dayweekendingonthatday. The adjustingentry
necessaryatthe endof the fiscal periodendingonThursdayis
a. debitSalariesPayable,$16,000; credit Cash, $16,000
b. debitSalaryExpense,$16,000; creditDrawing,$16,000
c. debitSalaryExpense,$16,000; creditSalariesPayable,$16,000
d. debitDrawing,$16,000; creditCash, $16,000
97. The difference betweenthe balance of afixedassetaccountandthe relatedaccumulateddepreciationaccountis
termed
a. historical cost
b. contra asset
c. bookvalue
d. marketvalue
98. As time passes,fixedassetsotherthanlandlose theircapacitytoprovide useful services. Toaccountfor this
decrease inusefulness,the costof fixedassetsissystematicallyallocatedtoexpense throughaprocesscalled
a. equipmentallocation
b. depreciation
c. accumulation
d. matching
99. If the prepaidrentaccountbefore adjustmentatthe endof the monthhas a debitbalance of $1,600,
representingapaymentmade onthe firstday of the month,andif the monthlyrentwas$800, the amountof
prepaidrentthat wouldappearonthe balance sheetatthe endof the month,afteradjustment,is

14. a. $800
b. $400
c. $2,400
d. $1,600
100. DepreciationExpense andAccumulatedDepreciationare classified,respectively,as
a. expense,contraasset
b. asset,contra liability
c. revenue,asset
d. contra asset,expense
101. Suppliesare recordedasassets whenpurchased.Therefore,the credittosuppliesinthe adjustingentryisforthe
amountof supplies
a. that are inthe endingbalance
b. purchased
c. used
d. eitherusedorremaining
102. If there is a balance inthe unearnedsubscriptions accountafteradjustingentriesare made,itrepresentsa(n)
a. deferral
b. accrual
c. drawing
d. revenue
103. Whichof the followingisanexample of aprepaidexpense?
a. Supplies
b. AccountsReceivable
c. UnearnedSubscriptions
d. Unearned Fees
104. The unexpiredinsurance atthe endof the fiscal periodrepresents
a. an accrued asset
b. an accrued liability
c. an accrued expense
d. a deferredexpense
105. Accruedrevenueswouldappearonthe balance sheetas
a. assets
b. liabilities
c. capital
d. prepaidexpenses
106. Accruedexpensesare ordinarilyreportedonthe balance sheetas
a. assets
b. liabilities
c. fixedassets
d. prepaidexpenses
107. The adjustingentryforrentearnedthat iscurrentlyrecorded inthe unearnedrentaccountis
a. UnearnedRent,debit;RentRevenue,credit
b. RentRevenue,debit;UnearnedRent,credit
c. UnearnedRent,debit;PrepaidRent,credit
d. RentExpense,debit;UnearnedRent,credit
108. Whichof the followingpairsof accountscould not appearin the same adjustingentry?

15. a. Service RevenueandUnearnedRevenue
b. InterestIncome andInterestExpense
c. RentExpense andPrepaidRent
d. SalariesPayable andSalariesExpense
109. The followingadjustingjournalentrywasfoundonpage 4 of the journal. Selectthe bestexplanationforthe
entry.
SuppliesExpense 360
Supplies 360
????????????????
a. Adjustsuppliesinventorytoactual
b. Recordpurchase of supplies
c. Adjustsuppliesexpense
d. Recordsale of supplies
110. The followingadjustingjournalentrywasfoundonpage 4 of the journal. Selectthe bestexplanationforthe
entry.
WagesExpense 2,555
Wages Payable 2,555
????????????????
a. Recordthe paymentof wages
b. Recordwagesto be paid thismonth
c. Recordwagespaidin advance
d. Recordwagesexpense incurredandtobe paid nextmonth
111. What affectwill the followingadjustingjournal entryhave on the accountingrecords?
DepreciationExpense 1,500
AccumulatedDepreciation 1,500
a. Increase netincome
b. Increase revenues
c. Decrease expenses
d. Decrease netbookvalue
112. How will the followingadjustingjournal entry affectthe accountingequation?.
UnearnedSubscriptions 12,000
Subscriptionsearned 12,000
a. Increase assets,increase revenues
b. Increase liabilities,increaserevenues
c. Decrease liabilities,increaserevenues
d. Decrease liabilities,decreaserevenues
113. The net bookvalue of a fixedassetisdeterminedby
a. Original costlessaccumulateddepreciation

16. b. Original costlessdepreciationexpense
c. Original costlessaccumulateddepreciationplusdepreciation expense
d. Original costplusaccumulateddepreciation
114. The net income reportedonthe income statementis$90,000. However,adjustingentrieshave notbeenmade
at the endof the periodforsuppliesexpense of $2,700 andaccrued salariesof $1,300. Netincome,ascorrected,
is
a. $87,300
b. $90,000
c. $88,700
d. $86,000
115. At the endof the fiscal year,the usual adjustingentryfordepreciationonequipmentwasomitted. Whichof the
followingstatementsistrue?
a. Total assets will be understatedatthe endof the current year.
b. The balance sheetandincome statementwillbe misstatedbutthe statementof owner's
equitywill be correctforthe currentyear.
c. Netincome will be overstatedforthe currentyear.
d. Total liabilitiesandtotal assetswillbe understated.
116. At the endof the fiscal year,the usual adjustingentryforaccruedsalariesowedtoemployeeswasomitted.
Whichof the followingstatementsistrue?
a. SalaryExpense forthe yearwas understated.
b. The total of the liabilitiesatthe endof the yearwas overstated.
c. Netincome forthe year wasunderstated.
d. Owner'sequityatthe endof the yearwas understated.
117. Whichof the accounts belowwouldappearonanadjustedtrial balance butprobablywould notappearonthe
trial balance?
a. FeesEarned
b. AccountsReceivable
c. UnearnedFees
d. DepreciationExpense
118. Duringthe end-of-periodprocessingwhich of the followingbestdescribesthe logical orderof thisprocess
a. Preparationof adjustments,adjustedtrial balance,financialstatements
b. Preparationof Income Statement,adjustedtrial balance,Balance Sheet
c. Preparationof adjustedtrial balance,cross-referencing,journalizing
d. Preparationof adjustments,adjustedtrial balance,posting
119. NotesReceivable due in345 daysappear onthe
a. balance sheetinthe currentassetssection
b. balance sheetinthe fixedassetssection
c. balance sheetinthe currentliabilitiessection
d. income statementasanexpense
120. UnearnedFeesappearonthe
a. balance sheetinthe currentassetssection
b. balance sheetasa current liability
c. balance sheetinthe owner'sequity section
d. income statementasrevenue
121. Whichone of the fixedassetaccountslistedbelow will nothave arelatedcontraassetaccount?
a. Office Equipment

17. b. Land
c. DeliveryEquipment
d. Building
122. Round-trippingiswhen
a. a sellingcompanysellstoa customercompanywithhuge discounts.
b. a sellingcompanypretendstosell toa fictitiouscompanywiththe intendof inflating
revenues
c. a sellingcompanylendsmoneytoacustomercompanyto increase assets.
d. a sellingcompany lendsmoneytoacustomercompanyto be usedtopurchase goods
fromthe sellingcompany.
123. The income statementshouldbe prepared
a. before the statementof owner’sequityandbalance sheet
b. afterthe statementof owner’sequityandbefore the balancesheet
c. afterthe statementof owner’sequityandbalance sheet
d. afterthe balance sheetandbefore the statementof owner’sequity
124. The Statementof Owner’sEquitybeginswiththe beginningbalance followedby
a. plusNetIncome (loss) lesswithdrawals
b. plusNetIncome (loss) plusinvestments
c. plusinvestmentslesswithdrawals
d. plusinvestmentsplusNetIncome (loss) lesswithdrawals
125. The Income Statementwill include the followingaccounts
a. Revenuesless Expenses(orderedlargest tosmallestamount) withMiscellaneous
Expense listedlast
b. RevenueslessExpenses(orderedsmallesttolargestamounts) withMiscellaneous
Expense listedlast
c. RevenueslessExpenses(orderedinalphabetical order)
d. RevenueslessExpenses(orderisnotimportant)
126. Balance sheetaccounts
a. representamountsaccumulatedduringaspecificperiodof time
b. are calledreal accounts
c. have zerobalancesafterthe closingentrieshave beenposted
d. are equal toassetsand liabilities
127. Whichis the followingthatis nottrue aboutclosingentries?
a. There are fourclosingentriesthatupdate the owner’sequityaccount.
b. Afterthe secondclosingentry,the income summaryaccountisequal tothe net income
or (loss) forthe period.
c. All real accountsare closedat the endof the period.
d. By closingnominal accountsatthe endof the periodtozero,it ispossible toisolate next
period’sinformationcorrectly.
128. Afterpostingthe second closingentrytothe income summaryaccount,the balance will be equal to
a. zero.
b. owner’sequity.
c. revenuesforthe period
d. the netincome or (loss) forthe period.
129. Whichof the followingaccountgroupsare all considerednominal accounts?
a. Cash,FeesEarned,UnearnedRevenues

18. b. PrepaidExpenses,UnearnedRevenues,FeesEarned
c. Capital Account,DrawingAccount,Income Summary
d. DrawingAccount,FeesEarned,RentExpense
130. Whichof the followingaccountswill be closedtothe Capital accountat the endof the fiscal year?
a. RentExpense
b. FeesEarned
c. Income Summary
d. DepreciationExpense
131. Whichof the followingaccountsordinarilyappearsinthe post-closingtrial balance?
a. Bill Smith,Drawing
b. SuppliesExpense
c. FeesEarned
d. UnearnedRent
132. The post-closingtrial balance differsfromthe adjustedtrial balance inthatit
a. doesnottake intoaccount closingentries
b. doesnottake intoaccount adjustingentries
c. doesnotinclude balance sheetaccounts
d. doesnotinclude income statementaccounts
133. A summaryof selectedledgeraccountsappearbelow forTed'sAutoServicesforthe 2007 calendaryearend.
Ted, Capital
12/31 7,000 1/1 5,000
12/31 17,000
Ted, Drawing
6/30 2,000 12/31 7,000
11/30 5,000
Income Summary
12/31 15,000 12/31 32,000
12/31 17,000
Netincome forthe periodis
a. $17,000
b. $22,000
c. $7,000
d. $15,000
134. The accountingcycle requiresthree trial balancesbe done. Inwhatordershouldtheybe prepared?
a. Post-closing,unadjusted,adjusted
b. Unadjusted,post-closing,adjusted
c. Unadjusted,adjusted,post-closing
d. Post-closing,adjusted,unadjusted
135. The natural businessyear
a. isa fiscal yearthat endswhenbusinessactivitiesare atits lowestpoint.
b. isa calendaryearthat endswhenbusinessactivitiesare atitslowestpoint.
c. isa fiscal yearthat endswhenbusinessactivitiesare atits highestpoint.

19. d. isa calendaryearthat endswhenbusinessactivitiesare atitshighestpoint.
136. Whena work sheetiscomplete,the adjustmentcolumnsshouldhave
a. total creditsgreaterthan total debitsif anet income wasearned
b. total debitsgraterthan total creditsif a netlosswas incurred
c. total debitsgreaterthantotal creditsif a net income wasearned
d. total debitsequal total credits
137. The difference betweenthe totalsof the debitandcreditcolumnsof the AdjustedTrial Balance columnsona
work sheet
a. isthe amountof net income orloss
b. indicatesthere isanerror onthe worksheet
c. isnot unusual whenpreparingthe worksheet
d. isthe netdifference betweenrevenue,expenses,anddrawing
138. Whichof the statementsbelow indicatesthata companyearnedanet income forthe period?
a. The sum of the debitsexceedsthe sumof the creditsinthe Balance Sheetcolumnson
the work sheet.
b. The sum of the creditsexceedsthe sumof the debitsinthe Income Statementcolumns
on the worksheet.
c. The sum of the debitsexceedsthe sumof the creditsinthe Income Statementcolumns
on the worksheet.
d. Cash inflowsexceededcashoutflows.
139. The work sheetatthe endof Septemberhas$4,000 in the Balance Sheetcredit columnforAccumulated
Depreciation. The worksheetatthe endof Octoberhas $4,750 in the Balance Sheetcreditcolumnfor
AccumulatedDepreciation. Whatwasthe amountof the depreciationexpense adjustmentforthe monthof
October?
a. amountcan not be determined
b. $4,750
c. $4,000
d. $750
140. On October1, the companypays rentfor twelve monthsinadvance anddebitsanassetaccount. At yearend,
the adjustingentryonthe worksheetwould
a. increase anexpense account
b. decrease aliabilityaccount
c. increase anassetaccount
d. decrease anexpense account

20. REVIEWER ACCTG 1
ANSWER SECTION
MULTIPLE CHOICE
1. D
2. A
3. B
4. D
5. D
6. C
7. C
8. D
9. C
10. D
11. B
12. A
13. A
14. B
15. D
16. B
17. C
18. A
19. C
20. A
21. D
22. A
23. A
24. B
25. A
26. C
27. C
28. B
29. C
30. A
31. C
32. A
33. C
34. D
35. D
36. D
37. B
38. B
39. B
40. C
41. B
42. C
43. B
44. D
45. A
46. C
47. B
48. D
49. A
50. D
51. B
52. C
53. C
54. D
55. D
56. A
57. A
58. A
59. B
60. D
61. B
62. A
63. B
64. A
65. B
66. D
67. B
68. A
69. D
70. A
71. A
72. A
73. C
74. A
75. D
76. D
77. B
78. A
79. A
80. D
81. B
82. C

21. 83. B
84. B
85. A
86. C
87. C
88. D
89. A
90. D
91. B
92. D
93. A
94. D
95. D
96. C
97. C
98. B
99. A
100. A
101. C
102. A
103. A
104. D
105. A
106. B
107. A
108. B
109. A
110. D
111. D
112. C
113. A
114. D
115. C
116. A
117. D
118. A
119. A
120. B
121. B
122. D
123. A
124. D
125. A
126. B
127. C
128. D
129. D
130. C
131. D
132. D
133. A
134. C
135. A
136. D
137. B
138. B
139. D
140. A