ACC 557 Midterm Exam Part 1

ACC 557 Midterm Exam Part 1
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Question 1
Equipment is classified in the balance sheet as
 a current asset.
 property, plant, and equipment.
 an intangible asset.
 a long-term investment.
Question 2
Correcting entries are made
 at the beginning of an accounting period.
 at the end of an accounting period.
 whenever an error is discovered.
 after closing entries.

Question 3
The first required step in the accounting cycle is
 reversing entries.
 journalizing transactions in the book of original entry.
 analyzing transactions.
 posting transactions.
Question 4
The net income (or loss) for the period
 is found by computing the difference between the income statement credit column and the balance sheet credit column
on the worksheet.
 cannot be found on the worksheet.
 is found by computing the difference between the income statement columns of the worksheet.
 is found by computing the difference between the trial balance totals and the adjusted trial balance totals.
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Question 5
The purpose of the post-closing trial balance is to
 prove that no mistakes were made.
 prove the equality of the balance sheet account balances that are carried forward into the next accounting period.
 prove the equality of the income statement account balances that are carried forward into the next accounting
period.
 list all the balance sheet accounts in alphabetical order for easy reference.
Question 6
All of the following are property, plant, and equipment except
 supplies.
 machinery.
 land.
 buildings.

Question 7
The operating cycle of a company is the average time that is required to go from cash to
 sales in producing revenues.
 cash in producing revenues.
 inventory in producing revenues.
 accounts receivable in producing revenues.
Question 8
An accounting time period that is one year in length, but does not begin on January 1, is referred to as
 a fiscal year.
 an interim period.
 the time period assumption.
 a reporting period.
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Question 9
Mary Chain Investments purchased an 18-month insurance policy on May 31, 2015 for $3,600. The December 31, 2015
balance sheet would report Prepaid Insurance of
 $0 because Prepaid Insurance is reported on the Income Statement.
 $1,400.
 $2,200.
 $3,600.
Question 10
A company usually determines the amount of supplies used during a period by
 adding the supplies on hand to the balance of the Supplies account.
 summing the amount of supplies purchased during the period.
 taking the difference between the supplies purchased and the supplies paid for during the period.
 taking the difference between the balance of the Supplies account and the cost of supplies on hand.

Question 11
Depreciation expense for a period is the
 original cost of an asset – accumulated depreciation.
 book value of the asset ÷ useful life.
 portion of an asset’s cost that expired during the period.
 market value of the asset ÷ useful life.
Question 12
If an adjusting entry is not made for an accrued revenue,
 assets will be overstated.
 expenses will be understated.
 stockholders’ equity will be understated.
 revenues will be overstated.
Mid-Exam Study Guide ACC 557 Midterm Exam

Question 13
NWA Air Charter signed a four-month note payable in the amount of $20,000 on September 1. The note requires interest at
an annual rate of 9%. The amount of interest to be accrued at the end of September is
 $150.
 $200.
 $600.
 $1,800.
Question 14
At January 31, 2015, the balance in Aislers Inc.’s supplies account was $750. During February, Aislers purchased supplies of
$900 and used supplies of $1,125. At the end of February, the balance in the supplies account should be
 $525 debit.
 $975 debit.
 $525 credit.
 $775 debit.

Question 15
Which of the following statements is false?
 Revenues increase stockholders’ equity.
 Revenues have normal credit balances.
 Revenues are a positive factor in the computation of net income.
 Revenues are increased by debits.
Question 16
The first step in posting involves
 entering in the appropriate ledger account the date, journal page, and debit amount shown in the journal.
 writing in the journal the account number to which the debit amount was posted.
 writing in the journal the account number to which the credit amount was posted.
 entering in the appropriate ledger account the date, journal page, and credit amount shown in the journal.
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Question 17
Transactions in a journal are recorded in
 account number order.
 dollar amount order.
 alphabetical order.
 chronological order.
Question 18
An accountant has debited an asset account for $1,300 and credited a liability account for $500. Which of the following would
be an incorrect way to complete the recording of the transaction?
 Credit an asset account for $800.
 Credit another liability account for $800.
 Credit a Stockholders' account for $800.
 Debit a Stockholders' account for $800.

Question 19
A T-account is
 a way of depicting the basic form of an account.
 what the computer uses to organize bytes of information.
 a special account used instead of a trial balance.
 used for accounts that have both a debit and credit balance.
Question 20
Collection of a $1,000 Accounts Receivable
 increases an asset $1,000; decreases an asset $1,000.
 increases an asset $1,000; decreases a liability $1,000.
 decreases a liability $1,000; increases stockholders' equity $1,000.
 decreases an asset $1,000; decreases a liability $1,000.
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Question 21
Mofro’s Computer Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year,
the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000.
Stockholders' equity at the end of the year was
 $200,000.
 $100,000.
 $250,000.
 $300,000.
Question 22
The proprietorship form of business organization
 must have at least three owners in most states.
 represents the largest number of businesses in the United States.
 combines the records of the business with the personal records of the owner.
 is characterized by a legal distinction between the business as an economic unit and the owner.

Question 23
The basic accounting equation may be expressed as
 Assets = Equities.
 Assets – Liabilities = Stockholders' Equity.
 Assets = Liabilities + Stockholders' Equity.
 All of these answers are correct.
Question 24
The Duce Company has five plants nationwide that cost a total of $100 million. The current fair value of the plants is $500
million. The plants will be recorded and reported as assets at
 $100 million.
 $400 million.
 $500 million.
 $600 million.
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Question 25
The accounting equation for Quattro Enterprises is as follows:
Assets Liabilities Stockholders' Equity
$120,000 = $60,000 + $60,000
If Quattro purchases office equipment on account for $25,000, the accounting
equation will change to
Assets Liabilities Stockholders' Equity
 $120,000 = $60,000 + $60,000
 $145,000 = $60,000 + $85,000
 $145,000 = $72,500 + $72,500
 $145,000 = $85,000 + $60,000

About Author:
This article covers the topic for the Strayed University ACC 557 Midterm Exam Part 1. The
author is working in the field of education from last 5 years. This article covers the questions &
answers of ACC 557 . Other topics in the class are as follows:
ACC 557 Week 1 DQ 1
ACC 557 Week 1 Homework
ACC 557 Week 1 Complete
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ACC 557 Midterm Exam Part 1

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