JULY 22, 2017 9.

On a classified balance sheet, the appropriate ordering of specific

FINANCIAL ACCOUNTING PART 3 classifications is:
QUIZ #1 a. Current assets; long-term investments; property, plant, and
equipment; intangible assets; other assets.
Name: b. Current assets; property, plant, and equipment; long-term
investments; intangible assets; other assets.
MULTIPLE CHOICE. c. Current assets; intangible assets; property, plant, and
equipment; long-term investments; other assets.
1. The accountants worksheet: d. Current assets; other assets; long-term investments; intangible
a. lays the groundwork for formal financial statement assets; property, plant, and equipment.
preparation. 10. If a company had a current ratio of 0.5, then which of the following
b. is a fundamental financial statement. statements regarding that companys working capital would be true?
c. provides details necessary for full disclosure and the a. The company's working capital would be positive.
preparation of footnotes. b. The company's working capital would be zero.
d. is prepared at the end of each operating cycle. c. The company's working capital would be negative.
2. In preparing a worksheet, a net loss would be computed and d. The company's working capital would be 2:1.
entered in the: 11. Of the following account types, which would be increased by a
a. debit column of the income statement columns of the debit?
worksheet. a. Liabilities and expenses.
b. credit column of the income statement columns of the b. Assets and equity.
worksheet. c. Assets and expenses.
c. in the debit column of the adjusted trial balance. d. Equity and revenues.
d. in the credit column of the balance sheet columns of the 12. The following comments all relate to the recording process. Which
worksheet. of these statements is correct?
3. Which of the following accounts would not be closed at the end of a. The general ledger is a chronological record of transactions.
an accounting period? b. The general ledger is posted from transactions recorded in the
a. Income Summary general journal.
b. Dividends c. The trial balance provides the primary source document for
c. Revenue recording transactions into the general journal.
d. Capital Stock d. Transposition is the transfer of information from the general
4. After closing all revenue and expense accounts, Norris Company had journal to the general ledger.
a debit balance in its Income Summary account of P10,000. The 13. The following comments each relate to the recording of journal
proper entry to record the closing of the Income Summary account entries. Which statement is true?
would be: a. For any given journal entry, debits must exceed credits.
a. Revenue 10,000 b. It is customary to record credits on the left and debits on the
Income Summary 10,000 right.
b. Retained Earnings 10,000 c. The chart of accounts reveals the amount to debit and credit to
Income Summary 10,000 the affected accounts.
c. Income Summary 10,000 d. Journalization is the process of converting transactions and
Retained Earnings 10,000 events into debit/credit format.
d. Income Summary 10,000 14. Failure to record the receipt of a utility bill for services already
Expenses 10,000 received will result in:
5. The following statements all pertain to the accounting cycle. Which a. An overstatement of assets.
of these statements is wrong? b. An overstatement of liabilities.
a. A post-closing trial balance is prepared prior to closing c. An overstatement of equity.
temporary accounts. d. An understatement of assets.
b. Formal financial statements may be produced from the 15. The proper journal entry to record Ransom Companys billing of
worksheet. clients for P500 of services rendered is:
c. Adjusting entries are recorded in the journal and posted to the a. Cash 500
ledger. Accounts Receivable 500
d. The post-closing trial balance is prepared by examining ledger b. Accounts Receivable 500
balances subsequent to the closing of accounts. Capital Stock 500
6. Which of the following statements about reversing entries is true? c. Accounts Receivable 500
a. Identical account balances are achieved in the subsequent Service Revenue 500
accounting period whether reversing entries are utilized or not. d. Cash 500
b. Reversing entries may not be used with accrued revenues. Service Revenue 500
c. Reversals are generally applied to those adjusting items that do 16. The proper journal entry to record P1,000 of Dividends paid by
not involve future cash flow. Myers Corporation is:
d. Reversing entries would not be prepared if a company also a. Dividends 1,000
utilized closing entries. Cash 1,000
7. Shipman Company had accrued salaries of P300 on December 31. b. Accounts Payable 1,000
The company recorded reversing entries on the following January 1. Cash 1,000
On the next payday, January 7, the appropriate entry to record the c. Dividends Expense 1,000
payment of P1,000 in salaries should include: Cash 1,000
a. a debit to Salaries Expense of P1,000. d. Dividends Expense 1,000
b. a debit to Salaries Expense of P700. Service Revenue 1,000
c. a debit to Salaries Expense of P1,300.
d. a debit to Salaries Payable for P300.
8. Current assets are those assets which management intends to
convert into cash or consume within:
a. The operating cycle
b. One year
c. The longer of (a) or (b)
d. The shorter of (a) or (b) 17. Lynn Lipincott invested land valued at P5,000 in her business. This
transaction would be recorded by:
 a. Cash 5,000 Blankenships year-end occurred on Wednesday, at which time a
Capital Stock 5,000 correct adjusting entry was recorded. On the following Friday, which
b. Land 5,000 of the following payroll journal entries should be recorded?
Capital Stock 5,000 a. Salary Expense10,000
c. Land 5,000 Cash 10,000
Service Revenue 5,000 b. Salary Expense 4,000
d. Capital Stock 5,000 Salary Payable 6,000
Land 5,000 Cash10,000
18. The trial balance: c. Salary Expense 6,000
a. Is a formal financial statement. Salary Payable 4,000
b. Is used to prove that there are no errors in the journal or Cash10,000
ledger. d. Salary Payable10,000
c. Provides a listing of every account in the chart of accounts. Cash10,000
d. Provides a listing of the balance of each account in active use. 26. The appropriate journal entry to record equipment depreciation
19. Which of the following errors will be disclosed in the preparation of expense would consist of a debit to Depreciation Expense and a
a trial balance? credit to which of the following accounts?
a. Recording transactions in the wrong account. a. Equipment
b. Duplication of a transaction in the accounting records. b. Accumulated Depreciation: Equipment
c. Posting only the debit portion of a particular journal entry. c. Retained Earnings
d. Recording the wrong amount for a transaction to both the d. Cash
account debited and the account credited. 27. At the end of the current accounting period, Johnson Company
20. The basic sequence in the accounting process can best be described failed to record utilities consumed during the period. Johnson will be
as: billed for the utilities during the next accounting period. As a result,
a. Transaction, journal entry, source document, ledger account, current period assets, liabilities, equity, and income, respectively,
trial balance. are:
b. Source document, transaction, ledger account, journal entry, a. Overstated, overstated, correct, correct
trial balance. b. Correct, understated, overstated, overstated
c. Transaction, source document, journal entry, trial balance, c. Overstated, understated, overstated, overstated
ledger account. d. Overstated, understated, correct, correct
d. Transaction, source document, journal entry, ledger account, 28. On November 1, 20X1, Limit Company purchased a one-year
trial balance. insurance policy for $12,000. Limit Company debited Cash and
21. For purposes of measuring business income, the life of a business is: credited Prepaid Insurance for $12,000. At the end of December,
a. divided into specific points in time. 20X1, $2,000 of insurance had expired. The journal entry to properly
b. divided into irregular cycles. state all accounts involved on December 31, 20X1, would be:
c. divided into discrete accounting periods. a. Insurance Expense 2,000
d. considered to be a continuous cycle. Prepaid Insurance22,000
22. Adjusting entries at the end of an accounting period would not be Cash 24,000
required for which of the following b. Insurance Expense2,000
a. Multiperiod costs that must be split among two or more Prepaid Insurance 2,000
accounting periods. c. Insurance Expense2,000
b. Multiperiod revenues that must be split among two or more Cash 2,000
accounting periods. d. Prepaid Insurance2,000
c. Expenses that have been incurred in a given period but not as Insurance Expense 2,000
yet recorded in the accounts. 29. Under the the income statement approach to adjusting entries, the
d. Revenue that has been earned and recorded in the accounting receipt of $5,000 of unearned revenue would be recorded by
records. debiting Cash. What account should be credited?
23. Blankenship Company pays its employees every Friday for work a. Cash
rendered that week. The payroll is typically $10,000 per week. b. Revenue
Which of the following journal entries would Blankenship ordinarily c. Unearned Revenue
record on the Friday payday? d. Prepaid Revenue
a. Salary Expense10,000 30. Simmons Company received and recorded a $5,000 payment for
Salary Payable 10,000 services to be rendered in the future. If the income statement
b. Salary Expense10,000 approach to adjusting entries is used, the appropriate adjusting
Cash 10,000 entry at the end of the accounting period for $3,000 of revenue not
c. Salary Payable10,000 yet earned would be:
Cash 10,000 a. Service Revenue3,000
d. Salary Payable10,000 Unearned Service Revenue 3,000
Salary Expense 10,000 b. Service Revenue2,000
24. Blankenship Company pays its employees every Friday for work Unearned Service Revenue 2,000
rendered that week. The payroll is typically $10,000 per week. What c. Accounts Receivable3,000
journal entry would be recorded (on Wednesday) if the end of the Unearned Service Revenue 3,000
accounting period occurred on a Wednesday?
a. Salary Expense6,000
d. No entry would be needed.
Salary Payable 6,000
b. Salary Expense6,000
Cash 6,000
c. Salary Payable6,000
Cash 6,000
d. Salary Payable6,000
Salary Expense 6,000

25. Blankenship Company pays its employees every Friday for work
rendered that week. The payroll is typically $10,000 per week.