1. Green Systems sold and delivered modems to Blue Computers for $660,000 to be paid by Blue in three equal installments over the next three months. The journal entry made by Blue Computers to record the last of the three installment payments will include: A) A debit of $220,000 to Modem Expense B) A debit of $220,000 to Accounts Receivable. C) A debit of $220,000 to Accounts Payable. D) A debit of $220,000 to Cash. 2. Master Equipment has a $17,400 liability to Arrow Paint Co. When Master Equipment makes a partial payment of $7,600 on this liability, which of following is true about the journal entry made by Master to record this transaction? A) The Cash Paid Out account is debited $7,600. B) The liability account Accounts Payable is credited $9,800. C) The Accounts Payable account is debited $7,600. D) The Cash account is debited $7,600. 3. Master Equipment has a $17,400 liability to Arrow Paint Co. When Master Equipment makes a partial payment of $7,600 on this liability, which of following is true about the journal entry made by Master to record this transaction? A) The Cash Paid Out account is debited $7,600 B) The liability account Accounts Payable is credited $9,800 C) The Cash account is debited $7,600 D) The Accounts Payable account is debited $7,600 4. Ben Dryden, president of Jet Glass, Inc, noticed a $8,000 debit to Accounts Payable in the companys general ledger. This debit could correspond to: A) A $8,000 sale to a customer. B) A payment of $8,000 to a supplier to settle a balance due. C) A purchase of equipment costing $8,000 on credit. D) The failure to pay this months $8,000 utility bill on time. 5. Davis, Inc., a music group, entertained at a black-tie dinner dance on April 26, and collected the fee in full at the end of the evening. This transaction: A) Violates the matching principle unless any expenses associated with this cash receipt are paid prior to recording the revenue. B) Is recorded by debiting Cash and crediting the Retained Earnings account. C) Causes an increase in assets and a decrease in owners equity. D) Causes an increase in assets and revenue, as well as an increase in owners equity. 6. JMB Jewelers purchased display shelves on March 1 for $12,000. If this asset has an estimated useful life of five years, what is the book value of the display shelves on April 30? A) $200. B) $11,600. C) $11,800 D) $400. 7. The adjusting entry to recognize an unrecorded expense is necessary: A) When an expense is paid in advance. B) When an expense has been neither paid nor recorded as of the end of the accounting period. C) Whenever an expense remains unpaid at the end of an accounting period. D) Because the accountant is likely to forget to pay these unrecorded expenses. 8. Before any month-end adjustments are made, the net income of Friendly Company is $125,000. However, the following adjustments are necessary: office supplies used, $7,500; services performed for clients but not yet recorded or collected, $3,200; interest accrued on note payable to bank, $3,400. After adjusting entries are made for the items listed above, Gannett companys net income would be: A) $139,100. B) $110,900. C) $132,300. D) $117,300. 9. Of the following adjusting entries, which one results in an increase in liabilities and the recognition of an expense at the end of an accounting period? A) The entry to accrue salaries owed to employees at the end of the period. B) The entry to record revenue earned but not yet collected or recorded. C) The entry to record earned portion of rent previously received in advance from a tenant. D) The entry to write off a portion of unexpired insurance. 10. The CPA firm auditing Bedford Company found that net income had been overstated. Which of the following errors could be the cause? A) Failure to record depreciation expense for the period. B) No entry made to record purchase of land for cash on the last day of the year. C) Failure to record payment of an account payable on the last day of the year. D) Failure to make an adjusting entry to record revenue that had been earned but not yet billed to customers. 11. CDK Inc. Trial Balance December 31 DEBITSCash$ 15 Accounts Receivable$ 25 Equipment$190 Dividends..$ 10 Salaries Expense..$ 85 Depreciation.$ 25 Supplies Expense..$ 15 TOTAL.. $365 CREDITS Accounts Payable..$ 20 Capital Stock$105 Retained Earnings$ 55 Service Revenue$185 TOTAL..$365 What is the balance in income summary before it is closed to retained earnings? A) 60 B) 50 C) 55 D) 125 12. Refer to the Trial Balance in Question 11. What is the balance in retained earnings at December 31 after all closing entries have been posted? A) 115 B) 105 C) 55 D) 60 13. Refer to the Trial Balance in Question 11 above. Which accounts will appear on the balance sheet? A) retained earnings of $55 B) dividends of $10 C) net income of $65 D) none of the above 14. Refer to the Trial Balance in Question 11 above. What is the total debits on the after-closing trial balance? A) 240 B) 365 C) 230 D) Some other amount. 15. Refer to the Trial Balance in Question 11 above. Which accounts are closed to income summary? A) All accounts B) Revenue and expenses. C) Revenue, expenses, and dividends. D) All accounts that are not nominal