1.A $15 credit to Sales was posted as a $150 credit. By what amount is the Sales account in error?

Multiple Choice

• $15 understated.

• $135 overstated.

• $135 understated.

• $150 understated.

• $150 overstated.

2.The numbering system used in a company's chart of accounts:

• Typically begins with income statement accounts.

• Is determined by generally accepted accounting principles.

• Is the same for all companies.

• Typically begins with balance sheet accounts.

• Depends on the source documents used in the accounting process.

3.All of the following statements accurately describe the debt ratio except.

• It is of use to both internal and external users of accounting information.

• Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.

• The dividing line for a high and low ratio varies from industry to industry.

• A relatively high ratio is always desirable.

• The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

4.Joe Jackson opened Jacksons Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the companys books:

1. Jackson invested $25,000 cash in the business in exchange for common stock.
2. Jackson contributed $100,000 of equipment to the business.
3. The company paid $2,000 cash to rent office space for the month of March.
4. The company received $16,000 cash for repair services provided during March.
5. The company paid $6,200 for salaries for the month of March.
6. The company provided $3,000 of services to customers on account.
7. The company paid cash of $500 for utilities for the month of March.
8. The company received $3,100 cash in advance from a customer for repair services to be provided in April.
9. The company paid Jackson $5,000 cash as a dividend.

Based on this information, net income for March would be:

• $5,300.

• $13,400.

• $8,400.

• $10,300.

• $13,500.

5.Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:

1. Andrea invested $13,500 cash in the business in exchange for common stock.
2. Andrea contributed $20,000 of photography equipment to the business in exchange for common stock.
3. The company paid $2,100 cash for an insurance policy covering the next 24 months.
4. The company received $5,700 cash for services provided during January.
5. The company purchased $6,200 of office equipment on credit.
6. The company provided $2,750 of services to customers on account.
7. The company paid cash of $1,500 for monthly rent.
8. The company paid $3,100 on the office equipment purchased in transaction #5 above.
9. Paid $275 cash for January utilities.

Based on this information, the amount of total stockholders equity reported on the Balance Sheet at the end of the month would be:

• $31,150.

• $30,875.

• $40,175.

• $39,200.

• $31,400.