$.$ Depreciation on Building is estimated to be $$5,000$

a$.$ debit to accumulated depreciation for $$5,000$

b$.$ credit to accumulated depreciation for $$5,000$

c$.$ credit to depreciation expense $$5,000$

d$.$ credit to buildings for $ $5,000$

$2.$ A one year insurance policy was purchased for $$2,000.$

Three months has expired.

a$.$ debit to prepaid insurance for $$500$

b$.$ credit to prepaid insurance for $$500$

c$.$ credit to insurance expense for $$1,500$

d$.$ debit to insurance expense for $$1,500$

$3.$ Accrued interest on note payable amounts to $$100$

a$.$ credit to interest receivable for $$100$

b$.$ credit to interest expense for $$100$

c$.$ debit to interest expense for $$100$

d$.$ debit to interest payable for $$100$

$4.$ Company received an advance payment for $$3,600.$ of this

amount was earned to date.

a$.$ debit to unearned revenue for $$2,700$

b$.$ debit to earned revenue for $$900$

c$.$ credit to earned revenue for $$900$

d$.$ credit unearned revenue for $$2,700$

$5.$ The supplies amount showed a beginning balance of

$$200.$ During the year $ $$800$ of new supplies were

purchased and $$300$ is left on hand at the end of the period.

a$.$ debit to supplies expense for $$300$

b$.$ credit to supplies expense for $$800$

c$.$ debit to supplies expense for $$700$

d$.$ credit to supplies for $$300$

II$.$ The following represent items that pertain to the classified balance sheet. Choose the letter that best describes in which classification the account item would best be listed in$.$

$6.$ Wages payable would be recorded in which balance sheet section.

a$.$ current assets

b$.$ current liabilities

c$.$ noncurrent assets

d$.$ noncurrent liabilities

$7.$ Trademarks would classified.

a$.$ noncurrent liability

b$.$ current liability

c$.$ current asset

d$.$ noncurrent asset

$8.$ The purpose of the classified balance sheet is help evaluate:

a$.$ solvency

b$.$ going concern

c$.$ liquidity

d$.$ return on investment

$-2-$

$9.$ In calculating the current ratio which item would not be

included.

a$.$ equipment

b$.$ accounts payable

c$.$ accounts receivable

d$.$ short term investments

$10.$ Bonds payable in two years would be classified as$.$

a$.$ noncurrent assets

b$.$ equity

c$.$ current liability

d$.$ noncurrent liability

III. Using the following information to answer items $11$ thru $15.$

Sales $500,000,$ Sales Returns $10,000,$

Sales Discounts $10,000,$ Purchases $130,000$

Purchase returns $10,000,$ Purchase discounts $20,000$

Freight In $20,000,$ Selling expenses $50,000$

General expenses $170,000,$ inventory$-$beg $27,000$

Inventory$-$end $20,000$

$11.$ Net sales for the period are

a$.$ $$500,000$

b$.$ $$480,000$

c$.$ $$490,000$

d$.$ $$520,000$

$-3-$

$12.$ Net purchases for the period are

a$.$ $$100,000$

b$.$ $$120,000$

c$.$ $$150,000$

d$.$ $$160,000$

$13.$ Cost of goods sold for the period is

a$.$ $$147,000$

b$.$ $$107,000$

c$.$ $$127,000$

d$.$ none of the above

$14.$ Gross Margin for the period is

a$.$ $$353,000$

b$.$ $$333,000$

c$.$ $$303,000$

d$.$ none of the above

$15.$ Net income for the period is

a$.$ $$113,000$

b$.$ $$133,000$

c$.$ $$126,000$

d$.$ none of the above

$-4-$

IV$.$ The following balances are stated below:

Cash $$1,170$

Supplies $1,930$

Prepaid Insurance $600$

Equipment $20,600$

Accumulated Depreciation $5,400$

Accounts Payable $500$

Unearned Revenue $700$

Capital $13,925$

Withdrawal $4,800$

Revenue$-$Fees Earned $21,700$

Salary Expense $6,900$

Depreciation Expense $2,000$

Supplies Expense $800$

Insurance Expense $400$

Using this information for questions $16-20$ answer the

following questions as they relate to closing entries

$16.$ Which answer would best represent the closing entry for a

revenue type account?

a$.$ debit to income summary for $$22,400$

b$.$ credit to income summary for $$21,700$

c$.$ credit to revenue for $$21,700$

d$.$ debit to income summary for $$21,700$

$17.$ Which answer would represent the closing entry for

expense type account?

a$.$ debit income summary for $$10,100$

b$.$ debit income summary for $$15,500$

c$.$ debit accumulated depreciation $$5,400$

d$.$ credit depreciation expense $$2,000$

$-5-$