Question 1 (2 points)

In order to determine the proper point in time to enter revenue in the accounting records, accountants normally recognize revenue when it is billed.

Question 1 options:

1) True2) False

Question 2 (2 points)

During June, Anna Magazine sold for cash six advertising spaces for $400 each to be run in the July through December issues. On that date, Zorba properly recognized Unearned Revenue. The adjusting entry to record on July 31 includes:

Question 2 options:

1)

A debit to Unearned Revenue for $2,000

2)

A credit to Unearned Revenue for $400

3)

A credit to Revenue for $2,000

4)

A debit to Cash for $2,000

5)

None of these

Question 3 (2 points)

The Sales account and Purchases account should include:

Question 3 options:

1)

Only cash sales and cash purchases of merchandise

2)

Only credit sales and credit purchases of merchandise

3)

Not only merchandise transactions but also purchases and sales of other assets used in the business

4)

None of the above

Question 4 (2 points)

The closing process corrects the lack of agreement between the Retained Earnings account and the ending balance of retained earnings shown in the statement of retained earnings.

Question 4 options:

1) True2) False

Question 5 (2 points)

On January 7, Olaf purchased supplies on account for $2,000 and recorded this purchase to the Supplies account. At the end of January, Olaf had $1,200 of these supplies still on hand. The proper adjusting journal entry at January 31 would:

Question 5 options:

1)

Include a debit to Supplies for $2,000

2)

Include a credit to Supplies for $800

3)

Include a debit to Accounts Payable for $800

4)

Include a debit to Supplies Expense for $600

5)

None of these

Question 6 (2 points)

Under the cash basis of accounting, revenues are recognized when goods are sold and delivered or services are rendered.

Question 6 options:

1) True2) False

Question 7 (2 points)

Kristoff Ice Company uses the perpetual inventory system. Which of the following statements is correct?

Question 7 options:

1)

When Kristoff records a sale, it should also debit inventory.

2)

When Kristoff records a sale, it should also credit inventory.

3)

When Kristoff records a sale, it should also credit cost of goods sold.

4)

When Kristoff records a sale, it should also debit cost of goods available for sale.

Question 8 (2 points)

For purposes of reporting the results of operations, the life of a business is:

Question 8 options:

1)

Considered to be one continuous reporting period

2)

Divided into discrete accounting periods

3)

Divided into one-year time intervals

4)

Divided into specific points in time

5)

None of these

Question 9 (2 points)

On September 3, 2003, Olaf purchased $500 of supplies and debited the Supplies account. At the end of September, $200 of these supplies remained on hand. The adjusting entry at the end of September would include:

Question 9 options:

1)

A debit to Supplies and a credit to Supplies Expense for $500

2)

A debit to Supplies and a credit to Supplies Expense for $300

3)

A debit to Supplies Expense and a credit to Supplies for $300

4)

A debit to Supplies Expense and a credit to Supplies for $800

5)

None of these

Question 10 (2 points)

On March 1, 2020, Anna purchased a one-year insurance policy for $4,800. On that date, Jimenez debited Prepaid Insurance for $4,800. If Anna desires to prepare financial statements at the end of March, the adjusting journal entry would include a:

Question 10 options:

1)

Debit to Insurance Expense for $2,400

2)

Credit to Prepaid Insurance for $2,200

3)

Credit to Insurance Expense for $2,200

4)

Debit to Insurance Expense for $400

5)

None of these

Question 11 (2 points)

Anna Company purchased an 18-month insurance policy on June 1 for $36,000. The entry on June 1 would be:

Question 11 options:

1)

A debit to Prepaid Insurance for $12,000

2)

A debit to Cash for $36,000

3)

A credit to Cash for $12,000

4)

A Debit to Prepaid Insurance for $36,000

5)

None of these

Question 12 (2 points)

On March 1, 2020 Anna purchased a one-year insurance policy for $4,800. On that date, Anna debited Insurance Expense for $4,800. If Anna desires to prepare financial statements at the end of March, the adjusting journal entry would include a:

Question 12 options:

1)

Debit to Insurance Expense for $2,400

2)

Debit to Insurance Expense for $200

3)

Credit to Insurance Expense for $2,200

4)

Credit to Prepaid Insurance for $2,200

5)

None of these

Question 13 (2 points)

On January 15, King Agnarr paid $1,000 in insurance premiums for a two-month policy covering January 15 to March 15. The payment was initially recorded to Prepaid Insurance. Approximately how much should be reported at January 31?

Question 13 options:

1)

Insurance Expense of $250

2)

Prepaid Insurance of $750

3)

Both A and B

4)

A or B, but not both

5)

None of these

Question 14 (2 points)

Anna Company purchased an 18-month insurance policy on June 1 for $36,000. The adjusting entry on December 31 would be:

Question 14 options:

1)

A debit to Insurance Expense for $14,000

2)

A debit to Cash for $36,000

3)

A credit to Cash for $14,000

4)

A Debit to Prepaid Insurance for $36,000

5)

None of these

Question 15 (2 points)

Olaf purchased merchandise and may be dissatisfied with the quality of goods purchased on account and will return the goods to the Duke of Weaseltown with an indication that payment will not be forthcoming. In this case, the document prepared by the purchaser is called:

Question 15 options:

1)

A debit memorandum

2)

A credit memorandum

3)

A receiving report

4)

An invoice

Question 16 (2 points)

On August 1, supplies were purchased; Accounts Payable was debited and Supplies credited for $2,500. The account was due in October, and $700 of these supplies were on hand at the end of August. The entry to correct the accounts at August 31:

Question 16 options:

1)

Requires a debit to Supplies for $700

2)

Requires a credit to Supplies for $700

3)

Requires a debit to Supplies for $2,200

4)

Requires a credit to Accounts Payable for $1,500

5)

None of these

Question 17 (2 points)

Hans had beginning inventory of $25,000 (250 units of carrots), a purchase on January 3 of $35,000 (300 units of carrots), and a purchase on January 18 of $40,000 (310 units of carrots). 500 units of carrots were sold on January 15. Using a perpetual average system, ending inventory in units is:

Question 17 options:

1)

360 units

2)

860 units

3)

500 units

4)

250 units

5)

None of these

Question 18 (2 points)

If Sven Company pays employees each Wednesday for the weekly pay period ending the previous Friday, and an entry is made each Friday to accrue the payroll for that week, the journal entry to record on payday (Wednesday) would involve a debit to:

Question 18 options:

1)

Wage Expense

2)

Wages Payable

3)

Cash

4)

Cash Expense

5)

None of these

Question 19 (2 points)

Earned revenues represent future revenues that have been collected but not yet earned.

Question 19 options:

1) True2) False

Question 20 (2 points)

The Sales account is used strictly to record revenues and expenses that relate to the sale of merchandise; the sale and/or disposal of other assets are recorded elsewhere.

Question 20 options:

1) True2) False