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Dashboard  PA_S2(2019-2020)DH45ISB-4  Midterm Exam  Midterm Exam

Started on Wednesday, 11 March 2020, 1:21 PM

State Finished
Completed on Wednesday, 11 March 2020, 2:49 PM
Time taken 1 hour 28 mins
Grade 53.0 out of 60.0 (88%)

Question 1 The subtotal net assets is used in

Correct
Select one:
Mark 1.0 out of 1.0
a. GAAP but not IFRS.
b. IFRS but not GAAP. Correct

c. both GAAP and IFRS.

d. neither IFRS nor GAAP.

The correct answer is: IFRS but not GAAP.

Question 2 During the year 2016, Dallas Company earned revenues of $90,000, had expenses of
Correct $62,000, purchased assets with a cost of $10,000 and had owner drawings of $6,000.
Net income for the year is
Mark 1.0 out of 1.0

Select one:
a. $28,000. Correct

b. $18,000.

c. $32,000.

d. $22,000.

The correct answer is: $28,000.

Question 3 The heading for a post-closing trial balance has a date line that is similar to the one
Correct found on

Mark 1.0 out of 1.0

Select one:
a. an owner's equity statement.

b. a balance sheet. Correct

c. an income statement.

d. the worksheet.

The correct answer is: a balance sheet.

Question 4 What is the order in which assets are generally listed on a classified balance sheet?
Correct
Select one:
Mark 1.0 out of 1.0
a. Current; property, plant, and equipment; intangible assets; long-term investments

b. Current; long-term investments; property, plant, and equipment; intangible assets

Correct

c. Current and long-term

d. Current; property, plant, and equipment; long-term investments; intangible assets

The correct answer is: Current; long-term investments; property, plant, and equipment;
intangible assets

Question 5 Which of the following statements is false?

Correct
Select one:
Mark 1.0 out of 1.0
a. Revenues are a positive factor in the computation of net income.

b. Revenues are increased by debits. Correct

c. Revenues increase owner's equity.

d. Revenues have normal credit balances.

The correct answer is: Revenues are increased by debits.

Question 6 A chart of accounts usually starts with
Correct
Select one:
Mark 1.0 out of 1.0
a. liability accounts.

b. asset accounts. Correct

c. revenue accounts.

d. expense accounts.

The correct answer is: asset accounts.

Question 7 Durawash Laundry purchased $8,000 worth of supplies on June 2 and recorded the
Correct purchase as an asset. On June 30, an inventory of the supplies indicated only $3,000
on hand. The adjusting entry that should be made by the company on June 30 is
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Select one:
a. Debit Supplies, $5,000; Credit Supplies Expense, $5,000.

b. Debit Supplies Expense, $5,000; Credit Supplies, $5,000. Correct

c. Debit Supplies Expense, $3,000; Credit Supplies, $3,000.

d. Debit Supplies, $3,000; Credit Supplies Expense, $3,000.

The correct answer is: Debit Supplies Expense, $5,000; Credit Supplies, $5,000.

Question 8 A journal is not useful for

Correct
Select one:
Mark 1.0 out of 1.0
a. locating and preventing errors.
b. disclosing in one place the complete effect of a transaction.

c. providing a record of transactions.

d. preparing financial statements. Correct

The correct answer is: preparing financial statements.

Question 9 Auditing is
Incorrect
Select one:
Mark 0.0 out of 1.0
a. a part of accounting that involves only recording of economic events.

b. conducted by the Securities and Exchange Commission to ensure that registered

financial statements are presented fairly. Incorrect

c. the examination of financial statements by a CPA in order to express an opinion

on their fairness.

d. an area of accounting that involves such activities as cost accounting, budgeting,

and accounting information systems.

The correct answer is: the examination of financial statements by a CPA in order to
express an opinion on their fairness.

Question 10 A list of accounts and their balances at a given time is called a(n)
Incorrect
Select one:
Mark 0.0 out of 1.0
a. posting. Incorrect

b. income statement.

c. journal.
d. trial balance.

The correct answer is: trial balance.

Question 11 Relevant accounting information

Correct
Select one:
Mark 1.0 out of 1.0
a. has been objectively determined.
b. is information that is capable of making a difference in a business decision.
Correct

c. is information that has been audited.

d. must be reported within the operating cycle or one year, whichever is longer.

The correct answer is: is information that is capable of making a difference in a business
decision.
Question 12 Mirah Company compiled the following financial information as of December 31, 2016:
Correct

Mark 1.0 out of 1.0

Mirah's assets on December 31, 2016 are

Select one:
a. $260,000. Correct

b. $480,000.
c. $190,000.

d. $360,000.

The correct answer is: $260,000.

Question 13 Can financial statements be prepared directly from the adjusted trial balance?
Correct
Select one:
Mark 1.0 out of 1.0
a. They cannot. The general ledger must be used.
b. Yes, adjusting entries have been recorded in the general journal and posted to
the ledger accounts. Correct

c. No, the adjusted trial balance merely proves the equality of the total debit and
total credit balances in the ledger after adjustments are posted. It has no other
purpose.

d. They can because that is the only reason that an adjusted trial balance is
prepared.

The correct answer is: Yes, adjusting entries have been recorded in the general journal
and posted to the ledger accounts.
Question 14 Eli's Electronic Repair Shop started the year with total assets of $300,000 and total
Correct liabilities of $200,000. During the year, the business recorded $400,000 in electronic
repair revenues, $300,000 in expenses, and Eli withdrew $50,000. Eli's Owner's Capital
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balance changed by what amount from the beginning of the year to the end of the year?

Select one:
a. $250,000.

b. $200,000.
c. $100,000.

d. $ 50,000. Correct

The correct answer is: $ 50,000.

Question 15 A trial balance would only help in detecting which one of the following errors?
Correct
Select one:
Mark 1.0 out of 1.0
a. Offsetting errors are made in recording the transaction

b. A transaction that is not journalized

c. A journal entry that is posted twice

d. A transposition error when transferring the debit side of journal entry to the ledger
Correct

The correct answer is: A transposition error when transferring the debit side of journal
entry to the ledger

Question 16 SWC Bus Charter signed a four-month note payable in the amount of $30,000 on
Correct September 1. The note requires interest at an annual rate of 5%. The amount of interest
to be accrued at the end of September is
Mark 1.0 out of 1.0

Select one:
a. $200.
b. $500.

c. $1,500.

d. $125. Correct

The correct answer is: $125.

Question 17 The following items are taken from the financial statements of the Freight Service for the
Correct year ending December 31, 2016:

Mark 1.0 out of 1.0

The current assets should be listed on Freight Service's balance sheet in the following
order:

Select one:
a. cash, accounts receivable, prepaid insurance, supplies. Correct

b. equipment, supplies, prepaid insurance, accounts receivable, cash.

c. cash, prepaid insurance, supplies, accounts receivable.

d. cash, accounts receivable, prepaid insurance, equipment.

The correct answer is: cash, accounts receivable, prepaid insurance, supplies.

Question 18 Grand Slam Company purchased equipment for $9,600 on January 1, 2016. The
Correct company expects to use the equipment for 4 years. It has no salvage value. Monthly
depreciation expense on the asset is
Mark 1.0 out of 1.0

Select one:
a. $2,400.

b. $200. Correct

c. $0.

d. $9,600.

The correct answer is: $200.

Question 19 International standards are referred to as
Correct
Select one:
Mark 1.0 out of 1.0
a. GAAP.

b. IFRS. Correct

c. FASB.

d. IASB.

The correct answer is: IFRS.

Question 20 The relationship between current assets and current liabilities is important in evaluating
Correct a company's

Mark 1.0 out of 1.0

Select one:
a. accounting cycle.
b. liquidity. Correct

c. market value.

d. profitability.

The correct answer is: liquidity.

Question 21 Beethoven Company provided consulting services and billed the client $3,600. As a
Correct result of this event,

Mark 1.0 out of 1.0

Select one:
a. assets increased by $3,600.
b. assets and owner's equity both increased by $3,600. Correct

c. assets remained unchanged.

d. owner's equity increased by $3,600.

The correct answer is: assets and owner's equity both increased by $3,600.
Question 22 A three column form of account is so named because it has columns for
Correct
Select one:
Mark 1.0 out of 1.0
a. debit, credit, and balance. Correct

b. debit, credit, and account name.

c. debit, credit, and reference.

d. debit, credit, and date.

The correct answer is: debit, credit, and balance.

Question 23 Boneta City College sold season tickets for the 2016 football season for $250,000. A
Correct total of 8 games will be played during September, October and November. In
September, two games were played. In October, three games were played. The balance
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in Unearned Ticket Revenue at October 31 is

Select one:
a. $0.

b. $93,750. Correct

c. $156,250.

d. $50,000.

The correct answer is: $93,750.

Question 24 The following selected account balances appear on the December 31, 2016 balance
Correct sheet of Gigante Co.

Mark 1.0 out of 1.0

Accumulated Depreciation 650,000

What is the total net amount of property, plant, and equipment that will be reported on
the balance sheet?

Select one:
a. $1,550,000

b. $1,250,000 Correct

c. $1,475,000
d. $1,906,000

The correct answer is: $1,250,000

Question 25 The chart of accounts is a

Correct
Select one:
Mark 1.0 out of 1.0
a. required step in the recording process.

b. device used to prove the mathematical accuracy of the ledger.

c. listing of the accounts and the account numbers which identify their location in
the ledger. Correct

d. list of accounts and their balances at a given time.

The correct answer is: listing of the accounts and the account numbers which identify
their location in the ledger.
Question 26 The difference between the cost of a depreciable asset and its related accumulated
Correct depreciation is referred to as the

Mark 1.0 out of 1.0

Select one:
a. market value of the asset.

b. book value of the asset. Correct

c. depreciated difference of the asset.

d. blue book value of the asset.

The correct answer is: book value of the asset.

Question 27 Which one of the following statements concerning the accounting cycle is incorrect?
Correct
Select one:
Mark 1.0 out of 1.0
a. The steps in the accounting cycle are repeated in each accounting period.
b. The accounting cycle includes journalizing transactions and posting to ledger
accounts.

c. The steps in the accounting cycle are performed in sequence.

d. The accounting cycle includes only one optional step. Correct

The correct answer is: The accounting cycle includes only one optional step.

Question 28 On a classified balance sheet, current assets are customarily listed

Correct
Select one:
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a. in the order of liquidity. Correct

b. in alphabetical order.

c. with the largest dollar amounts first.

d. in the order of acquisition.

The correct answer is: in the order of liquidity.

Question 29 All of the following are property, plant, and equipment except
Correct
Select one:
Mark 1.0 out of 1.0
a. buildings.

b. machinery.
c. land.
d. supplies. Correct

The correct answer is: supplies.

Question 30 A net loss will result during a time period when

Correct
Select one:
Mark 1.0 out of 1.0
a. expenses exceed revenues. Correct

b. assets exceed owner's equity.

c. assets exceed liabilities.

d. revenues exceed expenses.

The correct answer is: expenses exceed revenues.

Question 31 An adjusted trial balance

Correct
Select one:
Mark 1.0 out of 1.0
a. is a required financial statement under generally accepted accounting principles.
b. is prepared after the financial statements are completed.

c. cannot be used to prepare financial statements.

d. proves the equality of the total debit balances and total credit balances of ledger
accounts after all adjustments have been made. Correct

The correct answer is: proves the equality of the total debit balances and total credit
balances of ledger accounts after all adjustments have been made.
Question 32 Bill Justice is a lawyer who requires that his clients pay him in advance of legal services
Incorrect rendered. Elliott routinely credits Service Revenue when his clients pay him in advance.
In June Bill collected $25,000 in advance fees and completed 60% of the work related to
Mark 0.0 out of 1.0
these fees. What adjusting entry is required by Bill's firm at the end of June?

Select one:
a.

Incorrect

b.

c.

d.

The correct answer is:

Question 33 At March 1, 2016, Milo Corp. had supplies on hand of $600. During the month, Milo
Correct purchased supplies of $1,300 and used supplies of $1,400. The March 31 adjusting
journal entry should include a
Mark 1.0 out of 1.0

Select one:
a. debit to the supplies account for $1,300.

b. debit to the supplies account for $1,400.

c. credit to the supplies account for $600.

d. credit to the supplies account for $1,400. Correct

The correct answer is: credit to the supplies account for $1,400.
Question 34 The double-entry accounting system is the basis of accounting systems
Correct
Select one:
Mark 1.0 out of 1.0
a. in the U.S. only

b. worldwide. Correct
c. neither internationally nor in the U.S.
d. worldwide, except for the U.S.

The correct answer is: worldwide.

Question 35 Correcting entries are made

Correct
Select one:
Mark 1.0 out of 1.0
a. at the end of an accounting period.

b. after closing entries.

c. whenever an error is discovered. Correct

d. at the beginning of an accounting period.

The correct answer is: whenever an error is discovered.

Question 36 The first item listed under current liabilities is usually

Incorrect
Select one:
Mark 0.0 out of 1.0
a. taxes payable.
b. accounts payable. Incorrect

c. salaries and wages payable.

d. notes payable.

The correct answer is: notes payable.

Question 37 Equipment is classified in the balance sheet as
Correct
Select one:
Mark 1.0 out of 1.0
a. a long-term investment.

b. a current asset.

c. an intangible asset.
d. property, plant, and equipment. Correct

The correct answer is: property, plant, and equipment.

Question 38 Which of the following liabilities are not related to the operating cycle?
Correct
Select one:
Mark 1.0 out of 1.0
a. Utilities payable
b. Accounts payable

c. Salaries and wages payable

d. Bonds payable Correct

The correct answer is: Bonds payable

Question 39 Income Summary has a credit balance of $19,000 in B. Browne Co. after closing
Correct revenues and expenses. The entry to close Income Summary is

Mark 1.0 out of 1.0

Select one:
a. credit Income Summary $19,000, debit Owner's Drawings $19,000.

b. debit Income Summary $19,000, credit Owner's Capital $19,000. Correct

c. debit Income Summary $19,000, credit Owner's Drawings $19,000.

d. credit Income Summary $19,000, debit Owner's Capital $19,000.

The correct answer is: debit Income Summary $19,000, credit Owner's Capital $19,000.
Question 40 On January 2, 2016, Tucson Co. purchased a general liability insurance policy for
Incorrect $3,600 for coverage for the calendar year. The entire $3,600 was charged to Insurance
Expense on January 2, 2016. If the firm prepares monthly financial statements, the
Mark 0.0 out of 1.0
proper adjusting entry on January 31, 2016, will be:

Select one:
a.

b.

c.

Incorrect
d.

The correct answer is:

Question 41 When three or more accounts are required in one journal entry, the entry is referred to
Correct as

Mark 1.0 out of 1.0

Select one:
a. triple entry.

b. multiple entry.

c. compound entry. Correct

d. simple entry.

The correct answer is: compound entry.

Question 42 Collection of a $1,500 Accounts Receivable
Correct
Select one:
Mark 1.0 out of 1.0
a. increases an asset $1,500; decreases an asset $1,500. Correct

b. decreases a liability $1,500; increases owner's equity $1,500.

c. decreases an asset $1,500; decreases a liability $1,500.

d. increases an asset $1,500; decreases a liability $1,500.

The correct answer is: increases an asset $1,500; decreases an asset $1,500.

Question 43 Which of the following depicts the proper sequence of steps in the accounting cycle?
Correct
Select one:
Mark 1.0 out of 1.0
a. Prepare a trial balance, prepare financial statements, prepare adjusting entries
b. Journalize the transactions, analyze business transactions, prepare a trial
balance

c. Prepare a trial balance, prepare adjusting entries, prepare financial statements

Correct

d. Prepare a trial balance, post to ledger accounts, post adjusting entries

The correct answer is: Prepare a trial balance, prepare adjusting entries, prepare
financial statements

Question 44 Which of the statements below is not true?

Correct
Select one:
Mark 1.0 out of 1.0
a. An adjusted trial balance proves the mathematical equality of debits and credits
in the ledger.
b. An adjusted trial balance is prepared before all transactions have been
journalized. Correct

c. An adjusted trial balance should show ledger account balances.

d. An adjusted trial balance can be used to prepare financial statements.

The correct answer is: An adjusted trial balance is prepared before all transactions have
been journalized.
Question 45 A balance sheet shows
Correct
Select one:
Mark 1.0 out of 1.0
a. expenses, drawings, and owner's equity.

b. revenues, liabilities, and owner's equity.

c. revenues, expenses, and drawings.

d. assets, liabilities, and owner's equity. Correct

The correct answer is: assets, liabilities, and owner's equity.

Question 46 On January 1, 2015, Murphy Inc. purchased equipment for $38,400. The company is
Correct depreciating the equipment at the rate of $800 per month. At January 31, 2016, the
balance in Accumulated Depreciation is
Mark 1.0 out of 1.0

Select one:
a. $10,400. Correct
b. $800.

c. $9,600.
d. $28,000.

The correct answer is: $10,400.

Question 47 If prepaid expenses are initially recorded in expense accounts and have not all been
Correct used at the end of the accounting period, then failure to make an adjusting entry will
cause
Mark 1.0 out of 1.0

Select one:
a. assets to be understated. Correct

b. contra-expenses to be overstated.

c. expenses to be understated.

d. assets to be overstated.

The correct answer is: assets to be understated.

Question 48 Posting
Correct
Select one:
Mark 1.0 out of 1.0
a. is accomplished by examining ledger accounts and seeing which ones need
updating.

b. should be performed in account number order.

c. involves transferring all debits and credits on a journal page to the trial balance.
d. accumulates the effects of journalized transactions in the individual accounts.
Correct

The correct answer is: accumulates the effects of journalized transactions in the
individual accounts.

Question 49 On January 1, 2016, Utah Utility Company reported owner's equity of $705,000. During
Correct the year, the owner withdrew cash of $30,000. At December 31, 2016, the balance in
owner's equity was $795,000. What amount of net income or net loss would the
Mark 1.0 out of 1.0
company report for 2016?

Select one:
a. Net loss of $60,000
b. Net income of $150,000

c. Net income of $90,000

d. Net income of $120,000 Correct

The correct answer is: Net income of $120,000

Question 50 Teamboo Company's owner's equity at the beginning of August 2016 was $740,000.
Correct During the month, the company earned net income of $175,000 and owner's drawings
were $80,000. At the end of August 2016, what is the balance in owner's equity?
Mark 1.0 out of 1.0

Select one:
a. $820,000

b. $740,000

c. $835,000 Correct

d. $660,000

The correct answer is: $835,000

Question 51 If the sum of the debit column equals the sum of the credit column in a trial balance, it
Correct indicates

Mark 1.0 out of 1.0

Select one:
a. no errors have been made.

b. that all accounts reflect correct balances.

c. no errors can be discovered.

d. the mathematical equality of the accounting equation. Correct

The correct answer is: the mathematical equality of the accounting equation.

Question 52 When two accounts are required in one journal entry, the entry is referred to as a
Correct
Select one:
Mark 1.0 out of 1.0
a. balanced entry.
b. simple entry. Correct

c. posting.
d. nominal entry.

The correct answer is: simple entry.

Question 53 Which of the following is false about a journal?

Correct
Select one:
Mark 1.0 out of 1.0
a. It keeps in one place all the information about changes in specific account
balances. Correct
b. It helps to prevent or locate errors because debit and credit amounts for each
entry can be readily compared.

c. It provides a chronological record of transactions.

d. It discloses in one place the complete effects of a transaction.

The correct answer is: It keeps in one place all the information about changes in specific
account balances.
Question 54 U.S. standards are referred to as
Incorrect
Select one:
Mark 0.0 out of 1.0
a. FASB. Incorrect

b. IFRS.

c. GAAP.

d. IASB.

The correct answer is: GAAP.

Question 55 Which of the following steps in the accounting cycle would not generally be performed
Correct daily?

Mark 1.0 out of 1.0

Select one:
a. Prepare adjusting entries Correct
b. Post to ledger accounts

c. Analyze business transactions

d. Journalize transactions

The correct answer is: Prepare adjusting entries

Question 56 A company using the same accounting principles from year to year is an application of
Correct
Select one:
Mark 1.0 out of 1.0
a. timeliness.
b. consistency. Correct

c. meteriality.

d. full disclosure.

The correct answer is: consistency.

Question 57 Big Bite Diner received a bill of $800 from the Blackstone Wine Advertising Agency. The
Correct owner, K. T. Lang, is postponing payment of the bill until a later date. The effect on
specific items in the basic accounting equation is
Mark 1.0 out of 1.0

Select one:
a. a decrease in Cash and an increase in Owner's Capital.

b. an increase in Accounts Payable and a decrease in Owner's Capital. Correct

c. a decrease in Accounts Payable and an increase in Owner's Capital.

d. a decrease in Cash and an increase in Accounts Payable.

The correct answer is: an increase in Accounts Payable and a decrease in Owner's
Capital.

Question 58 The standard format of a journal would not include

Correct
Select one:
Mark 1.0 out of 1.0
a. a reference column.

b. a T-account. Correct

c. an account title column.

d. a date column.

The correct answer is: a T-account.

Question 59 Andrew is a barber who does his own accounting for his shop. When he buys supplies
Incorrect he routinely debits Supplies Expense. Andrew purchased $1,700 of supplies in January
and his inventory at the end of January shows $400 of supplies remaining. What
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adjusting entry should Andrew make on January 31?

Select one:
a.

b.

Incorrect

c.

d.

The correct answer is:

Question 60 Owner's equity is increased by

Correct
Select one:
Mark 1.0 out of 1.0
a. expenses.
b. liabilities.

c. drawings.

d. revenues. Correct

The correct answer is: revenues.

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