Accounting fundamentals Midterm exam_EBBA14.1 Student name:.. quip. Khoo ink... Discs A223 SOK. Part |: Multiple choices Exam paper code: Mid.1.3 MULTIPLE CHOICE, Choose the one alternative that best completes the statement or answers the question. 41) The drawings account is not a proper subdivision of owner's equity jis increased with debits and decreased with credits | appears on the income statement along with the expenses of the business (0) must show transactions every accounting period 2)Barsuk Company began the year with owner’s equity of $217,000. During the year, Barsuk rocalvesadllocal ener nvoomons of $204,000, record expenaes of $840.00, und had ‘owner drawings of $58,000. f Barsuk’s ending owner's equity was $581,000, what was the company’s revenue forthe year? '8)$1,204,000 '8)$1,260,000 Cs288.000 10)$910,000, 2) A journal provides ‘a list ofall accounts used in the business the balances for each account a chronological record of transactions §) information about a transaction in several diferent places 4)On January 14, Edamame Industries purchased supplies of $700 on account. The entry to record the purchase will include —" 1a debit to Accounts Receivable and a credit to Supplies s debit to Supplies and a credit to Accounts Payable ) 4 debit to Supplies and a credit to Cash (0) debit to Supplies Expense and a credit to Accounts Receivable ') Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $10,000 in expenses. Stahl made an additional investment of $3,000 and withdrew cash of $5,000 during the year. ‘Owner's equity changed by what amount from the beginning of the year to the end ofthe year? ‘4)$3,000 8)$1,000 )$4,000 0)$15,000 6) Owner of Adventures Unlimited Company withdrew cash for personal use. How does this transaction affect the accounting equation? The assets decrease and equity increases. e assets decrease and eqully decreases. C) The assets, liabilities, and equity remain the same, ) The assets increase and liabilities decrease. +. 7) Jackson Electric Services incurred $800 as a repair expense and paid for It in cash. This transaction will A)increase the liabilities of the business » £8) decrease the iablities of the business ©Pincrease the assets of the business 1D) decrease the Owner's equity spy + EX" pa ne ior : we 85 eh Be a pul coop e aadetl to, " oy ye @ ASS . ©. 1 6k _ v0, =) = Past wn oA ot ‘ 8 Bag a eee wy Scanned with CamScannerpoo ‘Accounting fundamentals Midterm exam_EBBA14.1 Exam paper code: ig ot ma 8) The step In the accounting cycle that is performed on a periodic basis (Le... monthly. quarteryy, nalyzing transactions 8) posting to ledger accounts n - imalizing and posting adjusting entries D) preparing a post-closing trial balance 9) The income statement for the year 2012 of Fugazi Co. contains the following information: Revenues: $70,000 Expenses: ‘Salaries and Wages Expense $45,000 Rent Expense 12,000 Advertising Expense 8,000 ‘Supplies Expense 6,000 Utlities Expense 2,500 Insurance Expense 2,000 Total expenses 75,500 (5,500) Net income (loss) The entry to close Income Summary to Owner's Capital includes ‘a debit to Reevenus for $70,000 B) credits to Expenses totalling $75,500 1a credit to Owner's Capital for $5,500 D)a credit to Income Summary for $5,500 410) On December 1, 2019, Carrie's Day Care receives $4200 in advance for an agreement to care for Susan's children for the months of December, January, and February. Carrie's Day Care will make an adjusting entry smber 31, 2019 to: Jexedit Prepaid Revenue for $2800. B) credit Revenue for $4200. ) debit Uncarned Revenue for $1400. D) credit Revenue for $2800. 41) Which of the following transactions includes a credit to cash? A) the purchase of supplies on account 8) the collection of cash from an accounts receivable C) receipt of cash from a customer when service is provided Bye payment of an accounts payable 12) Pixles Inc. pays its rent of $90,000 annually on January 1. If the February 28 monthly adjusting for prepaid rent Is omitted, which of the following will be true? )Assets will be overstated by $7,500 and net income and owner's equity will be overstated by ‘$7,500 8) Failure to make the adjustment does not affect the February financial statements C) Assets will be overstated by $15,000 and net income and owner's equity will be understated by $15,000 0) Expenses will be overstated by $7,500 and net income and owner's equity will be understated by $7,500 + 13) During 2012, its first year of operations, Neko's Bakery had revenues of $60,000 and expenses 6f $33,000. The business had owner drawings of $20,000. What is the amount of owner's equity at December 31, 20127 A)$0 B) $18,000 debit C) $27,000 credit @ $7,000 credit gdh. wa Scanned with CamScannerAccounting fundamentals Midterm exam_EBBA14.1 Exam paper code: Mid.1.3 insferring journal amounts to ledger accounts 3) proving the equality of the two columns C)listing the account titles and their balances: D) totaling the debit and credit columns “) a steps In preparing a tial balance include all of the following except ? 45)"The income statement for the year 2012 of Fugazi Co. contains the following Information: Revenues $70,000 Expenses: ‘Salaries and Wages Expense $45,000 Rent Expense 12,000 ‘Advertising Expense 8,000 ‘Supplies Expense 8,000 Utilities Expense 2,800 Insurance Expense 2,000 Total expenses 15,500 Net income (loss) ‘$(5,500) After all closing entries have been posted, the revenue account will have ce of ‘A)$5,500 credit 8) $70,000 debit $0 {(}870,000 credit 16) If Income Summary has a credit balance after revenues and expenses have been closed into It, closing entry for Income Summary will include a ‘credit to the owner's capital account 2) credit to the owner's drawings account ‘C) debit to the owner's capital account D) debit to the owner's drawings account 47) On July 4, Runner's Sports Store pald $10,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store Is Debit Rent Expense, $10,000; Credit Prepaid Rent, $2,500 bit Prepaid Rent, $2,500; Credit Rent Expense, $2,500 Debit Rent Expense, $10,000; Credit Prepaid Rent, $10,000 Debit Rent Expense, $2,500; Credit Prepaid Rent, $2,500 18) Fat Possum's Service Shop started the year with total assets of $110,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $140,000 In expenses, and owner drawings of $20,000. Owner's equity at the end of the year was 4) $100,000 8B) $30,000 €) $120,000 'D)}$80,000 19) The purchase of office computers for cash includes @ debit to: Accounts Recelvable and credit to Office Equipment. (8) Office Equipment and a credit to Cash. ) Cash and a credit to Office Equipment. D) Office Equipment and a credit to Accounts Payable. @® ® Scanned with CamScannerAccounting fundamentals Midterm exam_EBBA14,1 Exam paper code: Mid.1,3 | 20) Precision Camera Services started the year with total assels of $90,000 and total liabilities of $85,000. The revenues and the expenses for the year smounted to $100,000 and $70,000, tespectively. During the year, the owner did nol make additional invesiment, bul the owner ‘withdrew $40,000 cash for personal use. What Is the amount of owner’s equity at the end of the year? ‘4)$70,000 B)s15,000 ¢) $100,000 1) $40,000 21) Owner's capital at the end of the period is equal to ‘AJowners capital at the beginning of the period plus net income minus liabilities. B)assets plus liabilities C)net income e's capital at the beginning of the period plus net Income minus drawings 22)In the first month of operations for Gallowsbird Industries, the total of the debit entries to the cash account amounted 10 $9,000 ($4,000 investment by the owner and revenues of $5.000). The total of the credit entries to the cash account amounted to $5.500 (purchase of equipment ‘$2,000 and payment of expenses $3,500). At the end of the month, the cash account has a(n) '$3,500 credit balance 8) $1,500 credit balance $3,500 debibalance 10) $1,500 debit balance 23) When three or more accounts are required in one jougaal entry, the entry Is referred to as a A) simple entry 'B) multiple entry ‘Copenonnd entry —_D) triple entry 24) Which of the following statements regarding a tral balance is TRUE? 'A) Arial balance is alist ofall accounts used in a business with their balances. B)A tial balance shows whether lotal debits equal total credits. C)A trial balance may be prepared al any time during the accounting period. (Hyaterine above ae tue. 25) 8 company fails to make an adjusting entry to recosd supplies expense, then Ayassets will be understated owner's equity will be understated C)net income will be understated D) expense will be understated 25) REM Real Estate received a check for $24,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent was credited for the full $24,000. Financial statements will be prepared on July 31. REM Real Estate should make the following adjusting entry on July Debit Uneamed Rent, $24,000; Credit Rental Revenue, $24,000 Ores ‘Unearned Rent, $4,000: Credit Rental Revenue, $4,000 Debit Cash, $24,000; Credit Rental Revenue, $24,000 ‘D) Debit Rental Revenue, $4,000; Credit Uneamed Rent, $4,000 2) Anintangible asset Als converted into a tangible asset during the operating cycle B)cannot be classified on the balance sheat because it lacks physical subst: Bemmes because It has no physical substance hysteal subsiance }does not have physical substance, yet often Is very valuable 1s w a Scanned with CamScanner\ ‘pocounting fundamentals ‘Midterm exam_EBBA14.1 Exam papércode: Mid.1.3 28) The balance inthe income summary account before itis closed willbe equal to ‘) the ending balance in the owners capital account 8) zero C) the beginning balance in the owner's capital account ‘COpthe net income or oss on the Income statement 28) The adjustment for an accred revenys? 8 increases a payable necessary because a busiest often cams revenue before they rcsive the cash, (C) decreases a recvivable account. is nerssry because a business often revives cash before it performs the service. 30) A business purchased office supplies of $28,000 on account. The business would: Avdebit Accounts Payable for $28,000 and credit Supplies for $28,000. Cahebit Supplies or $28,000 and cred Accounts Payable for $28,000. (C) debit Accounts Receivable for $28,000 and credit Supplies for $28,000. ‘D) debit Supplies for $28,000 and credit Cash for $28,000. 31) Yellow Company had a balance of $31,000 in Accounts Payable at the beginning of June, and purchased $104,000 of merchandise on account during the month. At the end of June, Yellow’s ‘Accounts Payable balance was $29,000. Whal amount did Yellow pay on account during age? $106,000 8) $75,000 ©)$104,000 0)$44,000 32) Which of the following would not be classified a long-term liability? A Lease liable '8) Bonds payable surrent maturities of long-term debt D) Mortgage payable 3) Mitchell Company receives a bil from one of its suppliers for advertising sarvices received and will pay the supplier next month. How does the recelpt of the bit ym the supplier affect the accounting equation of Mitchell? ‘A)Assets and equity decrease. Assets and liabilities increase. ) Liabilities and equity increase. Liabilities increase and equity decreases. 44) Uneamed revenues are ‘A)eamed and already recelved and recorded 3) eamed but not yat recelved or recorded received and recorded as liablties before they are earned 'D) earned and recorded as liabilities before they are received 38) At December 31, the NBC Company ovses an employee for four days of work that will not be paid until January Sth. The weekly rate of pay for a five-day workweek is $500, The adjusting entry to record the accrued wages 1 wilinlie | debit to Salaries Expense for $400. 8) debit to Salaries Payable for $400. >) debit to Salaries Payable for $500. (D) debit to Salaries Expense for $500. '36) The first item listed under current llabilitles Is usually Jaccounts payable 8) taxes payable C) salaries and wages payable D)notes payable BAM 5 s Scanned with CamScanner‘Accounting fundamentals Midterm exam_EBBA14.1 Exam paper code: Mid.1.3 137) Uttramega Company collected $11,760 In May of 2012 for 4 months of service which would take place from October of 2012 through January of 2013. The revenue reported from this transaction during 2012 would be 4)$2.840 (@)ss.az0 €)$11.760 $0 38) Which of the following Is 8 tue statement abaut closing the books of » proprietorship? 'A) Revenues, expenses, and the owner's drawings account are closed to the Income ‘Summary account Revenues and expenses are closed to the Income Summary account €) Only revenues are closed to the Income Summary account ) Expenses are closed to the Expense Summary account '39) Which of the following reflect the balances of prepayment accounts prior to adjustment? ‘A) Balance sheet accounts are overstated and income statement accounts are overstated 8) Balance sheet accounts are understated and income statement accounts are overstated Balance sheet accounts are understated and income st ‘accounts are understated ince sheet accounts are overstaled and Income statement accounts are understated~ 40) The income statement for the month of June, 2012 of Camera Obscura Enterprises contains the {following Information: $7,000 and Wages Expense $3,000 Rent Expense 1,000 ‘Advertising Expense ‘800 Supplies Expense 300 Insurance Expense 400 Total expenses 5,200 Net income $1,800 ‘At June 1, 2012, Camera Obscura reported owner's equity of $35,000. The company had no ‘owner drawings during Juge. At June 30, 2012, the company will report owner's equity of ‘A)$42,000 $36,800 $35,000 D)$29,800 Part Il: Questions For transactions bellow, assuming the accounting period of companies ends on December 31. 1. OnDecember 1, 2016, Mosquera Club collected $375,000 cash from sales of season tickets for 20 home games to be played by its team. During the month of December, the club played 4 home games. Prepare the necessary journal entries for Mosquera Club on December 1 and December 31, 2016 2. Rizzo Company collected $9,100 on May 1, 2012 for 5 months of service which would take place from October of 2012 through February of 2013. Peper the necessary journal entries for Rizzo Company on May 1 and December eo Whe 6 Scanned with CamScanner