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Copy of PA review for final
Principles of Accounting (Trường Đại học Kinh tế Thành phố Hồ Chí Minh)
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1.What is the last step in the journalizing process?
A - Specify each account affected by the trAnsaction and classify each account by
type.
B - Record the transaction in the journal.
C - Determine whether each account is increased or decreased by the trAnsaction.
D - Post the journal entry to the ledger.
2.Which one of the following account groups normally has a credit balance?
A. liabilities and revenues

B. assets and liabilities
C. equity and assets
D. assets and expenses
3.Every journal entry:
-affects both an income statement account and a balance sheet account.

-must debit at least one account and credit at least one account.
-is recorded in either the journal or the ledger.
-must increase at least one account and decrease at least one account.
4.Prepaid Rent is an ________ account and has a normal ________ balance.
A. -asset; debit
B. -asset; credit
C. -liability; credit
D. -liability; debit
5.The ledger:
A. -contains only the permanent accounts used by a business.

B. -is a grouping of all of the balance sheet accounts only.
C. -is a grouping of all the income statement accounts only.
D. -contains all the accounts used by a business
6.Under cash basis accounting, revenue is recorded when it is earned, regardless of

when cash is received.
True
False

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7. The key differences between the cash basis and accrual basis of accounting are
the timing and recognition of assets and liabilities.
True
False
8. Accrual basis accounting requires the business to review the unadjusted trial
balance and determine whether any additional revenues and expenses need to be
recorded.
True
False
9.The amount of revenue to record is the amount of cash or its equivalent that is
trAnsferred from the customer to the seller.
True
False
10.Which of the following is NOT a type of adjusting entry?
A. -deferred expenses
B. -accrued revenues
C. -unearned expenses
D. -deferred revenues
11.The revenue principle states that revenue should be recorded in the same period
as the cash is received.
True
False
12.An interim period used for reporting purposes is generally:
the same as the fiscal year.
more than one year, but less than the life of the company.
more than one year.
less than one year
13.Financial statements can be prepared from the unadjusted trial balance.

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True
False
14.The accounting concept that requires every business to be accounted for

separately from other business entities, including its owner or owners is known as
the:
Business entity assumption.
Time-period assumption.
Revenue recognition principle.
Going-concern assumption.
15.Creditors' claims on the assets of a company are called:
Revenues.
Equity.
Liabilities.
Expenses.
16.A law firm billed a client $1,800 for work performed in the current month. Which of
the following general journal entries will the firm make to record this transaction?
Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
17.A business's source documents may include all of the following except:
Ledgers.

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Checks.
Sales receipts.
Purchase orders.
(When a business generates a financial transaction, it creates a paper trail. This

paper trail is called a “Source Document.” Your bookkeeper or accountant may ask
you to provide them with some sort of source document to verify data and record
transactions correctly. Ex:Bank Statements,Payroll Reports,Invoices,Leases &
Contracts,Check Registers,Sales Tax Returns,Credit Card Statements)
18.The accounting principle that ensures all expenses are recorded during the period
when they are incurred and offsets those expenses against the revenues of the
period is called the ________ principle.
matching
revenue recognition
comparison
accrual
19.Which of the following entries would be made because of the matching principle?
a. Cash 1,000
Unearned Revenue 1,000
b. Salaries Expense 1,000
Service Revenue 1,000
c. Salaries Expense 1,000
Salaries Payable 1,000
d. Cash 1,000
Salaries Expense 1,000
20.In an ________ adjustment, the expense occurs before a cash payment is made.

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depreciation
general
deferred
accrued
21.In an ________ adjustment, the cash payment occurs before an expense is

incurred or the cash receipt occurs before the revenue is earned.
deferred
general
accrued
depreciation
22.Dynamic Services Company purchased computers that are to be used in its

consulting services. Based on the matching principle, the related account that should
appear on the income statement for the year ended December 31 is ________.
Accumulated depreciation - Computers
Depreciation Expense - Computers
Computer Expense
Service Revenue
23.The liability created when a business collects cash from its customers before
completing a service or delivering a product is called ________.
deferred expense
deferred revenue
accrued expense
accrued revenue
24.Advance cash payments of future expenses are called ________.
deferred expenses

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accrued revenues
accrued expenses
deferred revenues
25.On October 1 of the current year, a company received $8,400 for services to be
performed evenly over the next six months. If no adjusting entry was made on
December 31 of the current year:
net income would be understated by $8,400.
net income would be overstated by $2,100.
net income would be overstated by $4,200.
net income would be understated by $4,200.
26.Princeton Financial Services Company purchased computers that are to be used

in its consulting services. Based on the matching principle, what account, other than
Computers, should appear on the balance sheet as of December 31?
Accumulated depreciation - Computers
Service Revenue
Depreciation Expense - Computers
Computers Expense
27.Accrual accounting records all of the following transactions EXCEPT:
expiration of prepaid insurance.
accrual of expenses incurred but not paid.
receipt of signed contract from customer for services to be provided next week.
earning of unearned revenue received in advance.
28.If a company is considering the purchase of a parcel of land that was acquired by
the seller for $85,000, is offered for sale at $150,000, is assessed for tax purposes at

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$95,000, is considered by the purchaser as easily being worth $140,000, and is

purchased for $137,000, the land should be recorded in the purchaser's books at:
$95,000.
$137,000.
$138,500.
$140,000.
29.The Superior Company acquired a building for $500,000. The building was
appraised at a value of $575,000. The seller had paid $300,000 for the building 6
years ago. Which accounting principle would require Superior to record the building
on its records at $500,000?
Correct!
Measurement (Cost. Principle).
Going-concern assumption.
Monetary unit assumption.
Business entity assumption.
30.A company's list of accounts and the identification numbers assigned to each
account is called a:
Journal.
Chart of accounts.
Source document.
Trial balance.
31.The record of all accounts and their balances used by a business is called a:
Ledger (or General Ledger..
Chart of accounts.
Balance column journal.

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Journal.
32.A double-entry accounting system is an accounting system:
That allows total credits to be greater than total debits.
That records each transaction twice.
That records the effect of each transaction in at least two accounts with equal
debits and credits.
In which each transaction affects and is recorded in two or more accounts but that
could include two debits and no credits.
*33.A balance sheet that places the assets above the liabilities and equity is called
a(n.:
Account form balance sheet.
Unadjusted balance sheet.
Report form balance sheet.
Classified balance sheet.
34.On September 1, Kennedy Company loaned $100,000, at 12% annual interest, to

a customer. Interest and principal will be collected when the loan matures one year
from the issue date. Assuming adjustments are only made at year-end, what is the
adjusting entry for accruing interest that Kennedy would need to make on December
31, the calendar year-end?
Debit Interest Receivable, $12,000; credit Cash, $12,000.
Debit Interest Expense, $12,000; credit Interest Payable, $12,000.
Debit Interest Receivable, $4,000; credit Interest Revenue, $4,000.
Debit Interest Expense, $4,000; credit Interest Payable, $4,000.
35.On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month

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subscriptions to several different magazines. Santa Fe debited the prepayment to a

Prepaid Subscriptions account, and the subscriptions started immediately. What
adjusting entry should be made by Santa Fe, Inc. for the adjustment on December
31 of the first year assuming the company is using a calendar-year reporting period
and no previous adjustments had been made?
Debit Subscription Expense $387 and credit Cash $387.
Debit Prepaid Subscriptions $516 and credit Subscription Expense $516.
Debit Subscription Expense $516 and credit Prepaid Subscriptions $516.
Debit Subscription Expense $387 and credit Prepaid Subscriptions $387
36.According to the ________, acquired assets should be recorded at the

amount actually paid rather than at the estimated market value.
cost principle
economic entity concept
going concern assumption
monetary unit assumption
37.Accumulated Depreciation is
An owner’s equity account.
An expense account.
A liability account.
A contra asset account.
38.The adjusting entry to record an accrued revenue is:
Increase an expense; increase a liability.
Decrease a liability; increase revenue.
Increase an expense; decrease an asset.

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Increase an asset; increase revenue.
*39.Revenues, expenses, and withdrawals accounts, which are closed at the end of
each accounting period are:
Closing accounts.
Temporary accounts.
Real accounts.
Permanent accounts.
40.Which of the following accounts is a permanent account?
Fees earned.
Accounts payable.
Office supplies expense.
Interest revenue.
41.In terms of tax payment, the earnings of a sole proprietorship are
not combined with the proprietor's personal income
subject to double taxation
combined with the personal income of the proprietor
handled similarly to that of a corporation
42.Bookkeeping differs from accounting in that bookkeeping primarily involves

which part of the accounting process?
Communication.
Recording.
Identification.
Analysis.
43.When using the double-entry system of accounting each transaction affects only

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two accounts.
True
False
44.The process of transferring data from the ledger to the journal is called posting.
True
False
*45.Common stock and retained earnings are increased with debits.
True
False
46.The description of the relation between a company's assets, liabilities, and equity,
which is expressed as Assets = Liabilities + Equity, is known as the:
Income statement equation.
Accounting equation.
Business equation.
Return on equity ratio.
47.Which of the following factors is not a component of the fraud triangle?
Opportunity
All of the above are components of the fraud triangle.
Rationalization
Pressure
*48.Which of the following is not true regarding a Certified Public Accountant?
Must meet education and experience requirements.
Must pass an examination.

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Cannot hold any certificate other than a CPA.
May also be a Certified Management Accountant.
49.The purchase of equipment, involving a cash down payment and a promise to

pay the balance in the future, includes:
a credit to Cash and a credit to Accounts Payable.
a debit to Cash and a credit to Equipment.
a debit to Note Payable and a credit to Cash.
a debit to Cash and a debit to Note Payable.
50.In order to determine the balance in AN account, you must look at the:
source documents.
journals.
ledger.
book of original entry.
51.The two basic categories of adjusting entries are ________.
deferrals and accruals
deferrals and depreciation
revenues and expenses
depreciation and accruals
52.The expense recognition principle states that expenses have future benefit to the
company.
True
False

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53.If a company is using accrual basis accounting, when should it record revenue?
when services are performed, even though cash may be received at a later date
before services are performed
when cash is received, even though services may be performed at a later date
when cash is received, 30 days after the completion of the services
54.accrual basis accounting requires the business to review the unadjusted trial
balance and determine whether any additional revenues and expenses need to be
recorded.
True
False
55.An exchange of value between two entities that yields a change in the accounting
equation is called:
An external transaction.
Recordkeeping or bookkeeping.
An asset.
The accounting equation.
56.ABC Company had the following transactions during the month. What would be
the total amount of service revenues for the month if ABC Company uses the accrual
basis method?
a) Paid $3,600 for insurance for the next 12 months.
b) On the first of the month, received $6,000 for services to be performed equally
over the next 12 months.

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c) Paid $700 for the current month's rent.
d) Paid $150 cash for office supplies.
e) Paid $500 in Salaries Expense.
f) Received $1,500 in cash for service revenue earned this month.
$2,150
$7,500
Correct!
$2,000
$3,000
57.Which of the following statements is true of accrual basis accounting?
Accrual basis accounting records expenses only when cash has been paid for
them.
Accrual basis accounting always results in greater net income than cash basis
accounting.
Accrual basis accounting records revenue only when cash is received.
Accrual basis accounting is required by Generally Accepted Accounting Principles

(GAAP..
58.On April 30, Gomez Services had an Accounts Receivable balance of $18,000.
During the month of May, total credits to Accounts Receivable were $52,000 from
customer payments. The May 31 Accounts Receivable balance was $13,000. What
was the amount of credit sales during May?
$52,000.
$47,000.

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$57,000.
$5,000.
59.If a company records prepayment of expenses in an asset account, the adjusting

entry when all or part of the prepaid asset is used or expired would:
Cause an accrued liability account to exist.
Result in a debit to a liability and a credit to an asset account.
Cause an adjustment to prior expense to be overstated and assets to be

understated.
Result in a debit to an expense and a credit to an asset account.
60.The adjusting entry to record the salaries earned due to employees for services
provided but unpaid at the end of the accounting period affects the accounts in which
of the following ways?
Debit Salaries Expense and credit Salaries Payable.
Debit Salaries Expense and credit Cash.
Debit Cash and credit Salaries Expense.
Debit Accrued Salaries and credit Salaries Payable.
61.An account linked with another account that has an opposite normal balance and
is subtracted from the balance of the related account is a(n.:
Accrued expense.
Contra account.
Accrued revenue.
Intangible asset.
62.Equipment would appear on the:

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income statement with revenues.
income statement with operating expenses.
balance sheet with long-term assets.
balance sheet with current assets.
63.After closing entries have been posted ________.
the ending balance of Owner, Capital has been properly updated
All of the statements are correct.
Owner, Withdrawals have been closed into Owner, Capital
only permanent accounts carry balances
*64.On May 25, Mt. Hood Company received a $370 check from Douglas Fir for
services to be performed in the future. The bookkeeper for Mt. Wood Company
incorrectly debited Cash for $370 and credited Accounts Receivable for $370. The
amounts have been posted to the ledger. To correct this entry, the bookkeeper
should:
debit Cash $370 and credit Unearned Service Revenue $370.
debit Accounts Receivable $370 and credit Service Revenue $370.
debit Accounts Receivable $370 and credit Cash $370.
debit Accounts Receivable $370 and credit Unearned Service Revenue $370.
65.
The order in which current assets are typically listed is:
prepaid expenses, cash and cash equivalents, accounts receivable, inventory.
accounts receivable, inventory, cash and cash equivalents, prepaid expenses.
cash and cash equivalents, accounts receivable, inventory, prepaid expenses.

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cash and cash equivalents, accounts receivable, prepaid expenses, inventory.
66.Olsteen Company earned revenues of $66,000 and incurred expenses of

$77,000. No withdrawals were made. Which of the following statements is correct?
The entry to close Income Summary is the same regardless of a net income or a
net loss.
The entry to close Income Summary requires a debit to the Income Summary
account.
The entries to close revenues and expenses will differ if there is a net loss.
Olsteen, Capital will be debited for $11,000 and Income Summary will be credited
for $11,000.
67.Which of the following should NOT be considered when comparing the Adjusted
Trial Balance to the Post-Closing Trial Balance to ensure that no errors were made in
the closing process?
Account balances below Owner, Capital are zero.
The account balances on each of the trial balances are the same.
Account balances above Owner, Capital are the same.
The Owner, Capital account balance on the post-closing trial balance matches
Owner, Capital on the balance sheet.
68.A business's source documents:
Must be in electronic form.
Are records of all increases and decreases in specific asset.
Include the ledger.!
Provide objective evidence that a transaction has taken place.
*69.A company had revenues of $75,000 and expenses of $62,000 for the
accounting period. The owner withdrew $8,000 in cash during the same period.

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Which of the following entries could not be a closing entry?
Debit Revenues $75,000; credit Income Summary $75,000.
Debit Income Summary $62,000, credit Expenses $62,000.
Debit Income Summary $75,000; credit Revenues $75,000.
Debit Income Summary $13,000; credit Owner's, Capital $13,000.
70Advantages of a corporation include:
each stockholder can conduct business in the name of the corporation.
difficulty in raising large sums of capital.
limited liability of the stockholders for the corporation's debts.
double taxation of distributed profits.
71.A compound journal entry has more than two accounts, but the total dollar value
of the debits still must equal the total dollar value of the credits.
True
False
72.Which of the following is not true regarding ethics:
Ethics are beliefs that distinguish right from wrong.
Good ethics are good business.
Ethics do not affect the operations or outcome of a company.
Are critical in accounting.
73. corporation is:
A business legally separate from its owners.
The same as a limited liability partnership.
Controlled by the FASB.

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Not responsible for its own acts and own debt
74.Which of the following statements regarding the time-period concept is NOT

correct?
Accountants prepare financial statements for specific periods of time.
Interim financial reports are rarely prepared.
Most large companies use a calendar year for financial reporting.
The basic accounting period is one year
75.On January 1, the Accounts Receivable of Martha Company had a debit balance
of $200,000. during January, the company provided services for $400,000 on
account. The company collected $230,000 from its customers on account in January.
What was the ending balance in the Accounts Receivable account at the end of
January?
$370,000
$600,000
$170,000
$400,000
76.Doorglam paid $98,000 for office furniture. The furniture is depreciated using the
straight-line method and has an estimated service life of 7 years and no residual
value. After three years of use, the accumulated depreciation of the furniture will be:
$42,000.
$84,000.

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$56,000.
$98,000.
77.All of the closing entries for a net loss are the same as the closing entries for a
net income.
True
False
78.Land and building, machinery, furniture, investments all come under Fixed assets
(long-term assets)
True
False
79.After the closing entries have been recorded and posted, the balance of the
Income Summary account will equal the net income of the business.
True
False
80.The time span during which cash is paid for goods and services, which are then
sold to customers from whom the business collects cash, is called the sales time
operating cycle
accounting cycle
production time
81.Revenue and expense accounts are called income statement accounts and
nominal account.
True
False
82.After the accounts are closed, there should be no unearned revenue accounts

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with balances.
True
False
83.A debt or obligation that must be paid or liquidated within one year or one
operating cycle of the business, is classified as a non-current liability.
True
False
84.An asset that may reasonably be expected to be realized in cash or be consumed

within one year or one operating cycle of the business, whichever is longer, is
classified as a non-current asset.
True
False
85.Accumulated depreciation is shown as separate item on the asset side of the

balance sheet
True
False
86.All assets that will not be converted to cash or used up within the business's
operating cycle or one year, whichever is greater, are called
long-term assets
current assets
current liabilities
fully depreciated assets

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87. Prepaid Rent is always classified as a long-term asset.
True
False
88.A trial balance will not balance if:*
a. Posting a correct journal entry twice.
b. The purchase of supplies on account is recorded as debited to Supplies and credited to

Cash.
c. a $100 cash withdrawal by the owner is debited to Owner’s Drawings for $1,000 and
credited to Cash for $100.
d. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash
for $45.
89.The law requires that creditor claims be paid before ownership claims.
(True/False)
True
False
90.Opportunities in accounting include but are not limited to auditing, consulting,

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market research, and tax planning. (True/False)*
True
False
91.When the volume of transactions is large, recording them in tabular form is more
efficient than using journals and ledgers. (True/False)*
True
False
92.Once the adjusted trial balance is in balance, the flow of accounts will now go
into the financial statements. (True/False)*
True
False
93. After the account balances have been extended from the Adjusted Trial Balance
columns on the worksheet, the difference between the initial totals of the Balance
Sheet debit and credit columns is Net Income or Net Loss. (True/False)*
True
False
94.In a worksheet, net income is entered in the following columns:
a. income statement (Dr) and balance sheet (Dr).

b. income statement (Cr) and balance sheet (Dr).
c income statement (Dr) and balance sheet (Cr).
d. income statement (Cr) and balance sheet (Cr).

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95The primary objective of managerial accounting is to provide general purpose

financial statements to help external users analyze and interpret an organization's
activities. (True/False)*
True
False
96. The Sales Returns and Allowances account and the Sales Discounts account are
both classified as expense accounts.
True
False
97. When merchandise that was sold is returned, a credit to sales returns and
allowances is made
True
False
98.In a perpetual inventory system, the merchandise inventory account is only used
to reflect the beginning inventory.
True
False
99. In a perpetual inventory system, merchandise returned to vendors reduces the
merchandise inventory account.
True
False
100. The cost of merchandise inventory is limited to the purchase price less any
purchase discounts.
True
False
101.The cost of merchandise inventory is limited to the purchase price less any
purchase discounts.
True
False
(The cost of inventory includes the cost of purchased merchandise, less discounts
that are taken, plus any duties and transportation costs paid by the purchaser.)
!!!102. Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly
savings rate of approximately
2%
36%
24%

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20%
103. Norfolk Sporting Goods purchases merchandise with a catalog list price of
$30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30.
What amount should Norfolk debit to the merchandise inventory account?
$21,000
$29,400
$20,580
$30,000
104.Which of the following items would not affect the cost of merchandise inventory
acquired during the period?
freight in
sales discounts
quantity discounts
sales commissions (hoa hồng)
105. Kaden Co. sells merchandise on credit to Jase Co. for $9,600. The invoice is
dated July 15 with terms of 1/15, net 45. If Jase Co. chooses not to take the
discount, by when should the payment be made?
July 30
August 29
July 25
August 15
106. A company that uses the perpetual inventory system purchases inventory for
$62,000 on account, with terms of 2/10, n/30. Which of the following is the journal
entry to record the payment made within 10 days?
A. a debit to Accounts Payable for $62,000, a credit to Cash for $1,240, and a credit
to Merchandise Inventory for $60,760
B. a debit to Accounts Payable for $62,000, a credit to Merchandise Inventory
for $1,240, and a credit to Cash for $60,760
C. a debit to Accounts Payable for $60,760, a debit to Merchandise Inventory for
$1,240, and a credit to Cash for $62,000
D. a debit to Merchandise Inventory for $1,240, a debit to Accounts Payable for
$62,000, and a credit to Cash for $63,240
107. Corbit Corp. sold merchandise for $10,000 cash. The cost of merchandise sold
was $7,590. The journal entries to record this transaction under the perpetual
inventory system would be

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A. Cash 7,590
Sales 7,590
Cost of Merchandise Sold 7,590

Merchandise Inventory 7,590
B.Cash 10,000
Sales 10,000

C. Cash 10,000

Sales
D. Cash 10,000
Sales 10,000

108.When goods are shipped FOB destination and the seller pays the freight
charges, the buyer
journalizes a reimbursement to the seller
makes no journal entry for the freight
does not take a discount
journalizes a reduction for the cost of the merchandise
109.In a merchandising business, operating income plus operating expenses is
equal to:
cost of merchandise sold
gross profit
cost of merchandise available for sale

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sales
110. Under the perpetual inventory system, a company purchases merchandise on
terms 2/10, n/30. The entry to record the purchase will include a debit to Cash and a
credit to Sales.
True
False
111. If payment is due by the end of the month in which the sale is made, the invoice
terms are expressed as n/30.
True
False
112.When merchandise that was sold is returned, a credit to sales returns and
allowances is made
True!
False
113,If the ownership of merchandise passes to the buyer when the seller delivers the
merchandise to the carrier, the terms are stated as FOB destination.
True
False
114.Freight is the amount paid by the seller to deliver merchandise sold to a
customer under FOB shipping point.
True
False
115.The primary difference between a periodic and perpetual inventory system is
that a
periodic system records the cost of the sale on the date the sale is made
periodic system keeps a record showing the inventory on hand at all times
periodic system provides an easy means to determine inventory shrinkage
periodic system determines the inventory on hand only at the end of the
accounting period
116.A sales invoice included the following information: merchandise price, $12,000;
terms 1/10, n/eom, FOB shipping point with prepaid freight of $900 added to the
invoice. Assuming that a credit for merchandise returned of $500 is granted prior to
payment and the invoice is paid within the discount period, what is the amount of
cash that should be received by the seller?
$10,480
$11,385
$12,285
$11,500

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117.The arrangements between buyer and seller as to when payments for

merchandise are to be made are called
gross cash
net cash
cash on demand
credit terms
118.The multiple-step form of income statement is easier to read than the single-step
form.
True
False
119.When the terms of sale are FOB shipping point, the buyer should pay the freight
charges.
True
False
120.The Sales Returns and Allowances account and the Sales Discounts account
are both classified as expense accounts.
True
False
121.In a merchandise business, sales minus operating expenses equals net income
True
False
122.In a perpetual inventory system, the merchandise inventory account is only used
to reflect the beginning inventory.
True
False
123.A seller may grant a buyer a reduction in selling price and this is called a
customer discount
True
False
124.Under the perpetual inventory system, a company purchases merchandise on

lOMoARcPSD|18066672
terms 2/10, n/30. The entry to record the purchase will include a debit to Cash and a
credit to Sales.
True
False
125.Sales revenues are earned during the period cash is collected from the buyer.
True
False
126.Which of the following statements is NOT correct?
A.Even in a perpetual inventory system, a business must count inventory at least
one a year.
B. In a periodic inventory system, merchandise inventory and purchasing systems

are integrated with the records for Accounts Receivable and Sales Revenue.
C. Restaurants and small retail stores often use the periodic inventory system.
D. In a perpetual inventory system, the "cash register" at the store is a computer

terminal that records sales and updates inventory records.
127.During 2016, Wu Han Co. generated revenues of $95,000. The company's

expenses were as follows: cost of goods sold of $47,000, operating expenses of
$16,000 and a loss on the sale of equipment of $5,000. Wu Han's income from
operations is
$48,000.
$32,000.
$95,000.
$28,000.
128.A company using the perpetual inventory system purchased inventory worth
$500,000 on account with credit terms of 3/15, n/45. Defective inventory of $50,000
was returned 3 days later, and the accounts were appropriately adjusted. If the
company paid the invoice 25 days later, the journal entry to record the payment
would be ________.
$500,000 debit to Accounts Payable, $486,500 credit to Cash, and $13,500 credit
to Merchandise Inventory
$500,000 debit to Accounts Payable and $500,000 credit to Cash
$463,500 debit to Accounts Payable, $13,500 credit to Merchandise Inventory, and
$450,000 credit to Cash

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$450,000 debit to Accounts Payable and $450,000 credit to Cash

129.Which of the following statements regarding the operating cycle of a
merchandising company is not true?
A.The operating cycle ends with the collection of cash from the sale of
merchandise.
B. The operating cycle is shortened by credit sales.
C. The operating cycle begins with the purchase of merchandise.

D. The operating cycle can vary in length among different merchandising
companies.
130.Randolph Company purchased merchandise with an invoice price of $3,000 and
credit terms of 3/10, n/30. Assuming a 360-day year, what is the implied annual
interest rate inherent in the credit terms?
72%
54%
36%
60%
131.When purchases of merchandise are made on account with a perpetual
inventory system, the transaction is recorded with which entry?
debit Merchandise Inventory; credit Cash Discounts
debit Accounts Payable; credit Merchandise Inventory
debit Merchandise Inventory; credit Accounts Payable
debit Merchandise Inventory; credit Purchases

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lOMoARcPSD|18066672

lOMoARcPSD|18066672

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1.What is the last step in the journalizing process?

A. liabilities and revenues

3.Every journal entry:

-affects both an income statement account and a balance sheet account.

4.Prepaid Rent is an ________ account and has a normal ________ balance.

A. -contains only the permanent accounts used by a business.

6.Under cash basis accounting, revenue is recorded when it is earned, regardless of

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10.Which of the following is NOT a type of adjusting entry?

12.An interim period used for reporting purposes is generally:

the same as the fiscal year.

more than one year.

less than one year

13.Financial statements can be prepared from the unadjusted trial balance.

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14.The accounting concept that requires every business to be accounted for

Business entity assumption.

Revenue recognition principle.

15.Creditors' claims on the assets of a company are called:

Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.

Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.

Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.

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(When a business generates a financial transaction, it creates a paper trail. This

Unearned Revenue 1,000

b. Salaries Expense 1,000

Service Revenue 1,000

c. Salaries Expense 1,000

Salaries Payable 1,000

Salaries Expense 1,000

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21.In an ________ adjustment, the cash payment occurs before an expense is

22.Dynamic Services Company purchased computers that are to be used in its

Accumulated depreciation - Computers

Depreciation Expense - Computers

24.Advance cash payments of future expenses are called ________.

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net income would be understated by $8,400.

net income would be overstated by $2,100.

net income would be overstated by $4,200.

net income would be understated by $4,200.

26.Princeton Financial Services Company purchased computers that are to be used

Accumulated depreciation - Computers

Depreciation Expense - Computers

27.Accrual accounting records all of the following transactions EXCEPT:

expiration of prepaid insurance.

accrual of expenses incurred but not paid.

earning of unearned revenue received in advance.

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$95,000, is considered by the purchaser as easily being worth $140,000, and is

Measurement (Cost. Principle).

Monetary unit assumption.

Business entity assumption.

Ledger (or General Ledger..

Balance column journal.

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32.A double-entry accounting system is an accounting system:

That allows total credits to be greater than total debits.

That records each transaction twice.

Account form balance sheet.

Unadjusted balance sheet.

4.Prepaid Rent is an account and has a normal balance.