The accounting process is correctly sequenced as

Question 1 options:

	identification, communication, recording.
	recording, communication, identification.
	identification, recording, communication.
	communication, recording, identification.

Question 2 (2 points)

The historical cost of an asset and its fair value are

Question 2 options:

	never the same.
	the same when the asset is sold.
	irrelevant when the asset is used by the business in its operations.
	the same on the date of acquisition.

Question 3 (2 points)

George and Ringo met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a

Question 3 options:

	joint venture.
	partnership.
	corporation.
	proprietorship.

Question 4 (2 points)

Owner’s equity is best depicted by the following:

Question 4 options:

	Assets = Liabilities.
	Liabilities + Assets.
	Residual equity + Assets.
	Assets – Liabilities.

Question 5 (2 points)

If total liabilities decreased by $40,000 and owner’s equity decreased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?

Question 5 options:

	$70,000 decrease
	$10,000 decrease
	$10,000 increase
	$70,000 increase

Question 6 (2 points)

Collection of a $1,500 Accounts Receivable

Question 6 options:

	increases an asset $1,500; decreases an asset $1,500.
	increases an asset $1,500; decreases a liability $1,500.
	decreases a liability $1,500; increases owner’s equity $1,500.
	decreases an asset $1,500; decreases a liability $1,500.

Question 7 (2 points)

As of December 31, 2016, Cancon Company has assets of $42,000 and owner’s equity of $22,000. What are the liabilities for Cancon Company as of December 31, 2016?

Question 7 options:

	$22,000.
	$20,000.
	$42,000.
	$64,000.

Question 8 (2 points)

Eli’s Electronic Repair Shop started the year with total assets of $300,000 and total 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 balance at the end of the year was

Question 8 options:

	$200,000.
	$100,000.
	$150,000.
	$350,000.

Question 9 (2 points)

All of the financial statements are for a period of time except the

Question 9 options:

	income statement.
	owner’s equity statement.
	balance sheet.
	statement of cash flows.

Question 10 (2 points)

Mirah Company compiled the following financial information as of December 31, 2016:

Revenues $340,000

Owner’s Capital (1/1/16) 140,000

Equipment 80,000

Expenses 240,000

Cash 90,000

Owner’s Drawings 20,000

Supplies 20,000

Accounts payable 40,000

Accounts receivable 70,000

Mirah’s assets on December 31, 2016 are

Question 10 options:

	$190,000
	$260,000
	$360,000
	$480,000

Question 11 (2 points)

Which of the following correctly identifies normal balances of accounts?

Question 11 options:

	Assets Debit, Liabilities Credit, Owner’s Capital Credit, Revenues Debit, Expenses Credit
	Assets Debit, Liabilities Credit, Owner’s Capital Credit, Revenues Credit,Expenses Credit
	Assets Credit, Liabilities Debit, Owner’s Capital Debit, Revenues Credit, Expenses Debit
	Assets Debit, Liabilities Credit, Owner’s Capital Credit, Revenues Credit, Expenses Debit

Question 12 (2 points)

Boise Co. pays its employees twice a month, on the 7th and the 21st. On June 21, Boise Co. paid employee salaries of $6,000. This transaction would

Question 12 options:

	increase owner’s equity by $6,000.
	decrease the balance in Salaries and Wages Expense by $6,000.
	decrease net income for the month by $6,000.
	be recorded by a $6,000 debit to Salaries and Wages Payable and a $6,000 credit to Salaries and Wages Expense.

Question 13 (2 points)

Qwik Company showed the following balances at the end of its first year:

Cash $ 8,700

Prepaid insurance 9,400

Accounts receivable 7,000

Accounts payable 5,800

Notes payable 9,400

Owner’s Capital 2,300

Owner’s Drawings 1,400

Revenues 44,000

Expenses 35,000

Question 13 options:

	$52,400
	$61,500
	$62,900
	$70,900

Question 14 (2 points)

A complete journal entry does not show

Question 14 options:

	the date of the transaction.
	the new balance in the accounts affected by the transaction.
	a brief explanation of the transaction.
	the accounts and amounts to be debited and credited.

Question 15 (2 points)

Which of the following journal entries is recorded correctly and in the standard format?

Question 15 options:

	Salaries and Wages Expense ………………………………………. 500 Cash ……………………………………………………………………. 2,500 Advertising Expense ……………………………………………………. 2,000
	Salaries and Wages Expense ………………………………………. 500 Advertising Expense ……………………………………………………. 2,000 Cash ……………………………………………………………………. 2,500
	Cash …………………………………………………………………………. 2,500 Salaries and Wages Expense …………………………………. 500 Advertising Expense ………………………………………………. 2,000
	Salaries and Wages Expense ………………………………………. 500 Advertising Expense ……………………………………………………. 2,000 Cash ……………………………………………………………………. 2,500

Question 16 (2 points)

A chart of accounts for a business firm

Question 16 options:

	is a graph.
	indicates the amount of profit or loss for the period.
	lists the accounts and account numbers that identify their location in the ledger.
	shows the balance of each account in the general ledger.

Question 17 (2 points)

Orange County Shop follows the revenue recognition principle. Orange County services a bicycle on July 31. The customer picks up the bike on August 1 and mails the payment to Orange County on August 5. Orange County receives the check in the mail on August 6. When should Orange County show that the revenue was recognized?

Question 17 options:

	July 31
	August 1
	August 5
	August 6

Question 18 (2 points)

Depreciation is the process of

Question 18 options:

	valuing an asset at its fair value.
	increasing the value of an asset over its useful life in a rational and systematic manner.
	allocating the cost of an asset to expense over its useful life in a rational and systematic manner.
	writing down an asset to its real value each accounting period.

Question 19 (2 points)

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

Question 19 options:

	net income to be overstated.
	an understatement of assets and an understatement of revenues.
	an understatement of revenues and an understatement of liabilities.
	an understatement of revenues and an overstatement of liabilities.

Question 20 (2 points)

The closing entry process consists of closing

Question 20 options:

	all asset and liability accounts.
	out the owner’s capital account.
	all permanent accounts.
	all temporary accounts.

Question 21 (2 points)

The balance in the income summary account before it is closed will be equal to

Question 21 options:

	the net income or loss on the income statement.
	the beginning balance in the owner’s capital account.
	the ending balance in the owner’s capital account.
	zero.

Question 22 (4 points)

The income statement for the month of June, 2016 of Snap Shot, Inc. contains the following information:

Revenues $7,300

Expenses:

Salaries and Wages Expense $3,000

Rent Expense 1,300

Advertising Expense 700

Supplies Expense 200

Insurance Expense 100

Total expenses 5,300

Net income $2,000

After the revenue and expense accounts have been closed, the balance in Income Summary will be

Question 22 options:

	a debit balance of $7,300.
	a debit balance of $2,000.
	a credit balance of $2,000.
	a credit balance of $7,300.

Question 23 (4 points)

On March 8, Saltwater Taffy Company bought supplies on account from the Sweet Honey Company for $440. Saltwater Taffy Company incorrectly debited Equipment for $400 and credited Accounts Payable for $400. The entries have been posted to the ledger. The correcting entry should be:

Question 23 options:

	Supplies……………………………………………………………………… 440 Accounts Payable…………………………………………………… 440
	Supplies……………………………………………………………………… 440 Accounts Payable…………………………………………………… 400 Equipment…………………………………………………………….. 40
	Supplies……………………………………………………………………… 440 Equipment…………………………………………………………….. 440
	Supplies……………………………………………………………………… 440 Equipment…………………………………………………………….. 400 Accounts Payable…………………………………………………… 40

Question 24 (4 points)

The following information is for Qwik Auto Supplies:

Qwik Auto Supplies

Balance Sheet

December 31, 2016

Cash $ 45,000 Accounts Payable $ 140,000

Prepaid Insurance 80,000 Salaries and Wages Payable 60,000

Accounts Receivable 110,000 Mortgage Payable 150,000

Inventory 140,000 Total Liabilities 350,000

Land Held for Investment 185,000

Land 250,000

Building $200,000

Less Accumulated Owner’s Capital 750,000

Depreciation (50,000) 150,000

Trademark 140,000 Total Liabilities and

Total Assets $1,100,000 Owner’s Equity $1,100,000

he total dollar amount of assets to be classified as property, plant, and equipment is

Question 24 options:

	$400,000.
	$450,000.
	$585,000.
	$635,000.
	$400,000.
	$450,000.
	$585,000.
	$635,000.

Question 25 (2 points)

The use of reversing entries

Question 25 options:

	is a required step in the accounting cycle.
	changes the amounts reported in the financial statements.
	simplifies the recording of subsequent transactions.
	is required for all adjusting entries.

Question 26 (2 points)

Cost of goods sold is determined only at the end of the accounting period in

Question 26 options:

	a perpetual inventory system.
	a periodic inventory system.
	both a perpetual and a periodic inventory system.
	neither a perpetual nor a periodic inventory system.

Question 27 (2 points)

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Question 27 options:

	Inventory account.
	Purchases account.
	Supplies account.
	Cost of Goods Sold account.

Question 28 (3 points)

A credit sale of $4,000 is made on April 25, terms 3/10, n/30, on which a return of $300 is granted on April 28. What amount is received as payment in full on May 4?

Question 28 options:

	$3,589
	$3,700
	$3,880
	$4,000

Question 29 (3 points)

When the physical count of Barr Company inventory had a cost of $4,380 at year end and the unadjusted balance in Inventory was $4,600, Barr will have to make the following entry:

Question 29 options:

	Cost of Goods Sold……………………………………………………… 220 Inventory…………………………………………………………….. 220
	Inventory…………………………………………………………………….. 220 Cost of Goods Sold……………………………………………… 220
	Income Summary………………………………………………………… 220 Inventory…………………………………………………………….. 220
	Cost of Goods Sold……………………………………………………… 4,600 Inventory…………………………………………………………….. 4,600

Question 30 (4 points)

During August, 2016, Shelby’s Supply Store generated revenues of $65,000. The company’s expenses were as follows: cost of goods sold of $33,000 and operating expenses of $7,000. The company also had rent revenue of $2,000 and a loss on the sale of a delivery truck of $3,000. Shelby’s operating income for the month of August, 2016 is

Question 30 options:

	$25,000.
	$27,000.
	$24,000.
	$32,000.

Question 31 (4 points)

During the year, Bolt’s Pet Shop’s inventory decreased by $35,000. If the company’s cost of goods sold for the year was $600,000, purchases must have been

Question 31 options:

	$565,000.
	$600,000.
	$635,000.
	Unable to determine.

Question 32 (2 points)

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

Question 32 options:

	Accounts Payable.
	Inventory.
	Purchases.
	Purchase Returns and Allowances.

Question 33 (2 points)

An auto manufacturer would classify vehicles in various stages of production as

Question 33 options:

	finished goods.
	merchandise inventory.
	raw materials.
	work in process.

Question 34 (4 points)

As a result of a thorough physical inventory, Greeley Company determined that it had inventory worth $325,000 at December 31, 2016. This count did not take into consideration the following facts: Walker Consignment currently has goods worth $47,000 on its sales floor that belong to Greeley but are being sold on consignment by Walker. The selling price of these goods is $75,000. Greeley purchased $22,000 of goods that were shipped on December 27. FOB destination, that will be received by Greeley on January 3. Determine the correct amount of inventory that Greeley should report.

Question 34 options:

	$325,000.
	$347,000.
	$372,000.
	d.

Question 35 (2 points)

The LIFO inventory method assumes that the cost of the latest units purchased are

Question 35 options:

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