201 Midterm Review

Question 1

What type of business uses the specific identification inventory costing method?

Accepted Answer

Jewelry Store

Question 2

Which of the following is not an asset?

Accepted Answer

fees earned

Question 3

What is the adjusting entry for $500 of depreciation on buildings?

Accepted Answer

debit depreciation expense, credit accumulated depreciation - buildings

Question 4

Which of the following types of accounts have a normal credit balance?

Accepted Answer

liabilities and capital

Question 5

What financial statement lists assets, liabilities, and owner’s equity as of a specific date?

Accepted Answer

balance sheet

Question 6

The unadjusted balance in supplies is $1,000 and there are $350 worth of supplies on hand. What is the adjusting entry?

Accepted Answer

debit supplies expense $650, credit supplies $650

Question 7

The buyer's journal entry to record the return of merchandise (before paying for it) includes

Accepted Answer

Dr. Accounts Payable Cr. Merchandise Inventory

Question 8

Which of the following describes the classification and normal balance of fees earned account?

Accepted Answer

revenue, credit

Question 9

The first step of the accounting cycle is to _____.

Accepted Answer

analyze and record transactions in the journal

Question 10

What is the correct entry to accrue wages of $5,000?

Accepted Answer

debit wages expense $5,000; credit wages payable $5,000

Question 11

Assets and liabilities of a company are 128,000 and 84,000, respectively. Owner’s equity is

Accepted Answer

$44,000

Question 12

What is the order of the trial balances prepared during the accounting cycle?

Accepted Answer

Unadjusted, adjusted, post-closing

Question 13

What is the order of statement of owner's equity (OE), balance sheet (B), income statement (I)?

Accepted Answer

I, OE, B

Question 14

In which of the following types of accounts are increases recorded by credits?

Accepted Answer

revenues and liabilities

Question 15

The following accounts are closed at the end of the accounting period except _____.

Accepted Answer

Capital

Question 16

For accrued expenses, the adjusting entry debits a ___ account and credits a ___ account.

Accepted Answer

expense; liability

Question 17

In what order are the financial statements prepared?

Accepted Answer

Income statement, stmt. of owner's equity, balance sheet

Question 18

How does paying a liability in cash affect the accounting equation?

Accepted Answer

assets decrease; liabilities decrease

Question 19

Which account will NOT appear on the post-closing trial balance?

Accepted Answer

Fees Earned

Question 20

Which of the following accounts have a normal credit balance?

Accepted Answer

revenues and liabilities

Question 21

A classified balance sheet separates assets between current and:

Accepted Answer

Property, Plant, and Equipment

Question 22

A cash payment is recorded in the cash account as

Accepted Answer

credit

Question 23

Once the adjusting entries are posted, the adjusted trial balance is prepared to

Accepted Answer

verify that debits = credits

Question 24

A credit may signify

Accepted Answer

a decrease in an asset account

Question 25

Which inventory method results in the highest net income during periods of rising prices?

Accepted Answer

FIFO

Question 26

Typically, what account is NEVER adjusted during the adjusting process?

Accepted Answer

Land

Question 27

Land used in the operations of a business is classified under _____ on the balance sheet.

Accepted Answer

Property, plant, and equipment

Question 28

The asset created by a business when it makes a sale on account is termed

Accepted Answer

accounts receivable

Question 29

Merchandise is sold, revenue is reported as sales and cost is recognized as an expense called..

Accepted Answer

Cost of merchandise sold

Question 30

Payables listed as current liabilities are those that

Accepted Answer

are due to be paid within one year

Question 31

Owner withdrawals would appear on the _____.

Accepted Answer

Statement of Owner's Equity

Question 32

A business's yearly accounting period is called the

Accepted Answer

Fiscal Year

Question 33

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

Accepted Answer

FOB shipping point

Question 34

The financial statement that presents the revenues and expenses of a business for a period of time is

Accepted Answer

income statement

Question 35

Which of the following accounts is a liability?

Accepted Answer

accounts payable

Question 36

Adjusting entries always include

Accepted Answer

at least one balance sheet account and one income statement account

Question 37

Which of the following accounts is a liability?

Accepted Answer

All of the above

Question 38

The year-end balance of the owner's capital account appears in

Accepted Answer

both the statement of owner's equity and the balance sheet

Question 39

With decreasing costs, which inventory method yields the highest value for ending inventory?

Accepted Answer

LIFO

Question 40

Ending inventory is made up of the oldest purchases when a company uses

Accepted Answer

last in, first out

Question 41

Prepaid rent, representing rent for the next six months’ occupancy, would be reported on the tenant’s balance sheet as

Accepted Answer

a current asset

Question 42

The Cash balance on the adjusted trial balance will be carried to what financial statement?

Accepted Answer

Balance Sheet

Question 43

Fees earned account appears on the _____.

Accepted Answer

Income Statement

Question 44

If the supplies account is not adjusted, which of the following would occur?

Accepted Answer

Net income and equity would be overstated

Question 45

Net income will result when

Accepted Answer

revenues (credits) > expenses (debits)

Question 46

An internal report that will determine if debit balances equal credit balances in the ledger?

Accepted Answer

Trial Balance

Question 47

Calculate gross profit based on the following data:

Accepted Answer

a. $226,000

Question 48

In a service business, which of the following would not be a line item on the income statement?

Accepted Answer

Gross Profit

Question 49

Calculate operating income based on the following data:

Accepted Answer

$173,500

Question 50

Merchandise inventory is classified as ______ on the balance sheet.

Accepted Answer

a current asset

Question 51

The adjusting journal entry to record inventory shrinkage includes....

Accepted Answer

Dr. Cost of Merchandise Sold Cr. Merchandise Inventory

Question 52

Given the info below, determine the cost of merchandise sold for the sale of May 20 using LIFO inventory cost method

Accepted Answer

$144

Question 53

The financial statement that reports revenues and expenses for a period of time is called

Accepted Answer

income statement

Question 54

Which of the following is not considered to be a liability?

Accepted Answer

Accounts Receivable

Question 55

Which group of accounts is comprised of only assets?

Accepted Answer

Cash, Prepaid Rent, Buildings

Question 56

Which of the following is not considered to be a liability?

Accepted Answer

accounts receivable

Question 57

Which of the following accounts does NOT have a contra asset account associated with it?

Accepted Answer

Land

Question 58

Assets are

Accepted Answer

equal to liabilities plus owner's equity

Question 59

Net income will result when

Accepted Answer

revenues (credits) > expenses (debits)

Question 60

The account type and normal balance of Unearned Rent is

Accepted Answer

liability, credit

201 Midterm Review

Questions 60

201 Midterm Review

Questions 60