Accounting- The owner’s equity in a business amounted to $56,000

| January 30, 2017

Question
NAME:____________________________________

1. The owner’s equity in a business amounted to $56,000 at the beginning of the year and $100,000 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to

a.

$76,000.

b.

$67,000.

c.

$63,000.

d.

$188,000.

ANS: __________

2. The total assets amount to $24,000 and the total liabilities amount to $18,000. The amount of the owner’s equity is

a.

$16,000.

b.

$42,000.

c.

$18,000.

d.

$6,000.

ANS: __________

3. The total revenue of the month of June amounted to $6,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to

a.

$6,000.

b.

$2,400.

c.

$3,000.

d.

$3,500.

ANS: __________

4. Changes in owner’s equity that result from investments or withdrawals of assets by the owner are included in the

a.

statement of owner’s equity.

b.

income statement.

c.

balance sheet.

d.

chart of accounts.

ANS: __________

5. Owner’s equity can be increased through

a.

withdrawals by the owner.

b.

investments by the owner.

c.

expenses exceeding revenues.

d.

purchases of assets for cash.

ANS: __________

6. The balance in an expense account is closed to a(n)

a.

capital account.

b.

revenue account.

c.

drawing account.

d.

income summary account.

ANS: __________

7. The order in which financial statements should be prepared is

a.

balance sheet, income statement, statement of owner’s equity.

b.

income statement, balance sheet, statement of owner’s equity.

c.

statement of owner’s equity, balance sheet, income statement.

d.

income statement, statement of owner’s equity, balance sheet.

ANS: __________

8. After the closing entries are journalized and posted, which of the following accounts would NOT have a balance?

a.

Cash

b.

Office Equipment

c.

Notes Payable

d.

Delivery Fees

ANS: __________

9. To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the

a.

balance sheet.

b.

income statement.

c.

adjustments.

d.

post-closing trial balance.

ANS: __________

10. The journal entry to close the income summary account (showing a net loss) includes

a.

debiting the drawing account and crediting Income Summary.

b.

debiting Income Summary and crediting the drawing account.

c.

debiting the owner’s capital account and crediting Income Summary.

d.

debiting Income Summary and crediting the owner’s capital account.

ANS: __________

11. The Income Summary account is used to

a.

close the revenue accounts only.

b.

close the revenue accounts and expense accounts only.

c.

close the drawing account.

d.

close revenue accounts and expense accounts and update the owner’s capital account.

ANS: __________

12. The journal entry to close the drawing account includes

a.

debiting the owner’s capital account and crediting the drawing account.

b.

debiting the drawing account and crediting the owner’s capital account.

c.

debiting Income Summary and crediting the drawing account.

d.

debiting the drawing account and crediting Income Summary.

ANS: __________

13. What is the purpose of the post-closing trial balance?

a.

to prove no errors were made while recording entries in the journal

b.

to prove the equality of the debit and credit balances in the general ledger accounts

c.

to prove the closing entries were recorded correctly in the journal

d.

to prove the balances in the general ledger accounts are correct

ANS: __________

14. A check involves three parties. The person who orders the bank to pay a certain amount of money is called the

a.

drawer.

b.

drawee.

c.

payee.

d.

endorser.

ANS: __________

15. A check involves three parties. The person directed to receive the money is called the

a.

drawer.

b.

drawee.

c.

payee.

d.

endorser.

ANS: __________

16. To use an ATM machine, the depositor must have a

a.

Bank number.

b.

PIN number.

c.

BIN number.

d.

TIN number.

ANS: __________

17. The process of bringing the book and the bank balance into agreement is called

a.

reconciling the bank statement.

b.

proving the cash.

c.

preparing a statement of payment.

d.

preparing a statement of disbursements.

ANS: __________

18. On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as

a.

NSF checks.

b.

outstanding checks.

c.

deposits in transit.

d.

dishonored checks.

ANS: __________

19. Whenever the bank mails a credit memo to the depositor indicating the amount of interest credited to the account, the transaction that would be entered in the accounting records of the depositor would include

a.

debiting Interest Earned and crediting Cash.

b.

debiting Interest Expense and crediting Cash.

c.

debiting Cash and crediting Interest Earned.

d.

debiting Cash and crediting Interest Expense.

ANS: __________

20. In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include

a.

debiting Cash and crediting Miscellaneous Expense.

b.

debiting Cash and crediting Owner’s Capital.

c.

debiting Accounts Payable and crediting Cash.

d.

debiting Miscellaneous Expense and crediting Cash.

ANS: __________

21. To reconcile the bank statement, which of the following amounts would be added to the checkbook balance?

a.

service charge

b.

outstanding checks

c.

deposits in transit

d.

amounts collected by the bank for the depositor’s account

ANS: __________

22. To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?

a.

service charge

b.

outstanding checks

c.

deposits in transit

d.

amounts collected by the bank for the depositor’s account

ANS: __________

23. The balance sheet reports

a.

assets.

b.

revenue.

c.

expenses.

d.

net income.

ANS: __________

24. The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the

a.

Income Statement columns.

b.

Adjustments columns.

c.

Balance Sheet columns.

d.

Adjusted Trial Balance columns.

ANS: __________

25. The third pair of columns on a 10-column work sheet prepared at the end of the period would be the

a.

Income Statement columns.

b.

Adjustments columns.

c.

Balance Sheet columns.

d.

Adjusted Trial Balance columns.

ANS: __________

26. The second pair of columns on a 10-column work sheet prepared at the end of the period would be the

a.

Income Statement columns.

b.

Trial Balance columns.

c.

Adjustments columns.

d.

Adjusted Trial Balance columns.

ANS: __________

27. The time an asset is expected to last is called its

a.

depreciation.

b.

fiscal period.

c.

net loss value.

d.

useful life.

ANS: __________

28. Matching the cost of an asset with the revenue it is expected to produce is called

a.

adjusting.

b.

expensing.

c.

depreciation.

d.

contra-valuing.

ANS: __________

29. The cost of an asset that is subject to depreciation is called

a.

salvage value.

b.

depreciable cost.

c.

revenue.

d.

trade-in value.

ANS: __________

30. An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)

a.

contra-account.

b.

expense account.

c.

adjusting account.

d.

revenue account.

ANS: __________

31. If the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset is

a.

$16,000.

b.

$9,500.

c.

$9,000.

d.

$7,500.

ANS: __________

32 To record wages earned but not paid under the modified cash accounting method,

a.

debit Wages Payable and credit Wages Expense.

b.

debit Cash and credit Wages Expense.

c.

debit Wages Expense and credit Wages Payable.

d.

no entry is required.

ANS: __________

33. When posting an adjusting entry to the general ledger, write

a.

“adjusting” in the Posting Reference column.

b.

“adjusting” in the Item column.

c.

“ledger” in the general ledger.

d.

“balance” in the work sheet.

ANS: __________

34. If a business records revenue when it is received and records the purchase of a building as an asset and makes adjustments to allocate the cost of the building over many accounting periods, the business accounting system is a(n)

a.

accrual basis of accounting.

b.

adjustment basis of accounting.

c.

cash basis of accounting.

d.

modified cash basis of accounting.

ANS: __________

35. Joel Trump is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Trump’s regular rate is $8 per hour. During the week ended October 10, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Trump’s total earnings for the week ended October 10 are

a.

$110.

b.

$320.

c.

$430.

d.

$516.

ANS: __________

36. Sandra Wilson is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Wilson’s regular rate is $10 per hour. During the week ended July 3, she worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Wilson’s overtime earnings for the week ended July 3 are

a.

$110.

b.

$245.

c.

$320.

d.

$430.

ANS: __________

37. Cameron Tiller is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Tiller’s regular rate is $12 per hour. During the week ended March 15, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Tiller’s total regular earnings for the week ended March 15 are

a.

$110.

b.

$216.

c.

$480.

d.

$430.

ANS: __________

38. Jillian Diaz receives a regular salary of $1,500 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Diaz’s overtime pay rate is

a.

$6.92.

b.

$12.98.

c.

$276.92.

d.

$1,800.

ANS: __________

39. Any person who agrees to perform a service for a fee and is not subject to the control of those for whom the service is performed is called a(n)

a.

manager.

b.

employee.

c.

independent contractor.

d.

executive.

ANS: __________

40. The Fair Labor Standards Act provides which of the following minimum rates to be paid to employees for all hours worked over 40 hours per week?

a.

one and one-half times the regular rate

b.

same rate as the regular rate

c.

two and one-half times the regular rate

d.

two times the regular rate

ANS: __________

41. Compensation normally expressed in biweekly, monthly, or annual terms for managerial or administrative services is called

a.

supplements.

b.

commission.

c.

salary.

d.

wages.

ANS: __________

42. Examples of employees include all of the following EXCEPT

a.

secretaries.

b.

public accountants.

c.

accounting clerks.

d.

plant supervisors.

ANS: __________

43. An amount of an employee’s gross pay which is exempt from federal income tax withholding is a(n)

a.

additional withholding allowance.

b.

withholding allowance.

c.

zero bracket amount.

d.

special withholding allowance.

ANS: ____________

44. Employers usually prepare which of the following types of payroll records?

a.

payroll register, employee earnings record, and payroll check

b.

payroll register, payroll ledger, and employee earnings record

c.

payroll journal, employee earning record, and payroll ledger

d.

employee earning record, payroll check, and payroll ledger

ANS: __________

45. Compensation for managerial or administrative services is called ____________________.

46. ____________________ are compensation for skilled or unskilled labor.

47. An employee’s total earnings are also known as ____________________.

48. Gross pay less mandatory and voluntary deductions is called ____________________.

49. Someone who performs a service for a fee and does not work under the control and direction of the

company paying for the service is known as a(n) ____________________.

50. Payroll taxes withheld to provide Social Security and Medicare benefits are called

____________________.

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