Revenues and expenses are entered in the accounts as a result

| June 14, 2018

1. (True or False)Revenues and expenses are entered in the accounts as a result of financial events and activities that produce changes in an entity’s assets, liabilities, and/or equity.2. (Multiple Choice)Which of the following is considered a revenue item?A. Proceeds of a bank loan. B. Investments by owner. C. Sales on account. D. All of these. E. None of these. 3. (Multiple Choice)Richards Hospital was incorporated on August 1. The initial capital was raised by issuing $2,000,000 of stock. The appropriate journal entry for this transaction is:A. Debit Cash/Credit Revenue. B. Debit Capital Stock/Credit Revenue. C. Debit Capital Stock/Credit Cash. D. Debit Cash/Credit Capital Stock. E. None of these.4. (True or False)Under the cash basis of accounting, revenues are recognized in the period of cash receipt, while expenses are recognized in the period incurred.5. (True or False)Property, plant, and equipment consist of assets used in the operation of a business which will be converted into cash or used up within one year or the operating cycle, whichever is longer.6. (Multiple Choice)Pure Water’s complete assets and liabilities are Accounts Receivable ($800), Equipment ($10,000), Accounts Payable ($4,200), Prepaid Rent ($2,000), Supplies ($400), Bank Loan ($1,600), and Tools ($300). Pure Water’s total assets are:A. $11,100. B. $11,500. C. $13,100. D. $13,500. E. None of these.7. (Multiple Choice)Which statement about internal control for cash disbursements is false?A. All significant disbursements should be made by check. B. Cash in the ledger should be reconciled to cash reported by the bank. C. The individual responsible for signing checks should not also prepare the checks. D. Petty cash receipts should be destroyed once paid. E. None of these.8. (Multiple Choice)Archie Corporation’s trial balance included debits to expense accounts of $125,000, credits to revenue accounts of $175,000, and debits to the Dividends account of $50,000. Based on this information, the company’s net income(loss) appears to be:A. $0. B. ($125,000). C. $100,000. D. $175,000. E. None of these.9. (Multiple Choice)Which of the following statements is false?A. Cash discounts are a convenient means of reducing list prices to invoice prices. B. Cash discounts are used to encourage customers to make prompt payments. C. For a seller, cash discount and sales discount are synonymous terms. D. Cash discounts may be offered in conjunction with trade discounts. E. None of these.10. (Multiple Choice)Pure Water’s complete assets and liabilities are Accounts Receivable ($800), Equipment ($10,000), Accounts Payable ($4,200), Prepaid Rent ($2,000), Supplies ($400), Bank Loan ($1,600), and Tools ($300). Pure Water’s total equity is:A. $15,700. B. $7,700. C. $7,300. D. Cannot be determined from the information given. E. None of these.11. (True or False)The current ratio reflects current liabilities divided by current assets.12. (True or False)A journal entry is always required for the amount of the difference between the balance per bank statement and balance per books.13. (Multiple Choice)Jordan erroneously credited a liability account rather than a revenue account. Therefore:A. total assets are not affected. B. expenses are understated. C. ending stockholders’ equity will be overstated. D. liabilities are understated.. E. None of these.14. (Multiple Choice)A bank reconciliation revealed cash per the bank statement of $1,484, cash per company records of $1,681, bank charges of $11, deposits in transit of $317, outstanding checks of $221, and NSF checks of $90. The correct cash balance is?A. $1,479. B. $1,490. C. $1,580. D. $1,777. E. None of these.15. (True or False)The transactions in the journal and the accounts in the ledger are linked together by a transfer process called journalizing.16. (Multiple Choice)On January 7, Collin purchased supplies on account for $1,000, and recorded this purchase to the Supplies account. At the end of January, Collin had $600 of these supplies still on hand. The proper adjusting journal entry at January 31 would:A. include a debit to Supplies for $1,000. B. include a credit to Supplies for $400. C. include a debit to Accounts Payable for $400. D. include a debit to Supplies Expense for $600. E. None of these.17. (Multiple Choice)Which of the following statements is true?A. Dividends decrease net income. B. Net income causes liabilities to decrease. C. Assets will decrease by the amount of net loss. D. Cash increases as net income increases. E. None of these.18. (Multiple Choice)Amounts that must be left on deposit and cannot be withdrawn are known as:A. compensating balances. B. dead monies. C. sinking funds. D. demand deposits. E. None of these.19. (Multiple Choice)Failure to record the purchase of office furniture on account will result in:A. an overstatement of assets. B. an understatement of liabilities. C. an overstatement of stockholders’ equity. D. All of these. E. None of these.20. (Matching)Revenues (1) / Expenses (2) / Assets (3) / Stockholders’ equity (4) / Liabilities (5):A. Amounts charged to customers for goods sold or services. B. Economic resources owned that are expected to benefit future time periods. C. Residual interest of owners of a business. D. Amounts owed by an enterprise. E. Costs incurred to produce revenue.

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