Accounting 1 Final Study Guide Version 1

8/16/2019 Accounting 1 Final Study Guide Version 1

1/12

Accounting I Final Question and Answers:

Which of the following is not a step in providing accounting information to stakeholders?prepare accounting surveys

Equipment with an estimated market value of $!"### is offered for sale at $!"###% &heequipment is acquired for $'#"### in cash and a note pa(a)le of $#"### due in *# da(s%&he amount used in the )u(er+s accounting records to record this acquisition is ,,,,,,,,%$50,000

&he assets and lia)ilities of the compan( are $'!!"### and $#"### respectfull(%-wner.s equit( should equal ,,,,,,,,%$95,000

If total lia)ilities decreased )( $/!"### during a period of time and owner+s equit(increased )( $*#"### during the same period" the amount and direction 0increase ordecrease1 of the period+s change in total assets is ,,,,,,,,%$5,000 increase

If total assets decreased )( $2"### during a period of time and owner+s equit( increased )( $/"### during the same period" then the amount and direction 0increase or decrease1

of the period+s change in total lia)ilities is ,,,,,,,,%$71,000 decrease

&he 3enned( 4ompan( sold land for $#"### in cash% &he land was originall( purchasedfor $#"###" and at the time of the sale" $'!"### was still owed to First 5ational 6ank onthat purchase% After the sale" &he 3enned( 4ompan( paid off the loan to First 5ational6ank% What is the effect of the sale and the pa(off of the loan on the accountingequation?assets increase $5,000; liabilities decrease $15,000; owner's equity increases $20,000

Which of the following applications of the rules of de)it and credit is true?increase Supplies !pense wit" a debit and t"e nor#al balance is a debit


2/12

789 ospital purchased 7;ra( equipment for $*"###" paid $2!# down" with theremainder to )e paid later% &he correct entr( would )e ,,,,,,,,,,%quip#ent ,000

%ccounts &ayable 2,250

as" 750

a(a)le '#"###

?????????

&urc"ased equip#ent, paid cas" o* $+,000, wit" t"e re#ainder to be paid in

pay#ents

&he accounts in the ledger of icke(s >ark 4o% are listed )elow% All accounts havenormal )alances%

Accounts >a(a)le !## Fees Earned /"###

Accounts @eceiva)le ## Insurance EBpense *##4ommon Ctock '"### Dand /"###

4ash '"## Wages EBpense ##

Withdrawals /## @etained Earnings '"##

&he total of all the assets is:+,+00


3/12

&he accounts in the ledger of icke(s >ark 4o% are listed )elow% All accounts havenormal )alances%

Accounts >a(a)le !## Fees Earned /"###Accounts @eceiva)le ## Insurance EBpense *##

4ommon Ctock '"### Dand /"###

4ash '"## Wages EBpense ##

Withdrawals /## @etained Earnings '"##

>repare a trial )alance% &he total of the de)its is ,,,,,,,,,%$5,00

An overpa(ment error was discovered in computing and pa(ing the wages of a 6artson@epair Chop emplo(ee% When 6artson receives cash from the emplo(ee for the amountof the overpa(ment" which of the following entries will 6artson make?as", debit; ages !pense, credit

Which of the following errors" each considered individuall(" would cause the trial )alancetotals to )e unequal?a pay#ent o* $11 to a creditor was posted as a debit o* $,111 to %ccounts &ayable

and a debit o* $11 to %ccounts -eceivable

&he )alance in the prepaid rent account )efore ad=ustment at the end of the (ear is$'!"###" which represents three months+ rent paid on ecem)er '% &he ad=usting entr(required on ecem)er *' is ,,,,,,,%debit -ent !pense, $5,000; credit &repaid -ent, $5,000

&he )alance in the office supplies account on


4/12

A )usiness pa(s weekl( salaries of $/#"### on Frida( for a five;da( week ending on thatda(% &he ad=usting entr( necessar( at the end of the fiscal period ending on &hursda( is ,,,,,,,,%debit Salary !pense, $1.,000; credit Salaries &ayable, $1.,000

If the prepaid rent account )efore ad=ustment at the end of the month has a de)it )alanceof $'"##" representing a pa(ment made on the first da( of the month" and if the monthl(rent was $##" the amount of prepaid rent that would appear on the )alance sheet at theend of the month" after ad=ustment" is ,,,,,,,,%$/00

&he following ad=usting =ournal entr( was found on page of the =ournal% Celect the )esteBplanation for the entr(%

Wages EBpense /"!!!

Wages >a(a)le /"!!!

????????????????

-ecord wages e!pense incurred and to be paid ne!t #ont"

&he )alance in the supplies account" )efore ad=ustment at the end of the (ear is $/!%&he proper ad=usting entr( if the amount of supplies on hand at the end of the (ear is$*/! would )e ,,,,,,,,%

debit Supplies !pense $00, credit Supplies $00

When is the ad=usted trial )alance prepared?%*ter adusting ournal entries are posted

In the accounting c(cle" the last step is ,,,,,,,,,%preparing a postclosing trial balance

What is the ma=or difference )etween the nad=usted &rial 6alance and the Ad=usted &rial6alance?"e %dusted rial 3alance includes t"e postings o* t"e adust#ents *or t"e period

in t"e balance o* t"e accounts4


5/12

-nce the ad=usting entries are posted" the Ad=usted &rial 6alance will prepared to ,,,,,,,,%veri*y t"at t"e debits and credits are in balance

&he income statement is prepared from the ,,,,,,,,,%eit"er t"e adusted trial balance or t"e inco#e state#ent colu#ns o* t"e wor s"eet

When preparing the Ctatement of -wner.s Equit( the )eginning )alance should )efollowed )( ,,,, to arrive at the ending )alance of owner.s equit(%invest#ents plus net inco#e 6loss less wit"drawals

Dong;term lia)ilities are those lia)ilities that ,,,,,,,,%are due to be paid in #ore t"an one year

&he owner.s equit( is ,,,,,,,,%added to liabilities and t"e two are equal to assets

-n which financial statement will Income Cummar( )e shown?8o *inancial state#ent

&here are four closing entries% &he first one is to close ,,,," the second one is to close ,,,," the third one is to close ,,,," and the last one is to close ,,,,%-evenues, e!penses, inco#e su##ary, drawing account

&he entr( to close the appropriate insurance account at the end of the accounting period is ,,,,,,,%debit (nco#e Su##ary; credit (nsurance !pense


6/12

A summar( of selected ledger accounts appear )elow for &ed+s Auto Cervices for the /##2calendar (ear end%

&ed" 4apital'/G*' 2"### 'G' !"###

'/G*' '2"###

&ed" rawing

G*# /"### '/G*' 2"###

''G*# !"###

Income Cummar(

'/G*' '!"### '/G*' */"###

'/G*' '2"###

5et income for the period is ,,,,,,,,%$17,000

@ed @ock Ctone purchased a one;(ear lia)ilit( insurance polic( on


7/12

D% antle" 4apital ''"### ''"###

D% antle" rawing '"### '"###

Fees Earned 2"### 2"###

Wages EBpense /'"### /'"###

@ent EBpense "### "###epreciation EBpense !"### !"###

&otals 2"### 2"### */"### 2"### "### /"###

5et Income 0Doss1 '!"### '!"###

2"### 2"### "### "###

&he =ournal entr( to close revenues would )e: ,,,,,,,,,%debit ees arned $+7,000; credit (nco#e Su##ary $+7,000

&he proper sequence for the steps in the accounting c(cle is a follows: ,,,,,,,,%analy:e and record transactions, post transactions to t"e ledger, prepare a trial

balance, analy:e adust#ent data, prepare adusting entries, prepare *inancial

state#ents, ournali:e closing entries and post to t"e ledger

&he following are steps in the accounting c(cle% -f the following" which would )e prepared last?

%n adusted trial balance is prepared4

&he fiscal (ear selected )( companies ,,,,,,,,,% begins wit" t"e *irst day o* t"e #ont" and ends on t"e last day o* t"e twel*t" #ont"

A fiscal (ear ,,,,,,,,%ordinarily begins on t"e *irst day o* a #ont" and ends on t"e last day o* t"e

*ollowing twel*t" #ont"

&he natural )usiness (ear ,,,,,,,%is a *iscal year t"at ends w"en business activities are at its lowest point

A compan( using the periodic inventor( s(stem has the following account )alances:erchandise Inventor( at the )eginning of the (ear" $"###J &ransportation;In" $!#J


8/12

>urchases" $'/"###J >urchases @eturns and Allowances" $/"*##J >urchases iscounts"$//#% &he cost of merchandise purchased is equal to ,,,,,,,%$9,90

sing the following information" what is the amount of cost of merchandise sold?

>urchases $/"### >urchases discounts $##

erchandise inventor(April '

"!## erchandise inventor(April *#

2"##

Cales returns andallowances

2!# Cales !2"###

>urchases returns andallowances

'"### &ransportation In #

25,7/0

sing the following information" what is the amount of merchandise availa)le for sale?

>urchases $/"### >urchases discounts $##

erchandise inventor(April '

"!## erchandise inventor(April *#

2"##

Cales returns andallowances

2!# Cales !2"###

>urchases returns and

allowances

'"### &ransportation In #

,5/0


9/12

A retailer purchases merchandise with a catalog list price of $'#"###% &he retailerreceives a /!K trade discount and credit terms of /G'#" nG*#% What amount should theretailer de)it to the erchandise Inventor( account?$7,500

Which account will )e included in )oth service and merchandising companies closingentries?Sales

&aking a ph(sical count of inventor( ,,,,,,,,%is a detective control

Which of the following is not true a)out taking ph(sical inventories?&"ysical inventories are taen w"en inventory levels are at t"eir "ig"est4

&he 6a)( 4ompan( sells )lankets for $*# each% &he following was taken from theinventor( records during roduct & nits 4ost

urchase ! $'!

urchase '# $'2


10/12

'' >urchase '* units L $'2

' Cale ' units

/' >urchase units L $/#

/! Cale '# units

Assuming the )usiness maintains a perpetual inventor( s(stem" calculate the cost ofmerchandise sold and ending inventor( under First;in" first;out: ,,,,,,,%cost o* #erc"andise sold +.1; ending inventory 120

&he following lots of a particular commodit( were availa)le for sale during the (ear:

6eginning inventor( '# units at $!#

First purchase /! units at $!*

Cecond purchase *# units at $!

&hird purchase '! units at $#

&he firm uses the periodic s(stem and there are /# units of the commodit( on hand at theend of the (ear% What is the amount of inventor( at the end of the (ear according to thefirst;in" first;out method?$1,170

&he following lots of a particular commodit( were availa)le for sale during the (ear:

6eginning inventor( '# units at $#

First purchase /! units at $*

Cecond purchase *# units at $

&hird purchase '! units at $2#

&he firm uses the periodic s(stem and there are /# units of the commodit( on hand at theend of the (ear% What is the amount of the inventor( at the end of the (ear according tothe lower of cost or market" using the first;in" first;out method" if the current replacementcost is $ a unit?$1,2/0


11/12

uring a period of falling prices" which of the following inventor( methods generall(results in the lowest )alance sheet amount for inventor(?( #et"od

uring the taking of its ph(sical inventor( on ecem)er *'" /##" Al)ert.s 6ike Chopincorrectl( counted its inventor( as $/'#"### instead of the correct amount of $'#"###%&he effect on the )alance sheet and income statement would )e as follows: ,,,,,,,,,%assets and retained earnings overstated by $0,000; net inco#e overstated by

$0,000


12/12

If" while taking a ph(sical inventor(" the compan( counts their inventor( figures morethan the actual amount% ow will the error affect their )ottom line?8et inco#e will be overstated

Documents

Accounting 1 Final Study Guide Version 1