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PART I ? MULTIPLE CHOICE (54 points) Instructio...




PART I ? MULTIPLE CHOICE (54 points) Instructions: Designate the best answer for each of the following questions. ____ 1. "GAAP" refers to a. General Accounting and Auditing Principles. b. Guidelines for American Accounting Procedures. c. General Association of Accounting Practitioners. d. None of the above. ____ 2. The requirement that only transaction data capable of being expressed in terms of money be included in the accounting records relates to the a. cost principle. b. monetary unit assumption. c. economic entity assumption. d. both a and b above. ____ 3. The initials CPA stand for a. Certified Practical Auditor. b. Chartered Public Auditor. c. Certified Public Accountant. d. Can't Pass Accounting. ____ 4. Which of the following is not an external user of accounting data? a. Company officers b. Regulatory agency c. Labor union d. Taxing authority ____ 5. Which of the following is not generally understood to be a major service of a public accounting firm? a. Auditing b. Taxation c. Budgeting d. Management consulting ____ 6. Which of the following presents key aspects of the process of accounting in the correct chronological order? a. Totaling, auditing, and budgeting b. Budgeting, recording, and communicating c. Recording, totaling, and auditing d. Identifying, recording, and communicating ____ 7. The process of transferring transaction effects into the appropriate accounts is referred to as a. closing. b. journalizing. c. recording. d. posting. ____ 8. The following describes the process of identifying the economic events of an organization: a. Keeping a chronological diary of particular events in an orderly and systematic manner. b. Selecting the economic activities relevant to a particular organization. c. Preparing accounting reports, including financial statements. d. Quantifying events in dollars and cents. ____ 9. The current source of "GAAP" in the private sector is the a. Accounting Principles Board. b. Internal Revenue Service. c. Financial Accounting Standards Board. d. Securities Exchange Commission. ____ 10. Transactions are initially recorded in the a. general ledger. b. trial balance. c. general journal. d. balance sheet. ____ 11. The Retained Earnings Column had a beginning total of $40,000 and an ending total of $50,000. If $10,000 of dividends were paid during the period, net income must have been a. $20,000. b. $40,000. c. $10,000. d. $30,000. ____ 12. Which of the following is false with regard to a general journal? a. It tracks the increases and decreases in an individual account. b. It provides a chronological record of transactions. c. It discloses in one place the complete effect of a transaction. d. It helps to prevent errors since the debit and credit amounts in an individual entry can be readily compared. ____ 13. Financial statements combining the operations of Sears and J.C. Penney would violate the a. monetary unit assumption. b. economic entity assumption. c. cost principle. d. both a and c above. ____ 14. At January 1, 2008, Orion Enterprises reported accounts receivable totaling $3,500. During the month, the company had credit sales of $7,000 and collected cash on accounts of $6,000. At the end of January, the balance in accounts receivable is a. $3,500 credit b. $9,500 debit c. $2,500 credit d. $4,500 debit ____ 15. The accounting equation for Ally Elton, Inc. is: Assets $120,000 = Liabilities $50,000 + Stockholders? Equity $70,000. If the company purchases supplies on account for $5,000, the new accounting equation will be: a. Assets $115,000 = Liabilities $50,000 + Stockholders? Equity $70,000. b. Assets $125,000 = Liabilities $55,000 + Stockholders? Equity $70,000. c. Assets $125,000 = Liabilities $50,000 + Stockholders? Equity $75,000. d. Assets $120,000 = Liabilities $55,000 + Stockholders? Equity $65,000. ____ 16. Although a separate legal entity, the transactions of the following still must be kept separate from the personal activities of the owners for accounting purposes: a. Proprietorship. b. Partnership. c. Corporation. d. Both a and b above. ____ 17. Limited liability is not enjoyed by the owner(s) of a a. corporation. b. partnership. c. proprietorship. d. both b and c above. ____ 18. At June 1, 2008, Larry Levine Company reported Accounts Payable of $5,000. During the month, the company made purchases on account of $17,000 and payments on account of $10,000. At June 30, 2008, the balance in Accounts Payable is a. $5,000 debit b. $12,000 credit c. $22,000 credit d. $10,000 debit. PART II ? JOURNAL ENTRIES (26 points) The ledger accounts given below, with an identification number for each, are used by Wayne Company. Instructions: Indicate the appropriate entries for the month of June by placing the appropriate identification number(s) in the debit and credit columns provided. Item 0 is given as an example. Write "none" if no entry is appropriate. 1. Cash 7. Salaries Payable 13. Service Revenue 2. Accounts Receivable 8. Accounts Payable 14. Equipment Expense 3. Supplies 9. Unearned Service Revenue 15. Advertising Expense 4. Prepaid Salaries 10. Notes Payable 16. Supplies Expense 5. Prepaid Advertising 11. Common Stock 17. Rent Expense 6. Equipment 12. Dividends 18. Salaries Expense ??????????????????????????????????????????? Entry Account(s) Account(s) No. Entry Information Debited Credited 0. June 1 H. Wayne invested $25,000 in the business. 1 11 ??????????????????????????????????????????? 1. June 4 Purchased supplies costing $2,000 on account. ??????????????????????????????????????????? 2. June 5 Equipment was purchased at a cost of $5,000; a three-month, 12% note payable was signed for this amount. ??????????????????????????????????????????? 3. June 8 Received $7,000 from customers for services rendered during the week. ??????????????????????????????????????????? 4. June 10 Wayne agreed to hire B. Kiner as an assistant. She will be paid at the rate of $4,000 monthly, receiving $2,000 on the 15th and 30th of each month. She will begin work June 16. ??????????????????????????????????????????? 5. June 14 Paid $400 cash to the Daily News for advertisements run this past week. ??????????????????????????????????????????? 6. June 16 B. Kiner began work. ??????????????????????????????????????????? 7. June 19 Paid $2,000 in cash to Santo Company for June rent. ??????????????????????????????????????????? 8. June 25 Paid supplier for supplies purchased on June 4. ??????????????????????????????????????????? 9. June 26 Paid the Daily News $400 for an advertisement that will run the first week in July. ??????????????????????????????????????????? 10. June 27 Received $9,000 from customers for services to be rendered early in July. ??????????????????????????????????????????? 11. June 28 Billed customers $6,000 for services rendered but not collected during June. ??????????????????????????????????????????? 12. June 30 Wayne paid $900 of dividends. ??????????????????????????????????????????? 13. June 30 B. Kiner was paid $2,000 cash for her salary. ??????????????????????????????????????????? PART III ? SHORT PROBLEMS (10 points) Instructions: Present the solutions, with appropriate supporting calculations, for each of the following independent problems. A. Given the following information, compute 2008 net income for Orson Company. B. Stockholders? equity?January 1, 2008 $125,000 B. Stockholders? equity?December 31, 2008 160,000 Stockholder investments during 2008 20,000 Dividends paid during 2008 38,000 B. Indicate the impact on the accounting equation of each of the following transactions. 1. Owner investment of cash. 2. Purchase of equipment for cash 3. Borrowed money from bank by issuing a note payable. 4. Purchase of office furniture for cash. 5. Purchase of supplies on account. 6. Collect cash from customers for services performed. 7. Purchased 24-month insurance policy 8. Paid monthly payroll. PART IV ? TYPES OF ACCOUNTS (10 points) Instructions: Place a check in the appropriate columns to designate whether each of the following accounts: (1) has a debit or credit normal balance; and (2) is an asset, liability, or stockholders? equity account. ??????????????????????????????????????????? (1) (2) Stockholders? Account Debit Credit Asset Liability Equity ??????????????????????????????????????????? 1. Service Revenue ??????????????????????????????????????????? 2. Salaries Expense ??????????????????????????????????????????? 3. Supplies ??????????????????????????????????????????? 4. Common Stock ??????????????????????????????????????????? 5. Accounts Payable ??????????????????????????????????????????? 6. Salaries Payable ??????????????????????????????????????????? 7. Dividends ??????????????????????????????????????????? 8. Accounts Receivable ??????????????????????????????????????????? 9. Prepaid Insurance ??????????????????????????????????????????? 10. Notes Payable ???????????????????????????????????????????


Paper#6501 | Written in 18-Jul-2015

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