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The adjusting entry to record an expense related to the use of a delivery van would involve which of the following?


A) A debit to Accumulated Depreciation
B) A credit to Delivery Van
C) A debit to Depreciation Expense
D) A debit to Retained Earnings

E) A) and B)
F) A) and C)

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A transaction has been recorded in the T-accounts of Horowitz Corporation as follows: Cash 25,000\begin{array}{cc}\text {Cash }\\\hline\begin{array}{ll|l}&25,000& \\\end{array}\end{array} Common Stock 25,000\begin{array}{cc}\text {Common Stock }\\\hline\begin{array}{ll|l}&&25,000 \\\end{array}\end{array} Which of the following reflects how this event affects the company's financial statements?  Stk.  Stmt of  Asset = Liab. + Equity  Rev. − Exp. = Net Inc.  Cash Flows A+=++NANA−NA=NA+FAB+=NA++NA−NA=NA+FAC−=NA+−−−NA=−+OAD−=−+NANA−+=−−IA\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | } \hline&&&&&\text { Stk. }&&&&&&\text { Stmt of }\\ &\text { Asset }&=&\text { Liab. }&+&\text { Equity }&\text { Rev. }&-&\text { Exp. }&=&\text { Net Inc. }&\text { Cash Flows }\\\hline A&+&=&+&+&NA&NA&-&NA&=&NA&+FA\\\hline B&+&=&NA&+&+&NA&-&NA&=&NA&+FA\\\hline C&-&=&NA&+&-&-&-&NA&=&-&+OA\\\hline D&-&=&-&+&NA&NA&-&+&=&-&-IA\\\hline\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

E) A) and B)
F) None of the above

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Valley Packaging Company's adjusted trial balance showed a zero balance in retained earnings.Which of the following is the most likely explanation for this?


A) Valley reported zero net income in the current year.
B) Valley's trial balance will be out of balance until closing entries are recorded.
C) The current year was Valley's first year in business.
D) An error must have been made in preparing Valley's trial balance.

E) All of the above
F) A) and D)

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C

[The following information applies to the questions displayed below.] The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1:  Cash $4,000 Accounts receivable $3,400 Dividends 2,000 Common stock 3,900 Land 3,200 Revenue 3,200 Accounts payable 1,800 Expense 2,200 Retained earnings 5,900\begin{array}{lrlr}\text { Cash } & \$ 4,000 & \text { Accounts receivable } & \$ 3,400 \\\text { Dividends } & 2,000 & \text { Common stock } & 3,900 \\\text { Land } & 3,200 & \text { Revenue } & 3,200 \\\text { Accounts payable } & 1,800 & \text { Expense } & 2,200 \\\text { Retained earnings } & 5,900 & &\end{array} -The amount of Carolina's retained earnings on December 31,Year 1 was:


A) $5,900
B) $7,200
C) $3,900
D) $4,900

E) C) and D)
F) None of the above

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The following transaction has been recorded in the general journal entry:  Accourts Payable 1,200 Cash 1,200\begin{array} { | l | r | r | } \hline \text { Accourts Payable } & 1,200 & \\\hline \text { Cash } & & 1,200 \\\hline\end{array} Which of the following could be an explanation for this transaction?


A) Provided services on account.
B) Paid cash to settle accounts payable.
C) Collected cash from customers.
D) Borrowed money to support operating activities.

E) C) and D)
F) All of the above

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The Dividends account normally has a credit balance.

A) True
B) False

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A transaction has been recorded in the general journal of Manella Company as follows:  Cash 6,000 Unearned Reverue 6,000\begin{array} { | l | r | r | } \hline \text { Cash } & 6,000 & \\\hline \text { Unearned Reverue } & & 6,000 \\\hline\end{array} Which of the following could be an explanation for this transaction?


A) Paid cash to a customer who requested a refund.
B) Received cash in advance for work to be performed in future months.
C) Recorded adjusting entry for work completed.
D) Received cash for services completed.

E) A) and D)
F) A) and C)

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B

[The following information applies to the questions displayed below.]  Account No.  Account Title (1)  Cash (2)  Service Revenue (3)  Accounts Receivable (4)  Salaries Expense (5)  Dividends (6)  Common Stock (7)  Salaries Payable (8)  Retained Earnings \begin{array}{|c|l|}\hline \text { Account No. } &{\text { Account Title }} \\\hline(1) & \text { Cash } \\\hline(2) & \text { Service Revenue } \\\hline(3) & \text { Accounts Receivable } \\\hline(4) & \text { Salaries Expense } \\\hline(5) & \text { Dividends } \\\hline(6) & \text { Common Stock } \\\hline(7) & \text { Salaries Payable } \\\hline(8) & \text { Retained Earnings } \\\hline\end{array} -Which of the following is a true statement? (Note: A statement may be true even if it does not identify all accounts that have debit balances on that particular financial statement) .


A) Account numbers 1, 3, and 5 normally have debit balances.
B) Account numbers 2, 4, and 5 normally have debit balances.
C) Account numbers 2, 5, and 8 normally have debit balances.
D) Account numbers 4, 5, and 6 normally have debit balances.

E) C) and D)
F) A) and B)

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Warren Company began the accounting period with a $32,000 debit balance in its accounts receivable account.During the accounting period,the company recorded revenue on account amounting to $88,000.The accounts receivable account at the end of the accounting period contained a $16,000 debit balance.Based on this information,what is the amount of cash collected from customers during the period?


A) $104,000
B) $40,000
C) $72,000
D) $84,000

E) B) and D)
F) B) and C)

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To record an asset source transaction,an asset account would be debited and a liability or stockholders' equity account credited.

A) True
B) False

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Many companies choose to end their fiscal years during a part of the year when they expect low activity.

A) True
B) False

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Which of the following statements regarding credit entries is true?


A) Credits decrease liability accounts.
B) Credits increase asset accounts.
C) Credits increase the common stock account.
D) Credits increase asset and common stock accounts, and decrease liability accounts.

E) C) and D)
F) B) and D)

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C

Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period.How would the related adjusting entry be recorded in the company's T-accounts?


A) Salaries Expense 500\begin{array}{cc}\text {Salaries Expense }\\\hline\begin{array}{ll|l}&500& \\\end{array}\end{array}
Cash 500\begin{array}{cc}\text {Cash }\\\hline\begin{array}{ll|l}&&500 \\\end{array}\end{array}
B) Cash 500\begin{array}{cc}\text {Cash }\\\hline\begin{array}{ll|l}&500 \\\end{array}\end{array}
Salaries Expense 500\begin{array}{cc}\text {Salaries Expense }\\\hline\begin{array}{ll|l}&&500& \\\end{array}\end{array}
C) Salaries Expense 500\begin{array}{cc}\text {Salaries Expense }\\\hline\begin{array}{ll|l}&500& \\\end{array}\end{array}
Salaries Payable 500\begin{array}{cc}\text {Salaries Payable }\\\hline\begin{array}{ll|l}&&500 \\\end{array}\end{array}
D) Salaries Payable 500\begin{array}{cc}\text {Salaries Payable }\\\hline\begin{array}{ll|l}&500 \\\end{array}\end{array}
Salaries Expense 500\begin{array}{cc}\text {Salaries Expense }\\\hline\begin{array}{ll|l}&&500& \\\end{array}\end{array}

E) None of the above
F) A) and B)

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Which of the following statements is true?


A) Adjusting entries are recorded after the closing entries have been recorded.
B) Equal totals in a trial balance guarantees that no errors were made in the recording process.
C) Debits are equal to credits only after closing entries have been recorded.
D) The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger.

E) None of the above
F) All of the above

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Manhattan Company recorded an adjusting entry to accrue interest owed of $300 as of December 31,Year 1.When the related note was paid during Year 2,the company paid $450 in interest.Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry.)


A)  Iriterest Expernse 450 Cash 450\begin{array} { | l | r | r | } \hline \text { Iriterest Expernse } & 450 & \\\hline \text { Cash } & & 450 \\\hline\end{array}
B)  Iriterest Experse 450 Cash 300 Iriterest Payable 150\begin{array} { | l | r | r | } \hline \text { Iriterest Experse } & 450 & \\\hline \text { Cash } & & 300 \\\hline \text { Iriterest Payable } & & 150 \\\hline\end{array}
C)  Iriterest Expernse 150 Cash 150\begin{array} { | l | r | r | } \hline \text { Iriterest Expernse } & 150 & \\\hline \text { Cash } & & 150 \\\hline\end{array}
D)  Iriterest Expense 150 Iriterest Payable 300 Cash 450\begin{array} { | l | r | r | } \hline \text { Iriterest Expense } & 150 & \\\hline \text { Iriterest Payable } & 300 & \\\hline \text { Cash } & & 450 \\\hline\end{array}

E) B) and C)
F) A) and B)

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The type of transaction that would be represented by a debit to one asset and a credit to another asset is an asset source transaction.

A) True
B) False

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The following entry is taken from the journal of a merchandising company:  Cost of Goods Sold 6,000 Merchandise Inventory 6,000\begin{array}{|l|r|r|}\hline \text { Cost of Goods Sold } & 6,000 & \\\hline \text { Merchandise Inventory } & & 6,000 \\\hline\end{array} What is the effect of this entry on the company's financial statements?


A) Assets and stockholders' equity increase.
B) Assets and liabilities increase.
C) Assets and stockholders' equity decrease.
D) Assets decrease and stockholders' equity increases.

E) A) and C)
F) B) and C)

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Which of the following is a (are) permanent account(s) ?


A) The Retained Earnings account
B) All income statement accounts
C) The Dividend account
D) All balance sheet accounts and the Dividends account

E) A) and D)
F) B) and D)

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Why are adjusting entries recorded at the end of the accounting period?


A) The Cash account must be adjusted for the effects of the daily transactions with customers and creditors.
B) The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance.
C) Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared.
D) The data from the temporary accounts (revenues, expenses, and dividends) must be moved into the retained earnings account.

E) A) and C)
F) B) and C)

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A company's general ledger provides a chronological record of its business transactions.

A) True
B) False

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