Accounting 15 MCQs and 3 Questions

. (TCO 1) Operating expenses appear on the income statementdirectly after revenue.directly after gross profit.directly after cost of goods sold.nowhere; operating expenses do not appear on the income statement.Question 2.2. (TCO 1) The amount of a telephone bill is included in thebalance sheet with the long-term assets.income statement with the revenues.income statement with the operating expenses.balance sheet with the current assets.Question 3.3. (TCO 2) Net income is computed asrevenues plus expenses plus dividends.revenues plus expenses.revenues minus expenses.revenues only.Question 4.4. (TCO 2) Common stock appears on thebalance sheet.income statement.statement of cash flows and the statement of retained earnings.None of the aboveQuestion 5.5. (TCO 3) If the debit amount of an entry to record the purchase of supplies on account was not posted, thenassets would be understated.assets would be overstated.liabilities would be understated.liabilities would be overstated.Question 6.6. (TCO 3) If the credit amount of an entry to record the payment of rent was not posted, thenstockholders’ equity would be understated.assets would be overstated.expenses would be overstated.expenses would be understated.Question 7.7. (TCO 4) On September 1 of the current year, Prepaid Rent was debited $6,000 for 6 months of rent, in advance. The amount of the adjusting entry on December 31 is$6,000.$0.$2,000.$4,000.Question 8.8. (TCO 4) On November 1 of the current year, Stella Simon received $5,400 for legal services to be performed evenly throughout the next 12 months. The adjusting entry on December 31 of the current year would include adebit to Unearned Service Revenue for $5,400.credit to Unearned Service Revenue $900.debit to Service Revenue $5,400.credit to Service Revenue $900.Question 9.9. (TCO 5) If a bookkeeper mistakenly recorded a $63 deposit as $36, the error would be shown on the bank reconciliation as a$36 deduction from the book balance.$36 addition to the book balance.$27 deduction from the book balance.$27 addition to the book balance.Question 10.10. (TCO 5) On the bank reconciliation, an NSF check isdeducted from the bank balance.added to the bank balance.deducted from the book balance.added to the book balance.Question 11.11. (TCO 6) The two accepted methods of recording bad debts are theallowance method and the direct write-off method.receivables method and the aging method.allowance method and the aging method.direct write-off method and the percentage-of-sales method.Question 12.12. (TCO 6) Under the allowance method for estimating uncollectible accounts, the entry to record the estimated bad debtsincreases total assets.reduces net income.has no effect on total assets or net income.increases net income and decreases total assets.Question 13.13. (TCO 1) Assets appear on thebalance sheet.retained earnings statement.income statement.statement of cash flows.Question 14.14. (TCO 1) The balance sheet reports information aboutassets, liabilities, and equity.revenues, expenses, and equity.liabilities, equity, and expenses.assets, revenues, and liabilities.Question 15.15. (TCO 2) What is the first step in the journalizing process?Determine what accounts will be affected and whether to debit or credit them.Identify the transaction from source documents and other information.Post the transaction to the ledger.Enter the transaction in the journal.1. (TCO 1) Owner’s equity on 1/1/2013 and 12/31/2013 were $130,000 and $140,000, respectively. Assets on 1/1/2013 and 12/31/2013 were $210,000 and $250,000, respectively. Liabilities on 1/1/2013 were $80,000. What is the amount of liabilities on 12/31/2013? Describe how you used the accounting equation to come up with your answer. Why is the accounting equation so important to accounting?2.Journalize the following transactions:i. Began business by making a deposit in a company bank account of $48,000, in exchange for 4,800 shares of common stock.ii. Paid the premium on a 1-year insurance policy, $1,400.iii. Paid the current month’s rent, $3,000.3.Flamingo, Inc. has the following assets, liabilities, revenues, and expenses for the current year.EquipmentRent expenseSalary expenseCashLandService revenueNote payableSupplies expenseInterest payableBuildingInsurance expenseAccounts receivableCommon stockAccounts payableUtilities expense $45,000?$24,000?$68,000?$10,000?$18,000?$125,000?$30,000?$4,000?$500 ?$100,000?$1,500?$14,500?$21,000?$19,500?$12,000Prepare the Income Statement for ABC, Inc. for the current year.Prepare adjusting entries for the year ended December 31, 2013, based on the following data:i. A 1-year insurance policy costing $1,200 was purchased on September 30, 2013.ii. Employee salaries are owed for 4 days of a regular 5-day work week. Weekly payroll, $8,000.iii. The balance in Supplies before adjustment is $2,600. A physical count reveals $1,350 of supplies on hand on December 31, 2013.iv. Equipment was purchased at the beginning of the year for $40,000. The equipment has a useful life of 5 years and no salvage value.v. Unearned Service Revenue has a balance of $6,300 before adjustment. Records show that $3,425 of that amount has been earned by December 31, 2013.