156 test bank for financial and managerial accounting 9th edition needles

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156 Test Bank for Financial and Managerial Accounting 9th Edition Needles

Multiple Choice Questions - Page 1

Which of the following business events is not a transaction?

1 a.Signing a contract

2 b.Paying wages

3 c.Receiving goods

4 d.Purchasing a service

The issue of deciding when to record a transaction is solved by

1 a.properly classifying the transaction.

2 b.deciding on a point of recognition.

3 c.assigning historical cost to the transaction.

4 d.analyzing the intent of management.

Which of the following accounts is increased with a debit?

1 a.Common Stock

2 b.Rent Payable

3 c.Legal Fees Earned

4 d.Dividends

If office equipment is sold at cost in exchange for a promissory note,

1 a.total liabilities increase.

2 b.total liabilities and stockholders' equity decrease.

3 c.total assets decrease.

4 d.total assets remain the same.

If Accounts Receivable has debit postings of $29,000, credit postings of

$22,000, and a normal ending balance of $24,000, which of the following was its beginning balance?

1 a.$31,000 Dr.

2 b.$17,000 Dr.

3 c.$17,000 Cr.

4 d.$31,000 Cr.

Payment on a portion of Accounts Payable will

1 a.not affect stockholders' equity.

2 b.decrease net income.

3 c.increase total liabilities.

4 d.not affect total assets.

Which pair of accounts follows the rules of debit and credit in the opposite manner?

1 a.Prepaid Insurance and Dividends

2 b.Advertising Expense and Land

3 c.Dividends and Medical Fees Earned

4 d.Interest Payable and Common Stock

Which of the following accounts has a normal debit balance?

1 a.A company hires a new employee.

2 b.A customer purchases merchandise.

3 c.A company orders a product from a supplier.

4 d.An employee sends a purchase requisition to the purchasing department.

When a company has performed a service but has not yet received payment, what is the required journal entry to be recorded?

1 a.Accounts Receivable – Debit; Revenue from Services – Credit

2 b.Revenue from Services – Debit; Accounts Payable – Credit

3 c.No entry is required until the cash is received.

4 d.Revenue from Services – Debit; Accounts Receivable – Credit

The cost principle relates most closely to the

1 a.Declaration and payment of a dividend

2 b.Advance payment made for insurance

3 c.Receipt of a phone bill, to be paid at a later time

4 d.Dividends

Which pair of accounts follows the rules of debit and credit in the same manner?

1 a.Revenue from Services and Equipment

2 b.Prepaid Rent and Advertising Expense

3 c.Repair Expense and Notes Payable

4 d.Common Stock and Rent Expense

To determine the balance of a particular account, one should refer to the

When collection is made on Accounts Receivable,

1 a.stockholders' equity increases.

2 b.total assets decrease.

3 c.total assets remain the same.

4 d.total assets increase.

Which of the following accounts has a normal credit balance?

1 a.Dividends

2 b.Automotive Equipment

3 c.Advertising Fees Earned

4 d.Interest Expense

Which of the following is not a measurement issue in accounting?

1 a.When to record a business transaction

2 b.How to classify the items of a business transaction

3 c.What value to place on a business transaction

4 d.Where to record a business transaction

Which of the following events does not require a journal entry?

1 a.Purchase of a one-year insurance policy

2 b.Agreement to perform a service at a future date

3 c.Performance of a service agreed to at a past date

4 d.Payment for a service performed previously

When a service has been performed, but no cash has been received, which of the following statements is true?

1 a.The entry would include a debit to Accounts Receivable.

2 b.No journal entry would be made.

3 c.The entry would include a debit to Accounts Payable.

4 d.The entry would include a credit to Unearned Revenue.

A purchase is recognized in the accounting records when

1 a.payment is made for the item purchased.

2 b.the purchase requisition is sent to the purchasing department.

3 c.title transfers from the seller to the buyer.

4 d.the buyer receives the seller's bill.

If Accounts Payable has debit postings of $17,000, credit postings of $14,000, and a normal ending balance of $6,000, what was its beginning balance?

1 a.A company receives a product previously ordered.

2 b.A company pays an employee for work performed.

3 c.A customer inquires about the availability of a service.

4 d.A customer purchases a service.

A company that receives money in advance of performing a service What is the journal entry for the transaction?

1 a.Unearned Revenue – Debit; Accounts Payable – Credit

2 b.Cash – Debit; Unearned Revenue – Credit

3 c.Cash – Debit; Prepaid Fees – Credit

4 d.Cash – Debit; Accounts Receivable – Credit

A $4,000 machine is purchased by paying $1,000 cash and issuing a

promissory note for the remainder The journal entry should include a

1 a.credit to Machinery.

2 b.credit to Notes Payable.

3 c.credit to Notes Receivable.

4 d.debit to Cash.

Which of the following accounts is decreased with a credit?

1 a.Advertising Fees Earned

2 b.Insurance Expense

3 c.Common Stock

4 d.Unearned Revenue

Which of the following accounts has a normal debit balance?

1 a.Art Fees Earned

2 b.Notes Payable

3 c.Prepaid Insurance

4 d.Unearned Art Fees

The declaration and payment of a dividend will

1 a.decrease net income.

2 b.increase liabilities.

3 c.not affect total assets.

4 d.decrease stockholders' equity.

When a magazine company receives advance payment for a subscription, what

is the required journal entry to be recorded?

1 a.Cash – Debit; Unearned Subscriptions Revenue – Credit

2 b.Prepaid Subscriptions – Debit; Cash – Credit

3 c.Cash – Debit; Subscriptions Revenue – Credit

4 d.Unearned Subscriptions Revenue – Debit; Cash – Credit

Which of the following accounts is decreased with a debit?

2 b.Purchase of gasoline for fill-up of a company car

3 c.Receipt of a bill from the telephone company

4 d.realization.

When a company receives an electric bill but does not pay it right away, what is the required journal entry to be recorded?

1 a.Utilities Expense – Debit; Accounts Receivable – Credit

2 b.No entry is required until the bill is paid.

3 c.Utilities Expense – Debit; Accounts Payable – Credit

4 d.Accounts Payable – Debit; Utilities Expense – Credit

Which of the following is an illustration of the classification issue?

1 a.At what amount should an old machine be shown on the balance sheet?

2 b.At what point should the purchase of art supplies be recorded?

3 c.Should tools be recorded as an asset or as an expense?

4 d.At what point should a bill be paid for the purchase of an item?

Which of the following accounts is increased with a credit?

2 b.Rent Receivable – Debit; Cash – Credit

3 c.Rent Revenue – Debit; Cash – Credit

4 d.Rent Expense– Debit; Cash – Credit

81 Free Test Bank for Financial and Managerial

Accounting 9th Edition Needles Multiple Choice Questions

4 d.liability, if the supplies have not yet been paid for.

Unearned revenues are recorded by companies that

1 a.receive money in advance of the performance of a service.

2 b.pay money at the time the performance of a service is complete.

3 c.receive money at the time the performance of a service is complete.

4 d.pay money in advance of the performance of a service.

All of the following are examples of source documents except

1 a.checks.

2 b.invoices.

3 c.journals.

4 d.receipts.

All of the following actions can help a business manage its cash flows except

1 a.convince its creditors to allow payment over a period of time.

2 b.pay for all expenditures immediately.

3 c.be efficient in making collections from its customers.

4 d.arrange for a line of credit at the bank, should the funds be needed.

Which of the following accounts should be credited in a journal entry?

1 a.Dividends, when it has been increased

2 b.Accounts Receivable, when it has been decreased

3 c.Wages Expense, when it has been increased

4 d.Wages Payable, when it has been decreased

The process of transferring journal entry information from the journal to the ledger is called

1 a.journalizing.

2 b.posting.

3 c.footing.

4 d.analyzing.

Which of the following statements is true about a journal entry?

1 a.The Post Ref column is filled in prior to posting.

2 b.All debits are listed before any credits.

3 c.The name of the month should be repeated for each entry.

4 d.An explanation must follow each debit and each credit.

Which of the following accounts will not affect stockholders' equity?

Which of the following does not affect retained earnings?

1 a.Declaration and payment of dividends

2 b.balance column of the ledger.

3 c.date column of the general journal.

4 d.Post Ref column of the general journal.

Which of the following accounts is an asset?

1 a.Retained Earnings

2 b.Notes Payable

3 c.Prepaid Rent

4 d.Supplies Expense

The principal purpose of posting is to

1 a.enter transactions directly into the ledger.

2 b.help identify errors made in the journal.

3 c.obtain updated account balances.

4 d.help determine if the financial statements are ready to be prepared.

Which of the following accounts will eventually be followed with an outflow of cash?

1 a.Design Revenue

2 b.Notes Receivable

3 c.Accounts Payable

4 d.Prepaid Rent

Which of the following terms does not mean the same as the others?

Which of the following bookkeeping techniques generally is not acceptable?

1 a.Dollar signs on financial statements

2 b.Commas and periods in ruled columns

3 c.A double line after final totals

4 d.A dash in the cents column to indicate zero cents

The chart of accounts is the starting point for a

1 a.Payment received from a credit customer

2 b.Received a bank loan

3 c.Rendered a service, payment not yet received

4 d.Declared and paid a dividend

The Post Ref column in the general ledger shows that an amount has been posted when which of the following is placed in it?

1 a.The journal page number

2 b.An X

3 c.A check mark

4 d.The account number

Which of the following accounts is classified differently from the others listed?

The purpose of the ledger is to

1 a.keep a record of documentation to support each transaction.

2 b.make sure that all assets, liabilities, etc., have credit balances at all times.

3 c.record chronologically the day's transactions.

4 d.maintain a separate account for each asset, liability, etc.

Which of the following accounts might be used when there is a time delay between a transaction and its related cash flow?

1 a.Accounts Payable

2 b.Fees Earned

3 c.Cash

4 d.Prepaid Rent

Which of the following accounts might be placed first in a journal entry?

1 a.Bonds Payable, when it has been decreased

2 b.Cash, when it has been decreased

3 c.Unearned Revenue, when it has been increased

4 d.Interest Income, when it has been increased

Which of the following gives the correct sequence of accounting procedures?

1 a.Financial statements, trial balance, ledger, journal

2 b.Financial statements, journal, ledger, trial balance

3 c.Journal, ledger, trial balance, financial statements

4 d.Ledger, trial balance, journal, financial statements

The Unearned Fees account is classified as a(n)

1 a.liability.

2 b.revenue.

4 d.Accumulated Depreciation, Buildings

Office supplies become expenses

1 a.when they are consumed (used up).

2 b.when they are paid for.

3 c.at no time, since they are an asset.

4 d.when they are purchased.

The Post Ref column in the general journal is used to show that an amount has been posted to the ledger when which of the following is placed in it?

1 a.An X

2 b.Journal number

3 c.Journal page number

4 d.Account number

Which of the following accounts will eventually be followed with an inflow of cash?

4 d.Art Fees Earned

A $70 credit item is accidentally posted as a debit The trial balance column totals will therefore differ by

1 a.$0.

2 b.$35.

3 c.$70.

4 d.$140.

Which of the following statements is true about a journal entry?

1 a.Decreases in liabilities are indented.

2 b.The Post Ref column is left blank until entries are posted.

3 c.A line is skipped between each debit and each credit.

4 d.Assets are entered before liabilities.

To find an explanation of a transaction, one should look at the

1 a.ledger.

2 b.trial balance.

3 c.journal.

4 d.chart of accounts.

Which of the following statements is false about a journal entry?

1 a.It may have more than one debit or credit entry.

2 b.Credits are always indented.

3 c.Accounts that are increased are always listed first.

4 d.A space should be skipped between journal entries.

Which of the following statements is not necessarily true about a journal entry?

1 a.Liabilities are indented.

2 b.An explanation follows the journal entry.

3 c.The Post Ref column is left blank until the entry is posted.

4 d.All debits must be recorded before any credits.

Typically, the chart of accounts begins with

1 a.revenue accounts.

2 b.asset accounts.

3 c.liability accounts.

4 d.expense accounts.

Posting is performed by transferring information from the

1 a.source documents to the journal.

2 b.source documents to the ledger.

3 c.journal to the ledger.

4 d.ledger to the journal.

True - False Questions - Page 1

The classification issue involves the assignment of accounts to business transactions

When a company receives an order, a transaction has occurred

The cost principle is a solution to the recognition issue

An increase in an asset is recorded by a debit

The valuation issue deals with how the components of a transaction should be categorized

When a company purchases goods that it will resell, it must record the goods

in an expense account

1 True

2 False

70 Free Test Bank for Financial and Managerial

Accounting 9th Edition Needles True - False Questions - Page 2

The numbering scheme of a chart of accounts should contain no gaps

In a journal entry, the Post Ref column is left blank until the entry has been posted

Journal entries are typically posted only at the end of the year

In a financial report, a double line is placed below the final total(s)

Recording an account with a debit balance as a credit, or vice versa, will cause the trial balance to be out of balance by an amount that is evenly divisible by 2

Investments by stockholders are recorded in the Common Stock account, not

in the Retained Earnings account

Accounts Receivable and Accounts Payable are used when there is a time delay between a transaction and its related cash flow

Free Text Questions

If a debit to Supplies were posted as a credit, and a credit of the same amount

to Cash were posted as a debit, what would be the effect, if any, on the two accounts and on the trial balance column totals?

valuation, and (c) classification.

Answer Given

a The transaction occurred and was recognized on November 16; b A valuation of

$685 was placed on the transaction; c The accounts involved were determined to be (classified as) Accounts Payable and Cash.

Why is the Dividends account increased by a debit? Explain in terms of its relationship to stockholders' equity.

Answer Given