ACCT 207 Bethany Lutheran College Accounting Revenue Depreciation & Income Questions

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I need help with my ACCT test. The test is 12 true false, 14 multiple choices, and 3 problem solving. I have attached the file in the request below, and please ask me if you have any question. I will provide more information later if needed.

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Name: _________________________________ Section: A or B ACCT 207-Exam 2 61 Points True/False (12 points, 1 point each) 1. Net income results when expenses exceed revenues. ____ ____ 2. One application of accrual accounting is adjusting the accounts. ___ ____ 3. Accrual accounting recognizes revenues and expenses at the point that cash changes hands. _____ _____ 4. Depreciation Expense–Equipment is an example of a contra account. ___ ___ 5. In the accounting cycle, closing entries are prepared before adjusting entries. ____ ___ 6. Temporary account balances are reduced to zero by closing entries. ____ ____ 7. Accounts Receivable is closed to Income Summary as part of the closing process. 8. Supplies Expense is a temporary account. ____ ___ ____ _____ 9. After all closing entries have been recorded, the balance of the Income Summary account will be zero. _____ ______ 10. A revenue account is closed with a debit to the revenue account and a credit to Income Summary. _____ _______ 11. Income Summary is closed with a debit to Income Summary and a credit to the Withdrawals account. ____ _____ 12. An adjusted trial balance provides all the data needed to record the closing entries. ___ ___ Multiple Choices (14 points, 1 point each) 1. Which of the following is not an application of accrual accounting? a. Recognizing revenues when earned and expenses when incurred. b. Applying the matching rule. c. Adjusting the accounts. d. Recording on the basis of actual receipt and payment of cash. Name: _________________________________ Section: A or B 2. What is the adjusting entry for that portion of revenue received in advance which has now been earned? a. Unearned Revenue – Debit; Cash – Credit b. Unearned Revenue – Debit; Service Revenue – Credit c. Service Revenue – Debit; Unearned Revenue – Credit d. Cash – Debit; Unearned Revenue – Credit 3. An adjusting entry made to record salaries earned but not yet paid or recorded is made with which of the following entries? a. Salaries Expense – Debit; Cash – Credit b. Salaries Payable – Debit; Salaries Expense – Credit c. Salaries Expense – Debit; Salaries Payable – Credit d. Cash – Debit; Salaries Expense – Credit 4. Which of the following accounts is a contra account? a. Accumulated Depreciation–Office Furniture b. Interest Payable c. Depreciation Expense–Office Furniture d. Unearned Revenue 5. The Supplies account had a $720 debit balance at the end of the accounting period before adjustment for supplies used, and an inventory of $160 of unused supplies was on hand. Which of the following is the required adjusting entry? a. Debit Supplies Expense $160 and credit Supplies $160. b. Debit Supplies Expense $560 and credit Supplies $560. c. Debit Supplies $160 and credit Supplies Expense $160. d. Debit Supplies $560 and credit Supplies Expense $560. 6. Use this information pertaining to ABC Company to answer the following question. The company received a $3,600 advance payment during the year on services to be performed. By the end of the year, 1/3 of the services had been performed (Hint: What is 1/3 of 3,600). The adjusting entry to record the amount of service revenue earned during the accounting period is a. Service Revenue 2,400 Unearned Revenue 2,400 b. Unearned Revenue 1,200 Name: _________________________________ Section: A or B Service Revenue 1,200 c. Service Revenue 1,200 Unearned Revenue 1,200 d. Unearned Revenue 2,400 Service Revenue 2,400 7. Which of the following accounts is a Permanent account? a. Building b. Depreciation Expense–Buildings c. Interest Expense d. Service Revenue 8. Closing entries are made a. to clear revenue and expense accounts of their balances. b. to clear withdrawals of its balance. c. to summarize a period’s revenues and expenses. d. All of these choices. 9. An important purpose of closing entries is to a. set temporary account balances to zero to begin the next period. b. adjust the accounts in the ledger. c. help in preparing financial statements. d. set permanent account balances to zero to begin the next period. 10. Closing entries ultimately will affect a. total liabilities. b. the Cash account. c. the owner's Capital account. d. total assets. 11. Use the following adjusted trial balance to answer the question below. John’s Jet Skis Adjusted Trial Bala December nce 31, 20 x5 Name: _________________________________ Cash Section: A or B $ 25,000 Accounts Receivable 35,000 Supplies 15,000 Prepaid Insurance 25,000 Building 142,000 Accumulated Depreciation–Building $ 30,000 Accounts Payable 60,000 John Clair, Capital 100,000 John Clair, Withdrawals 40,000 Jet Ski Rentals 192,000 Depreciation Expense-Building 10,000 Wages Expense 70,000 Insurance Expense 20,000 $382,000 _______ $382,000 The entry to close the John Clair, Withdrawals account is: a. John Clair, Withdrawals 40,000 Income Summary 40,000 b. John Clair, Withdrawals 40,000 John Clair, Capital 40,000 c. John Clair, Withdrawals 40,000 Income Summary 40,000 d. John Clair, Capital 40,000 John Clair, Withdrawals 40,000 13. Use the following adjusted trial balance to answer the question below. John’s Jet Skis Adjusted Trial Bala December nce 31, 20 x5 Cash $ 25,000 Name: _________________________________ Section: A or B Accounts Receivable 35,000 Supplies 15,000 Prepaid Insurance 25,000 Building 142,000 Accumulated Depreciation–Building $ 30,000 Accounts Payable 60,000 John Clair, Capital 100,000 John Clair, Withdrawals 40,000 Rentals Revenue 192,000 Depreciation Expense-Building 10,000 Wages Expense 70,000 Insurance Expense 20,000 $382,000 _______ $382,000 The entry to close the Jet Ski Rentals account is a. Income Summary 192,000 Rentals Revenue 192,000 b. Rentals Revenue 192,000 John Clair, Withdrawals 192,000 c. John Clair, Capital 192,000 Rentals Revenue 192,000 d. Rentals Revenue 192,000 Income Summary 192,000 14. The post-closing trial balance would not include which of the following accounts? a. Unearned Legal Revenue b. Accumulated Depreciation–Office Equipment c. Withdrawals d. Owner's Capital Name: _________________________________ Section: A or B Problem (35 points) 1. Indicate with an X in the appropriate column the type of entry to be made to close the following accounts: (3 points) a. Design Revenue b. Telephone Expense c. Withdrawals d. Cash e. Depreciation ExpenseBuilding f. Owner's Capital Debit ____ ____ ____ ____ ____ Credit ____ ____ ____ ____ ____ Not Closed ____ ____ ____ ____ ____ ____ ____ ____ 2. In the journal provided, prepare adjusting entries for the following items. Omit explanations. (If no entry is required for a transaction/event, write "No Journal Entry Required".) (12 points) List of accounts: Supplies, Acct. Rec., Acct. Pay., Wage Expense, Equipment Expense, Cash, Service Revenue, Unearned Service Revenue, Owner’s capital, Supplies Expense, Depreciation Expense, Wage payable, Accumulated Depreciation a. Depreciation on machinery is $940 for the accounting period. b. Office supplies of $600 were on hand at the beginning of the period. Purchases of office supplies during the period totaled $200. At the end of the period, $80 in office supplies remained. c. Wages of $4,000 are paid every Friday for a five-day workweek. If July 1 falls on a Wednesday, the adjusting entry for wages would be recorded at what amount? Transaction a. b. General Journal $$ $$ Name: _________________________________ Section: A or B c. 3. In the journal provided, prepare Sterling's closing entries. Omit explanations. (20 points) Below are the adjusted accounts of Sterling Company for the month ended May 31, 20x5, listed in alphabetical order: Accounts Payable Accounts Receivable Accumulated DepreciationOffice Equipment Cash Commissions Revenue Depreciation ExpenseOffice Equipment $ 6,000 Office Equipment 24,000 Prepaid Rent Salaries Expense 30,000 Paul Sterling, Capital 12,000 Paul Sterling, Withdrawals 54,000 Utilities Expense $75,000 11,000 18,000 60,000 7,500 1,000 1,500 List of accounts: Commissions Revenue, Acct. Rec., Acct. Pay., Wage Expense, Equipment Expense, Cash, Service Revenue, Salaries Expense , Unearned Service Revenue, Paul Sterling, Capital, Supplies Expense, Depreciation Expense, Income Summary, Wage payable, Paul Sterling, Withdrawals, Depreciation Expense–Office Equipment, Utilities Expense Transaction Step 1 Step 2 Step 3 General Journal $$ $$ Name: _________________________________ Step 4 Section: A or B
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Explanation & Answer

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Name: _________________________________

Section: A or B

ACCT 207-Exam 2
61 Points
True/False (12 points, 1 point each)
1. Net income results when expenses exceed revenues.
2. One application of accrual accounting is adjusting the accounts.

False
True___ ____

3. Accrual accounting recognizes revenues and expenses at the point that cash changes hands.
False
4. Depreciation Expense–Equipment is an example of a contra account. False
5. In the accounting cycle, closing entries are prepared before adjusting entries. True

6. Temporary account balances are reduced to zero by closing entries. True
7. Accounts Receivable is closed to Income Summary as part of the closing process. True

Supplies Expense is a temporaryaccount.
8. True

9. After all closing entries have been recorded, the balance of the Income Summary account will
be zero. ____True_ ______
10. A revenue account is closed with a debit to the revenue account and a credit to Income Summary.
_____ True_______

11. Income Summary is closed with a debit to Income Summary and a credit to the Withdrawals
account .____True _____
12. An adjusted trial balance provides all the data needed to record the closing entries. ___True ___
Multiple Choices (14 points, 1 point each)
1. Which of the following is not an application of accrual accounting?
a. Recognizing revenues when earned and expenses when incurred.
b. Applying the matching rule.
c. Adjusting the accounts.
d. Recording on the basis of actual receipt and payment of cash.

Name: _________________________________

Section: A or B

2. What is the adjusting entry for that portion of revenue received in advance which has
now been earned?
a. Unearned Revenue – Debit; Cash – Credit
b. Unearned Revenue – Debit; Service ...


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