Question

Which of the following assets would most likely be listed last on a statement of financial position?

Select one:

a. Land.

b. Cash.

c. Accounts receivable.

d. Equipment.

2.

Which of the following will not cause a change in the owners' equity of a business?

Select one:

a. Purchase of land with cash.

b. Withdrawal of cash by the owner.

c. Sale of land at a profit.

d. Losses from unprofitable operations.

3.

Decreases in owners' equity are caused by:

Select one:

a. Purchases of assets and payment of liabilities.

b. Purchases of assets and incurrence of liabilities.

c. Payment of liabilities and unprofitable operations.

d. Distributions of assets to the owners and unprofitable operations.

4.

The cash account of Grande Home Improvement Store shows the following: a debit on June 1 for $25,000; a credit on June 5 for $10,000, a debit on June 16 for $14,000, and a credit on June 27 for $8,000. What is the balance in the cash account at the end of June?

Select one:

a. $39,000 debit.

b. $21,000 debit.

c. $18,000 credit.

d. $21,000 credit.

5.

Which of the following accounts normally has a credit balance?

Select one:

a. Cash

b. Service revenue

c. Accounts receivable

d. Utilities expense

6.

[The following information applies to the questions displayed below.]

The following entry appears in Martin Supply's general journal on March 10, 2018:

Accounts Receivable		30,000
Cash		21,000
Equipment					51,000

This transaction involves:

Select one:

a. Martin's collection of $30,000 on an account receivable.

b. Payment of $21,000 cash by Martin.

c. A $21,000 overall increase in Martin's assets.

d. Sale of equipment by Martin for $51,000.

7.

Which of the following errors would be disclosed by preparation of a trial balance?

Select one:

a. The collection of an account receivable was recorded by a debit to the Land account rather than to the Cash account.

b. The collection of an account receivable for $219 was recorded by a $291 debit to Cash and a $291 credit to Accounts Receivable.

c. The collection of a $365 account receivable was not recorded at all.

d. The collection of a $325 account receivable was recorded by a $325 debit to Cash and a $325 debit to Accounts Receivable.

8.

The normal balance of the Accumulated Depreciation account is:

Select one:

a. A debit balance.

b. A credit balance.

c. Either a debit balance or a credit balance.

d. There is no normal balance for this account.

9.

Swordfish Co. earned $75,000 in 2018 and expects to receive 2/3 of the amount in 2019 and the remainder in 2020. How much revenue should Swordfish Co. report in 2018?

Select one:

a. $0

b. $25,000

c. $50,000

d. $75,000

Answer 1

Question 1

Correct answer---(a) Land

Cash, accounts receivable are reported first and then equipment is reported, last thing to be seen on statement of Financial position is land.

.

Question 2

Correct answer---(a) Purchase of land with cash

Purchase of land with cash increase fixed asset and decrease current asset. All other items listed changes owner’s equity.

.

Question 3

Correct answer---(d) Distribution of assets to owners and unprofitable operations.

Distribution to owners is like a withdrawals by owner and loss decrease balance of owner’s equity.

.

Question 4

Correct answer---(b) $21000 debit

Add all debts and deduct all credits to get cash balance.

.

Question 5

Correct answer---(b) Service revenue

Service revenue is a revenue account and all revenue accounts have credit balance.

.

Question 6

Correct answer--- (d) Sale of equipment by Martin for $51,000

Sale of equipment is made partly for cash and partly for credit.

.

Question 7

Correct answer---(d) The collection of a $325 account receivable was recorded by a $325 debit to Cash and a $325 debit to Accounts Receivable.

All the other entries are compensating errors and last one record debit twice for $325 so trial balance will not tally.

.

Question 8

Correct answer---(b) A credit balance

Accumulated depreciation is contra asset account and have credit balance always.

.

Question 9

Correct answer---(d) $75000

It does not matter when cash is collected revenues are recorded when they are earned as per accrual principal.