Question

III. Multiple Choice

1. Joe Brown invests $10, 000 into his new business. How would the journal entry in this transaction be entered in the journal? (observe indention)

1. Cash                     10,000

       Brown, Capital       10,000

Invested cash in business

2. Cash                     10,000

Brown, Capital       10,000

Invested cash in business

3. Brown, Capital     10,000

        Cash                        10,000

Invested cash in business

4. Brown, Capital     10,000

Cash                        10,000

      Invested cash in business

2. Supplies                        500

      Accounts Payable                  500

What is the best explanation for this journal entry?

1. Purchased supplies with cash
2. Investment of supplies by owner
3. Purchased supplies on account
4. Paid accounts payable

3. Cash                             770

      Fees Earned                770

Received fees from customers.

Recording this transaction will?

1. Decrease cash and decrease revenues
2. Increase cash and increase revenues
3. Increase cash and decrease revenues
4. Increase revenues and decrease cash

4. Net income will result when

1. Revenues (credits) > expenses (debits)
2. Revenues (debits) > expenses (credits)
3. Expenses (credits) < revenues (debits)
4. Revenues (credits) = expenses (debits)

5. Which of the following will increase owner’s equity?

1. Expenses > revenues
2. The owner draws money for personal use
3. Revenues > expenses
4. Cash is received from customers on account

6. Cash                                        450

     Unearned Fees                     450

What is the best explanation for this journal entry?

1. Received cash for services performed
2. Received cash from services to be performed in the future
3. Paid cash in advance for services to be done
4. Paid cash for services to be performed

7. Equipment                                  14000

          Cash                                           4000

           Note Payable                           10000

What is the best explanation for this journal entry?

1. Purchased equipment, paid cash of $4000, with the remainder to be paid in payments
2. Purchased equipment, paid cash of $4000, with the remainder to be received in payments
3. Purchased equipment and paid cash for the entire amount
4. Purchased equipment on credit

8. The process of rewriting the information from the journal to the ledger is called

1. Sliding
2. Transposing
3. Journalizing
4. Posting

9. The verification that the total dollar amount of the debits equals the total dollar amount credits in the ledger is called a?

1. Ledger
2. Trial balance
3. Account
4. Balance sheet

10. Of the following financial reports, which one is the one that will determine if the accounting equation is in balance?

1. Journal entry
2. Income statement
3. Trial balance
4. Account reconciliation

11. If the two totals of a trial balance are not equal, it could be due to

1. Failure to record a transaction
2. Recording the same erroneous amount for both the debit and credit parts of a transaction
3. An error in determining the account balances, such as a balance being incorrectly computed
4. Recording the same transaction more than once

12. The accounts in the ledger of Mickeys Park Co. are listed in alphabetical order. All accounts have normal balances.

Accounts Payable 500
Accounts Receivable 800
Investment 1000
Cash 1600
Withdrawals 200
Fees Earned 2,000
Insurance expense 100
Land 2000
Wages expense 400
Owner’s equity 1800

Preparing a trial balance, the total of the debits are

1. $5, 300
2. $10,600
3. $4, 100
4. $10, 400
5. $4, 700

Answer 1

1.
Answer is Cash                     10,000 (Debit)
   Brown, Capital       10,000 (Credit)
Invested cash in business

In this two options are same

2.
Answer is c. Purchased supplies on account

3.
Answer is b. Increase cash and increase revenues

4.
Answer is a. Revenues (credits) > expenses (debits)

5.
Answer is c. Revenues > expenses

6.
Answer is b. Received cash from services to be performed in the future

7.
Answer is a. Purchased equipment, paid cash of $4000, with the remainder to be paid in payments

8.
Answer is d. Posting

9.
Answer is b. Trial balance

10.
Answer is c. Trial balance

11.
Answer is c. An error in determining the account balances, such as a balance being incorrectly computed

12.
Total = $800+1000+1600+200+100+2000+400 = $6100

Answer should be $6100, but there is no option for this.