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[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues. 4) Paid expenses of $250. 5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. -What is the after-closing amount of retained earnings that will be reported on Packard's balance sheet at the end of Year 2? (Assume that closing entries have been made) .


A) $640
B) $800
C) $290
D) $740

E) A) and B)
F) B) and C)

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The T-account format is also called the chart of accounts.

A) True
B) False

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[The following information applies to the questions displayed below.] The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1:  Cash $4,000 Accounts receivable $3,400 Dividends 2,000 Common stock 3,900 Land 3,200 Revenue 3,200 Accounts payable 1,800 Expense 2,200 Retained earnings 5,900\begin{array}{lrlr}\text { Cash } & \$ 4,000 & \text { Accounts receivable } & \$ 3,400 \\\text { Dividends } & 2,000 & \text { Common stock } & 3,900 \\\text { Land } & 3,200 & \text { Revenue } & 3,200 \\\text { Accounts payable } & 1,800 & \text { Expense } & 2,200 \\\text { Retained earnings } & 5,900 & &\end{array} -What is the amount of total assets that will be reported on the balance sheet as of December 31,Year 1?


A) $12,600
B) $13,800
C) $7,200
D) $10,600

E) A) and D)
F) None of the above

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[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues. 4) Paid expenses of $250. 5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. -What was the balance of Packard's Retained Earnings account before closing in Year 1?


A) $400
B) $0
C) $350
D) $450

E) A) and D)
F) A) and C)

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Which of the following elements is increased with a debit?


A) Stockholders' Equity
B) Liabilities
C) Assets
D) None of the above are increased with a debit

E) B) and D)
F) C) and D)

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The Wagner Company acquired $500,000 cash from the issue of common stock.How would this transaction be recorded in the company's T-accounts?


A)  Cash500,000\begin{array}{cc}\text { Cash}\\\hline\begin{array}{ll|l}&500,000& \\\end{array}\end{array}
Common Stock 500,000\begin{array}{cc}\text {Common Stock }\\\hline\begin{array}{ll|l}&&500,000 \\\end{array}\end{array}
B)  Common Stock500,000\begin{array}{cc}\text { Common Stock}\\\hline\begin{array}{ll|l}&500,000& \\\end{array}\end{array}
 Cash 500,000\begin{array} { c | c } { \text { Cash } } \\\hline & 500,000\end{array}
C)  Common Stock500,000\begin{array}{cc}\text { Common Stock}\\\hline\begin{array}{ll|l}&500,000& \\\end{array}\end{array}
 Retained Earnings500,000\begin{array}{cc}\text { Retained Earnings}\\\hline\begin{array}{ll|l}&&500,000 \\\end{array}\end{array}
D)  Retained Earnings500,000\begin{array}{cc}\text { Retained Earnings}\\\hline\begin{array}{ll|l}&500,000& \\\end{array}\end{array}
Common Stock500,000\begin{array}{cc}\text {Common Stock}\\\hline\begin{array}{ll|l}&&500,000 \\\end{array}\end{array}

E) C) and D)
F) None of the above

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A transaction has been recorded in the T-accounts of Powell Corporation as follows:  Rent Expense1,000\begin{array}{cc}\text { Rent Expense}\\\hline\begin{array}{ll|l}&1,000& \\\end{array}\end{array} Prepaid Rent 1,000\begin{array}{cc}\text {Prepaid Rent }\\\hline\begin{array}{ll|l}&&1,000 \\\end{array}\end{array} Which of the following reflects how this event affects the company's financial statements?  Stk.  Stmt of  Asset = Liab. + Equity  Rev. − Exp. = Net Inc.  Cash Flows A+=++NANA−NA=NA+FAB−=NA+−NA−+=−NAC+=NA+++−NA=++OAD−=−+NANA−+=−−OA\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | } \hline&&&&&\text { Stk. }&&&&&&\text { Stmt of }\\ &\text { Asset }&=&\text { Liab. }&+&\text { Equity }&\text { Rev. }&-&\text { Exp. }&=&\text { Net Inc. }&\text { Cash Flows }\\\hline A&+&=&+&+&NA&NA&-&NA&=&NA&+FA\\\hline B&-&=&NA&+&-&NA&-&+&=&-&NA\\\hline C&+&=&NA&+&+&+&-&NA&=&+&+OA\\\hline D&-&=&-&+&NA&NA&-&+&=&-&-OA\\\hline\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

E) A) and D)
F) None of the above

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A trial balance can be in balance,even if there are errors in the accounting system.

A) True
B) False

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A transaction has been recorded in the T-accounts of Gibbs Company as follows: Cash 1,500\begin{array}{cc}\text {Cash }\\\hline\begin{array}{ll|l}&1,500& \\\end{array}\end{array} Unearned Revenue 1,500\begin{array}{cc}\text {Unearned Revenue }\\\hline\begin{array}{ll|l}&&1,500 \\\end{array}\end{array} Which of the following could be an explanation for this transaction?


A) Cash has been paid out to a company that will provide future services to Gibbs Company.
B) Gibbs has completed services for which they had earlier received cash in advance.
C) Gibbs has provided services to a customer on account.
D) Gibbs has received cash for services to be provided in the future.

E) A) and B)
F) None of the above

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Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month.Which of the following journal entries correctly records this transaction?


A)  Cash 1,300 Accounts Payable 1,200 Consulting Revenue 2,500\begin{array}{|l|r|r|}\hline \text { Cash } & 1,300 & \\\hline \text { Accounts Payable } & 1,200 & \\\hline \text { Consulting Revenue } & & 2,500 \\\hline\end{array}
B)  Cash 1,300 Accounts Receivable 1,200 Consulting Revenue 2,500\begin{array}{|l|r|r|}\hline \text { Cash } & 1,300 & \\\hline \text { Accounts Receivable } & 1,200 & \\\hline \text { Consulting Revenue } & & 2,500 \\\hline\end{array}
C)  Cash 1,300 Consulting Reveruse 1,300\begin{array} { | l | r | r | } \hline \text { Cash } & 1,300 & \\\hline \text { Consulting Reveruse } & & 1,300 \\\hline\end{array}
D)  Consulting Reveruse 2,500 Cash 1,300 Accourits Receivable 1,200\begin{array} { | l | r | r | } \hline \text { Consulting Reveruse } & 2,500 & \\\hline \text { Cash } & & 1,300 \\\hline \text { Accourits Receivable } & & 1,200 \\\hline\end{array}

E) B) and C)
F) All of the above

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The entry to record revenue earned on account includes a debit to accounts receivable and a credit to revenue.

A) True
B) False

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The balance in Retained Earnings is decreased by debiting the account.

A) True
B) False

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On November 1,Year 1,Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months.Which of the following will be included in the adjustment required on December 31,Year 1?


A) A debit to Prepaid Insurance for $400
B) A credit to Prepaid Insurance for $400
C) A debit to Insurance Expense for $1,200
D) A credit to Insurance Expense for $1,200

E) All of the above
F) A) and D)

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The following is a trial balance of Barnhart Company as December 31,Year 1:  Account Title:  Debit  Credit  Cash 12,500 Accounts Receivable 3,250 Accounts Payable 2,800 Common Stock 6,600 Retained Earnings 4,500 Service Revenue 7,450 Operating Expenses 5,100 Dividends 500 Totals 21,35021,350\begin{array}{lr}\text { Account Title: } & \text { Debit }&\text { Credit } \\\text { Cash } & 12,500 \\\text { Accounts Receivable } & 3,250\\\text { Accounts Payable } && 2,800 \\\text { Common Stock } && 6,600 \\\text { Retained Earnings } && 4,500 \\\text { Service Revenue } && 7,450\\\text { Operating Expenses } & 5,100 \\\text { Dividends } & 500\\\text { Totals }&21,350&21,350\end{array} What is the total amount of assets that will be reported on the balance sheet prepared as of December 31,Year 1?


A) $21,350
B) $12,500
C) $15,750
D) $23,200

E) B) and D)
F) All of the above

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Generally accepted accounting principles require that a business's fiscal year must end on December 31.

A) True
B) False

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Source documents provide information that serves as the basis for entries into the accounting system.Examples of source documents include invoices and deposit tickets.

A) True
B) False

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Which of the following is decreased with a credit?


A) Assets
B) Liabilities
C) Stockholders' Equity
D) Net Income

E) C) and D)
F) A) and B)

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A transaction has been recorded in the general journal of Van Buren Company as follows:  Cash 5,000 Service Reveruse 5,000\begin{array} { | l | r | r | } \hline \text { Cash } & 5,000 \\\hline \text { Service Reveruse } & & 5,000 \\\hline\end{array} Which of the following describes how this entry affects the company's financial statements when it is posted to the ledger accounts?  Stk.  Stmt of  Asset = Liab. + Equity  Rev. − Exp. = Net Inc.  Cash Flows A+=++NANA−+=−NAB+−=NA+NA+−NA=++OAC+=NA+++−NA=++FAD+=NA+++−NA=++OA\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | } \hline&&&&&\text { Stk. }&&&&&&\text { Stmt of }\\ &\text { Asset }&=&\text { Liab. }&+&\text { Equity }&\text { Rev. }&-&\text { Exp. }&=&\text { Net Inc. }&\text { Cash Flows }\\\hline A&+&=&+&+&NA&NA&-&+&=&-&NA\\\hline B&+-&=&NA&+&NA&+&-&NA&=&+&+OA\\\hline C&+&=&NA&+&+&+&-&NA&=&+&+FA\\\hline D&+&=&NA&+&+&+&-&NA&=&+&+OA\\\hline\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

E) A) and D)
F) C) and D)

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What is the term used to describe the left side of a T-account?


A) Equity Side
B) Debit Side
C) Credit Side
D) Claims Side

E) A) and C)
F) A) and B)

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The employees of Able Company have worked the last two weeks of Year 1,but the employees' salaries have not been paid or recorded as of December 31,Year 1.The adjusting entry that Able should make to accrue these unpaid salaries on December 31,Year 1 is:


A) debit to Salaries Expense and credit to Cash.
B) debit to Salaries Expense and credit to Salaries Payable.
C) debit to Salaries Payable and credit to Salaries Expense.
D) no entry is required until the employee is paid next period.

E) B) and C)
F) None of the above

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