Chapter 15, TEST 15A



Chapter 15, TEST 15A

Name _________________________

Date _________________________

SCORING RECORD

| |Total Possible | |Student |

|Section | |Deductions |Score |

|A |30 | | |

|B |30 | | |

|C |10 | | |

|D |30 | | |

|Total |100 | | |

Section A

DIRECTIONS: Each of the following statements is true or false. Indicate your choice by writing in the Answers column T for a true answer or F for a false answer. (2 points for each correct answer)

For

Answers Scoring

1. The merchandise inventory account always reflects

the current inventory on hand. _____ _____

2. The amount of inventory on hand is determined by

taking a physical count of the merchandise on hand

and calculating the cost of those goods. _____ _____

3. Both the beginning and the ending merchandise

inventory amounts are posted to the income summary

account. _____ _____

4. Unearned revenue is a liability account. _____ _____

5. Cash received in advance for performing a service

or delivering a product is called prepaid revenue. _____ _____

6. The transaction to record earned revenue results

in a decrease in an asset account. _____ _____

7. A net loss results if the total of the debit column

of the Balance Sheet section exceeds the total of

the credit column of the Balance Sheet section. _____ _____

8. Adjusting entries entered on the work sheet and

recorded in the general journal do not have to

be posted to the general ledger. _____ _____

9. A contra-cost account is given a ".1" extension to

its related ledger account's number. _____ _____

10. When part of the amount of unearned revenue has

been earned, the unearned revenue account must be

adjusted. _____ _____

11. Both the debit and credit amounts for the income

summary account must be extended in the work

sheet. _____ _____

12. Journalizing adjustments from the work sheet has

no effect on the actual accounts in the general

ledger. _____ _____

13. In journalizing adjusting entries, Merchandise

Inventory is debited for the amount of ending

inventory. _____ _____

14. The work sheet is a formal financial statement. _____ _____

15. The difference between the Income Statement and

Balance Sheet debit and credit columns on the work

sheet represent the net income or the net loss. _____ _____

Section B

Directions: Complete each of the following statements by writing in the Answers column the letter of the word or words that correctly completes each statement. (3 points each)

For

Answers Scoring

1. A beginning inventory of $75,000 is removed from

the merchandise inventory general ledger account by:

A) debiting $75,000 to Merchandise Inventory;

B) crediting $75,000 to Merchandise Inventory;

C) debiting $75,000 to Purchases; (D) crediting

$75,000 to Income Summary; (E) crediting $75,000

to Cash. _____ _____

2. For the current accounting period, the balance

of purchases is $20,000, beginning inventory was

$90,000, and ending inventory is $60,000.

Entries to the merchandise inventory account

should be: (A) debit $90,000 and credit $60,000;

(B) debit $70,000 and credit $60,000; (C) debit

$60,000 and credit $90,000; (D) debit $60,000 and

credit $110,000; (E) debit $110,000 and

credit 20,000. _____ _____

3. Prior to the adjusting entries, the current

inventory on hand is reflected as the: (A) first

debit amount in Merchandise Inventory; (B) first

credit amount in Merchandise Inventory; (C)

balance of cost of merchandise sold; (D) owner's

equity account; (E) total assets. _____ _____

4. Unearned revenue is reported as: (A) a current

liability on the balance sheet; (B) contra-

revenue on the income statement; (C) a contra-asset

account on the chart of accounts; (D) an owner's

equity account on the work sheet; (E) none of these._____ _____

5. Which of the following accounts would be found

under the heading of "Cost of Goods sold" in a

chart of accounts? (A) Sales; (B) Freight-In;

(C) Cash; (D) Supplies; (E) Sales Returns

and Allowances. ______ _____

6. An example of a contra-revenue account is:

A) Purchase Returns and Allowances;

(B) Accumulated Depreciation; (C) Sales;

(D) Sales Returns and Allowances; (E) Income

Summary. _____ _____

7. In preparing a work sheet, the amounts for the

Trial Balance columns are copied from: (A) the

general journal; (B) the sales and purchases

journals; (C) the general ledger; (D) the latest

income statement and balance sheet; (E) the

current chart of accounts. _____ _____

8. Which of the following is not a formal report of

a business: (A) Income Statement (B) Balance

Sheet; (C) Trial Balance; (D) Statement of Owner’s

Equity; (E) all are formal reports. _____ _____

9. Examples of unearned revenue accounts for prepaid

services do not include: (A) Unearned Interest

Revenue; (B) Unearned Maintenance Revenue;

(C)Unearned Subscription Revenue; (D) Unearned

Insurance Revenue; (E) Merchandise Inventory. _____ _____

10. At the end of the accounting period, the correct

entry in the general journal to adjust for

beginning inventory is to: (A) debit Purchases

and credit Merchandise Inventory; (B) debit

Merchandise Inventory and credit Sales; (C) debit

Purchases and credit Cash; (D) debit the Capital

account and credit a revenue account; (E) debit

Income Summary and credit Merchandise Inventory. _____ _____

Section C

DIRECTIONS: Match the correct answer to the definition that best explains it. (2 points each)

_____ 1. Accounts that are deducted from the Purchases account when

computing cost of goods sold--Purchases Returns and

Allowances and Purchases Discounts.

_____ 2. Accounts that are deducted from Sales on the income

statement--Sales Returns and Allowances and Sales Discounts.

_____ 3. A physical count of the goods on hand.

_____ 4. The first step in preparing a work sheet is to prepare this

report.

_____ 5. Cash received in advance of delivering a product or

performing a service.

A. contra-cost accounts

B. physical inventory

C. trial balance

D. contra-revenue accounts

E. unearned revenue

Section D

DIRECTIONS:

The trial balance and adjusted trial balance on the following page were prepared on the work sheet of YouCanSave, Inc., a discount hardware business owned by Franke Elgin, for the year ended December 31, 20--. Journalize the adjusting entries by working backward for the adjusted trial balance to the trial balance. (30 points total)

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