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ACTG240 In-Class Practice Quiz 3

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17 views

ACTG240 In-Class Practice Quiz 3

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nhung.phanthi.bbs22
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ACTG240 In-class Practice Quiz 3

1. Which of the following will result in an increase in revenue?


A) Borrowing $10,000 from a bank
B) Shareholders investing $10,000 in a company
C) Selling $10,000 of concert tickets 4 months before the performance
D) Selling $10,000 of groceries.

2. Which of the following results in an expense for a company?


A) Purchase of land asset not an expense
B) Payment of advertising for last month considered as operating activities recorded in income statement
C) Payment of a dividend recorded as a reduction in retained earnings on the equity side of the balance sheet
D) Purchase of supplies If the supplies are used up immediately, they would be recorded as an expense (supplies expense).
However, if they are intended to be used over a period of time, they are initially recorded as an asset
(supplies inventory)
3. X Corp. received an order from a customer on November 10. It manufactured the ordered
items on November 15, shipped the goods on November 17, and received payment on
December 2. Under the accrual basis of accounting, it recorded revenue on:
A) November 10.
B) November 15. Under the accrual basis of accounting, revenue is recognized when it is earned and realizable,
regardless of when cash is received.
C) November 17.
D) December 2.
A) This is not unearned revenue. The revenue was earned when the
goods were sold a month ago
4. Which of the following situations results in unearned revenue?
A) Collection of $100 from a customer who charged the purchase of goods a month ago
B) The receipt of an order from a customer who will purchase and pay for goods in two
weeks B) This is not unearned revenue. No cash has been received yet; it is just an order.
C) The revenue is earned today when the goods are sold, even though the payment is due later.
C) The sale of $100 of goods today with payment due from the customer in 30 days
D) The receipt of $100 cash from a customer for an order of goods to be shipped next month
This is unearned revenue because cash has been received before the goods have been shipped. The revenue will be earned when the
goods are shipped next month.
5. Which of the following is not a limitation of the income statement?
A) Net income does not equal the amount of cash generated by the business during the
period.
B) Net income does not measure the change in value of a company during the period.
C) Measuring income just involves counting.
D) All are limitations of the income statement.

6. On January 31, 2-12, Becamex Corp. received a bill for $1,000 for running a newspaper ad in
January. The bill will be paid in February. As a result of receiving the bill, its:
A) Assets are decreased by $1,000 in January. not affect
B) Net income is decreased by $1,000 in January. SE + so NI +
C) Liabilities are decreased by $1,000 in January. L+
D) Contributed capital is reduced by $1,000 in January. not affect

7. Becamex Department Stores had a beginning balance in accounts receivable of $12,000.


During the year, it had credit sales of $150,000. Becamex Department Stores received
payments on account of $140,000. At the end of the year, accounts receivable has a:
A) Debit balance of $22,000. Beg. Bal. AR 12,000
B) Credit balance of $22,000. Add: Cr. sales during the year 150,000
Subtract: Payments received on account 140,000
C) Debit balance of $2,000.
D) Credit balance of $2,000. => End. Bal. 12+150-140 = 22

8. X Co. incurred an expense in April, 2012. It paid for the expense in May, 2012. Which
journal entry is required in April, 2012?
A) No entry is required. April:
B) Debit an expense account and credit a liability account. + Exp => Debit
C) Debit an expense account and credit unearned revenue. + L => Credit

D) Debit a prepaid expense and credit a liability.

9. Which of the following represents a subtotal rather than an account?


A) Advertising Expense.
B) Service Revenue.
C) Supplies Expense.
D) Total Revenues.

10. A customer purchased $1,500 of services on credit two months ago and has just paid the bill.
The receipt of the payment from the customer is recorded as a
A) Debit to Cash and a credit to Accounts Receivable. Debit to Cash: This increases the Cash account, reflecting
the receipt of money from the customer.Credit to
B) Debit to Cash and a credit to Accounts Payable. Accounts Receivable: This decreases the Accounts
C) Debit to Expenses and a creditor to Revenue. Receivable account, indicating that the amount owed by
the customer has been paid.
D) Debit to Accounts Receivable and a credit to Retained Earnings.

11. In January, a company pays for advertising space in the local newspaper for ads to be run
during the months of January, February, and March at $1,500 per month. The payment would
be recorded in January as a:
A) Debit of $4,500 to Cash, a credit of $1,500 to Advertising Expense, and a credit of $3,000
to Prepaid Advertising.
B) Debit of $4,500 to Accounts Payable and a credit of $4,500 to Cash.
C) Debit of $4,500 to Accounts Payable and a credit of $4,500 to Stockholders' Equity.
D) Debit of $1,500 to Advertising Expense, a debit of $3,000 to Prepaid Advertising, and a
credit of $4,500 to Cash.
12. In September, a customer signed a contract to have his house painted and paid for the job in
October. The painting company bought the paint in August on account and paid for it in
September. The painting company painted the house in November. According to the revenue
and matching principles, the painting company should record:
A) The revenues in November and the expenses in September.
B) The revenues and the expenses in September.
C) The revenues and the expenses in November.
D) The revenues in September and the expenses in August.

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