Quiz AC-10 - 1. Question: A corporation had $10,000 of...

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1. Question: A corporation had $10,000 of merchandise at the beginning of the period, which was fully paid for. During the year, the corporation purchased $50,000 of merchandise on account and sold $40,000 (cost basis) of the merchandise to customers. By the end of the year the corporation had paid $35,000 to its supplier. What is cost of goods sold? Your Answer: $60,000 ( . ) $50,000 $40,000 CORRECT ANSWER $35,000 Instructor Explanation: Cost of goods sold is the expense account for merchandise sold to customers. Points Received: (not graded) Comments: 2. Question: A corporation's general ledger contains the following accounts with normal account balances: Paid-In Capital, $30,000; Accounts Receivable, $20,000; Merchandise Inventory, $35,000; Accounts Payable, $25,000; and Retained Income $80,000. If Cash is the only other account in the general ledger, what is its balance? Your Answer: $20,000 ( Incorrect. You may have obtained this amount by listing as a decrease to owners' equity instead of an increase to owners' equity ) $60,000 ( Incorrect. You may have obtained this amount by listing the balance of Sales Revenue as a decrease to owners' equity and Expenses as increases to owners' equity. ) $80,000 ( CORRECT. This is the amount needed to make assets = liabilities + owners' equity ) CORRECT ANSWER $230,000 ( Incorrect. You may have obtained this answer by listing cost of goods sold as an increase to owners' equity instead of a decrease to owners' equity ) Instructor Explanation: Find the value of non-cash assets, liabilities, and owners' equity, put the values in the fundamental accounting equation and solve for cash. Points Received: (not graded) Comments: 3. Question: Which one is a characteristic of the recording of transactions in accounting? Your Answer: Each transaction affects one account. ( Incorrect. Transactions must affect at least two accounts ) Transactions are recorded in chronological order ( CORRECT. ) CORRECT Changes in accounts always include one ( Incorrect. For example, borrowing money increases cash and increases liabilities. )
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increase and one decrease Accounts are reset to zero at the start of each period ( Incorrect. Only revenues, expenses, and dividends declared begin at 0 each period. Assets, Liabilities, Contributed Capital and Retained Earnings are permanent accounts whose balance continues from year to year. ) Points Received: 1 of 1 Comments: 4. Question: Which one of the following best describes what is meant by a double-entry system of accounting. Your Answer: Every transaction causes at least one account to increase and at least one account to decrease. ( Incorrect. Although some transactions may cause one account to increase and another account to decrease, some transactions may cause all accounts affected to increase. An example is where cash is received upon the issuance of a note payable. Likewise, some transactions may cause all accounts
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Quiz AC-10 - 1. Question: A corporation had $10,000 of...

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