anwer_key-exam_1 - Name: Section: BUS 208 Midterm 1 Your...

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Name: Section: BUS 208 Midterm 1 Your Score: Highest Possible Score: 100 Multiple Choice: For each of the following questions, circle the letter of the answer that best answers the question. 40 points total 1. A company using the accrual basis of accounting receives its utility bill which will be paid in two weeks. The entry on that day will involve a debit to A. utilities payable B. utilities expense C. prepaid utilities D. prepaid revenue 2. GAAP requires businesses to use: A. either the cash basis or the accrual basis of accounting B. the cash basis of accounting C. the accrual basis of accounting D. the deferred basis of accounting 3. The accounts payable account has a beginning balance of $12,000 and the company made $50,000 of purchases on credit during the month. The ending balance was $10,000. How much did the company pay creditors during the month? A. $50,000. B. $52,000 C. $60,000 D. $62,000 4. A business has a balance of $50,000 in its accounts payable. If a business makes a payment of $50,000 to its creditor on this account, it would: A. have no effect on owner’s equity B. decrease net income C. increase assets D. increase liabilities Page 1 2/7/11
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3. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance? A. The Adjusted Trial Balance will show the net income (loss) as an additional account B. The total amount of debits per the Unadjusted Trial Balance must equal the total amounts of debits reported on the Adjusted Trial balance before you can continue with the accounting cycle C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the accounts D. The Unadjusted Trial Balance will be used to complete the Income Statement for the period 4. Unearned Fees appear on the: A. Balance sheet in the current assets sections B. Balance sheet as a current liability C. Income Statement as revenue D. Income Statement as a reduction to revenue 5. Which of the fixed asset accounts listed below will not have a related contra asset account? A. Office Equipment B. Land C. Delivery Equipment D. Building 6. The Statement of Owner’s Equity should be prepared A. Before the income statement and after the balance sheet B. Before the income statement and balance sheet C. After the income statement and balance sheet D. After the income statement and before the balance sheet 7. When preparing the Statement of Owner’s Equity the beginning balance should be followed by: A. Investments made by the owner plus net income (loss) B. Investments made by the owner less withdrawals made by the owner C. Net income (loss) less withdrawals made by the owner D. Investments made by owner plus net income (loss) less withdrawals [ Page 2 2/7/11
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8. On what financial statement will the Income Summary account be shown? A. Statement of Owner’s Equity
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anwer_key-exam_1 - Name: Section: BUS 208 Midterm 1 Your...

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