Winter11350examblank - 1. A debit entry is always...

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1. A debit entry is always favorable. True False 2. Zed Bennett opened an art gallery and as a dealer and completed these transactions: Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock. Purchased $70 of office supplies on credit. Paid $1,200 cash for the receptionist's salary. Sold a painting for an artist and collected a $4,500 cash commission on the sale. Completed an art appraisal and billed the client $200. What was the balance of the cash account after these transactions were posted? 3. The accrual basis of accounting reflects the principle that revenue is recorded when it is earned, not when cash is received. True False 4. Accountants at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase as a debit to Buildings. This error was not discovered before the journal entry was posted. What is the correcting entry? 5. A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are: 6. Luke Corporation began operations January 1, 2008, purchasing equipment for $200,000. The equipment is estimated to have a five year useful life with no residual value. In 2010, Luke changed its method of depreciating equipment from double-declining balance to straight-line. If depreciation expense had been computed under each of these two methods for 2008-2009, the results would have been:
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This note was uploaded on 01/20/2012 for the course ECON 380 taught by Professor Joyce during the Spring '11 term at University of Ottawa.

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Winter11350examblank - 1. A debit entry is always...

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