Question

1. The accounting equation can be stated as:

   	a.	A + L - SE = 0
   	b.	A - L + SE = 0
   	c.	-A + L - SE = 0
   	d.	A - L - SE = 0

1.25 points   

QUESTION 2

1. XYZ Corporation receives $100,000 from investors for issuing them shares of its stock. XYZ's journal entry to record this transaction include a:

   	a.	debit to Investments
   	b.	credit to Retained Earnings
   	c.	credit to Capital Stock
   	d.	credit to Revenue

1.25 points   

QUESTION 3

1. Somerset Leasing received $12,000 for 24 months' rent in advance. How should Somerset record this transaction?

   	a.	Prepaid Rent   12,000 Rent Expense    12,000
   	b.	Cash    12,000 Unearned rent revenue 12,000
   	c.	Rent expense    12,000 Cash 12,000
   	d.	Unearned rent revenue   12,000 Rent expense   12,000

1.25 points   

QUESTION 4

1. Prepayments occur when:

   	a.	cash flow precedes expense recognition.
   	b.	sales are delayed pending credit approval.
   	c.	customers are unable to pay the full amount due when goods are delivered.
   	d.	manufactured goods await quality control inspection.

1.25 points   

QUESTION 5

1. Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of merchandise, costing $620 and sold for $960 on account?

   	a.	Inventory   620 Accounts receivable 620 Sales 960 Revenue from sales 960
   	b.	Accounts receivable 960 Sales revenue 960 Cost of goods sold 620 Inventory 620
   	c.	Inventory      620 Gain on sale    340   Sales revenue 960
   	d.	Accounts receivable   960 Sales revenue 620    Gain on sale 340

1.25 points   

QUESTION 6

1. An example of a contra account is:

   	a.	depreciation expense.
   	b.	accounts receivable.
   	c.	sales revenue.
   	d.	accumulated depreciation.

1.25 points   

QUESTION 7

1. The balance in retained earnings at the end of the year is determined by retained earnings at the beginning of the year:

   	a.	plus revenues, minus liabilities.
   	b.	plus accruals, minus deferrals.
   	c.	plus net income, minus dividends.
   	d.	plus assets, minus liabilities.

1.25 points   

QUESTION 8

1. The purpose of closing entries is to transfer:

   	a.	accounts receivable to retained earnings when an account is fully paid.
   	b.	balances in temporary accounts to a permanent account.
   	c.	inventory to cost of goods sold when merchandise is sold.
   	d.	assets and liabilities when operations are discontinued.

Answer 1

1)
	Assets = Liabilities + Equity
	Asset - Liabilities - Equity = 0
	Therecore,
	Correct Option: d . A-L-SE =0
2)
	The journal entry would be
	Date	Account Title	Debit	Credit
		Cash	$        1,00,000
		Capital Stock		$        1,00,000
	Correct Option: c. Credit Capital Stock
3)
	The journal entry would be
	Date	Account Title	Debit	Credit
		Cash	$            12,000
		Unearned Revenue		$            12,000
	Correct Option: b.
4)	Correct Option: a.cash flow precedes expense recognition.
5)	The journal entry would be
	Date	Account Title	Debit	Credit
		Account Receivables	$                  960
		Sales Revenue		$                  960
		Cost Of Goods Sold	$                  620
		Inventory		$                  620
	Correct Option : b
6)	Correct Option:d.accumulated depreciation
7)	Correct Option: c.plus net income, minus dividends.
8)	Correct Option: b.balances in temporary accounts to a permanent account.