TEST BANK ACCOUNTING PRINCIPLES 12TH EDITION WEYGANDT ch02 WeyAP 12e TB AT 02

balance sheet and income statement accounts.. affects a balance sheet account and an income statement account.. Income statement columns and balance sheet columns?. Debit Accounts Payabl

Accounting Principles, 12e Instructor Weygandt, Kimmel, & Kieso Section # _ Date

Score

PART I — MULTIPLE CHOICE (26 points)

Instructions: Designate the best answer for each of the following questions.

1 The Accumulated Depreciation account is a(n)

a operating expense

b contra asset

c asset

d liability

2 A post-closing trial balance contains

a balance sheet or permanent accounts

b balance sheet and income statement accounts

c permanent and temporary accounts

d real and nominal accounts

3 An adjusting entry

a is always a compound entry

b affects two balance sheet accounts

c affects two income statement accounts

d affects a balance sheet account and an income statement account

4 For which of the following types of adjusting entries are both assets and revenues

understated before the adjusting entry is made?

a Accrued Expenses

b Unearned Service Revenues

c Accrued Revenues

d Prepaid Expenses

5 A law firm received $1,200 cash for legal services to be rendered in the future The full

amount was credited to the liability account Unearned Service Revenue If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

a revenues to be understated

b expenses to be overstated

c net income to be overstated

d liabilities to be understated

6 Assuming that there is a net loss for the period, in which section of the worksheet will

debits not be equal to credits?

a Adjusted trial balance columns

b Income statement columns and balance sheet columns

c Adjustments columns

d Trial balance columns

7 An accrued revenue account represents revenue for which

a services have been performed and received in cash

b services have not been performed nor received in cash

c services have been performed, but not received in cash or recorded

d cash has been received and recorded, but services have not been performed 8 What type of relationship exists with a prepaid expense adjusting entry?

a Asset/revenue

b Expense/asset

c Expense/liability

d Liability/revenue

9 The book value of a depreciable asset is defined as the asset's

a cost

b current market value

c cost less accumulated depreciation

d replacement cost

10 Sander Farms recorded a payment of cash on account to a creditor by debiting

Accounts Receivable and crediting Cash Which of the following is the correcting entry?

a Debit Accounts Payable and credit Cash

b Debit Cash and credit Accounts Receivable

c Debit Accounts Receivable and credit Accounts Payable

d Debit Accounts Payable and credit Accounts Receivable

11 Stately Decor signed an $18,000 six-month note payable on September 1 that bears

interest at a rate of 5% How much is the total interest to be accrued on this note at December 31?

a $900

b $75

c $300

d $450

12 The net income (or loss) for the period

a is found by computing the difference between the trial balance totals and the adjusted trial balance totals

b is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet

c cannot be found on the worksheet

d is found by computing the difference between the income statement columns of the worksheet

13 What effects will the omission of a prepaid expense adjusting entry have on a

company?

Total Assets Total Expenses Total Owners' Equity

PART II — WORKSHEET COMPLETION (25 points)

Instructions: Complete the partial worksheet presented below, inserting additional labels as

needed

LAWN BUTLER Partial Worksheet For the Month Ended April 30, 2017

Adjusted Trial Balance Income Statement Balance Sheet

Salaries and Wages Expense 7,000

PART III—ADJUSTING ENTRIES (24 points)

The ledger accounts given below, with an identification number for each, are used by Sun Cleaning

Instructions: Prepare appropriate adjusting entries for the year ended December 31, 2017, by

replacing the appropriate identification number(s) in the debit and credit columns provided and the dollar amount in the adjoining column Item 0 is given as an example

7 Accumulated Depreciation—Equipment 16 Interest Expense

8 Salaries and Wages Payable 17 Supplies Expense

——————————————————————————————————————————

Account(s) Account(s) Dollar

——————————————————————————————————————————

receivable at December 31, 2017

——————————————————————————————————————————

1 A customer paid Sun Cleaning $16,000 on December 1, $

2017, for services to be rendered from December 1

through January 31, 2018 The receipt was credited

to a liability account

——————————————————————————————————————————

per day At December 31, 2017, four days' salaries

have been earned but not paid

——————————————————————————————————————————

fee of $1,000 This fee has not yet been received or billed

——————————————————————————————————————————

January 1, 2016 Monthly depreciation is $400

——————————————————————————————————————————

6% interest, note payable on November 1, 2017

——————————————————————————————————————————

on July 1, 2017, debiting an asset account at that time

——————————————————————————————————————————

Sun purchased $4,000 in supplies during the year

and has $1,800 on hand at December 31 Supplies

were debited to an asset account when purchased

——————————————————————————————————————————

2017 Interest of $200 per month has been earned but

not received prior to December 31

—————————————————————————————————————————— PART IV—CLOSING ENTRIES (8 points)

Instructions: Place a "D" (Debit) or "C" (Credit) in the space provided to indicate whether the

account would be debited or credited to close the account at yearend Insert an X in the space provided if the account is not closed

2 Rent Expense 9 Unearned Subscription Revenue

3 Depreciation Expense 10 Interest Revenue

4 Equipment 11 Interest Receivable

5 Owner’s Drawing 12 Subscription Revenue

6 Accounts Receivable 13 Prepaid Rent

7 Accumulated Depreciation 14 Income Summary (assume Net Loss)

PART V—BALANCE SHEET CLASSIFICATIONS (17 points)

Instructions: Match the account titles given below with the appropriate balance sheet

classification An individual classification may be used more than once, or not at all An account may also not appear in the balance sheet

Classifications

PPE Property, Plant and Equipment LTL Long-term Liabilities

LTI Long-term Investments OE Owner's Equity

IA Intangible Assets NP Not separately presented on the balance sheet

Account Titles 1 Service Revenue _ 10 Owner’s Drawing

2 Unearned Rent Revenue _ 11 Supplies

3 Accumulated Depreciation—Equipment _ 12 Taxes Payable

4 Accounts Payable _ 13 Rent Expense

6 Short-term Investments _ 15 Mortgage Note Payable

8 Prepaid Insurance _ 17 Equipment

9 Accounts Receivable

Solutions — Achievement Test 2: Chapters 3 and 4

PART I — MULTIPLE CHOICE (26 points)

PART II — WORKSHEET COMPLETION (25 points)

LAWN BUTLER Partial Worksheet For the Month Ended April 30, 2017

——————————————————————————————————————————

——————————————————————————————————————————

Insurance Expense 1,500 1,500

20,300 20,300 51,075 51,075

PART III — ADJUSTING ENTRIES (24 points)

Account(s) Account(s) Dollar Account(s) Account(s) Dollar

PART IV—CLOSING ENTRIES (8 points)

PART V—BALANCE SHEET CLASSIFICATIONS (17 points)