A02 Principles of Accounting I Exam 7 Answers (Ashworth College)

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A02 Principles of Accounting I Exam 7 Answers (Ashworth College)

Question 1 of 40

2.5/ 2.5 Points

If the Supplies account is not adjusted __________.

A. assets will be overstated and expenses will be understated
B. assets will be overstated and expenses will be overstated
C. assets will be understated and expenses will be overstated
D. assets will be understated and expenses will be understated

Question 2 of 40

2.5/ 2.5 Points

If the balance of supplies at the start of the month was $900 and at the end of the month you had $450 on hand, the adjustment for Supplies would be __________.

A. $450
B. $550
C. $350
D. $900

Question 3 of 40

2.5/ 2.5 Points

The order of the steps to prepare the worksheet are __________.

A. prepare the trial balance, complete adjustments, prepare the adjusted trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
B. complete the adjustments, prepare the adjusted trial balance, prepare the trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
C. extend the totals to the Income Statement and Balance Sheet columns, prepare the trial balance, complete the adjustments, prepare the adjusted trial balance
D. prepare the adjusted trial balance, complete the adjustments, prepare the trial balance, extend the respective totals to the Income Statement and Balance Sheet columns

Question 4 of 40

2.5/ 2.5 Points

If the adjustment for Supplies used during the period was not made __________.

A. expenses would be too low
B. assets would be too low
C. expenses would be too high
D. revenue would be too high

Question 5 of 40

2.5/ 2.5 Points

If Prepaid Rent for the period is not adjusted __________.

A. assets will be overstated and expenses will be overstated
B. assets will be overstated and expenses will be understated
C. assets will be understated and expenses will be overstated
D. assets will be understated and expenses will be understated

Question 6 of 40

2.5/ 2.5 Points

Which of the following would cause total assets to decrease and total expense to increase?

A. recording the depreciation of equipment
B. recording the consumption of supplies
C. recording the expiration of prepaid rent
D. All of the above would have that effect.

Question 7 of 40

2.5/ 2.5 Points

When historical cost is used in the accounting records, the book value of the asset is __________.

A. the original cost
B. the market value
C. original cost less accumulated depreciation
D. closed out

Question 8 of 40

2.5/ 2.5 Points

At the start of this year 18 months’ rent was paid. At the year's end, how will this affect the balance sheet?

A. Assets will be decreased.
B. Liabilities will be increased.
C. Owner's equity will be increased.
D. This has no effect on the period end balance sheet.

Question 9 of 40

2.5/ 2.5 Points

As Prepaid Rent is used, the asset becomes a(n. __________.

A. liability
B. expense
C. contra-asset
D. revenue

Question 10 of 40

2.5/ 2.5 Points

Which of the following would cause a contra-asset to be credited and an expense debited?

A. recording an accrued expense
B. recording the consumption of supplies
C. recording the building depreciation
D. All of the above would have that effect.

Question 11 of 40

2.5/ 2.5 Points

The entry to record the expiration of part of the prepaid rent will __________.

A. decrease total assets and increase total expenses at the end of the month
B. decrease total assets and decrease total expenses at the end of the month
C. increase total assets and increase total expenses at the end of the month
D. increase total assets and decrease total expenses at the end of the month

Question 12 of 40

2.5/ 2.5 Points

Which of the following would cause a liability to be credited and an expense to be debited?

A. recording the adjustment for the expiration of rent
B. recording the depreciation of equipment
C. recording the accrual of salaries incurred
D. purchasing equipment

Question 13 of 40

2.5/ 2.5 Points

Bringing account balances up to date before preparing financial reports is called __________.

A. posting
B. adjusting
C. journalizing
D. analyzing

Question 14 of 40

2.5/ 2.5 Points

When historical cost is used to record equipment, it would appear as the __________.

A. original cost on the balance sheet
B. residual value on the income statement
C. residual value on the balance sheet
D. original cost on the income statement

Question 15 of 40

2.5/ 2.5 Points

It is the year end, but not the pay period end. How will this affect the balance sheet?

A. Assets will be increased.
B. Liabilities will be increased.
C. Owner's equity will be increased.
D. This has no effect on the period end balance sheet.

Question 16 of 40

2.5/ 2.5 Points

The capital balance amount shown in the balance sheet column of the worksheet represents __________.

A. the beginning capital plus net income
B. the beginning capital plus net income less withdrawal
C. the beginning capital less withdrawals
D. the beginning capital plus any investments to capital that occurred during the period

Question 17 of 40

2.5/ 2.5 Points

It's the end of the accounting period and no electric bill has been received (but the expense has been incurred.; you should record an entry that __________.

A. increases the total assets and increases the total expenses
B. decreases the total assets and increases the total expenses
C. increases the total liabilities and increases the total expenses
D. decreases the total liabilities and increases the total expenses

Question 18 of 40

2.5/ 2.5 Points

The adjustment to record supplies used during the period would be __________.

A. debit Supplies; credit Supplies Expense
B. debit Supplies Expense; credit Cash
C. debit Supplies Expense; credit Supplies
D. debit Supplies; credit Cash

Question 19 of 40

2.5/ 2.5 Points

Not recording the Prepaid Rent used causes __________.

A. assets to be too high
B. assets to be too low
C. expenses to be too high
D. revenue to be too high

Question 20 of 40

0.0/ 2.5 Points

The adjusted trial balance columns __________.

A. help to ensure the ledger is still in balance
B. help to identify any errors that may have been made during adjustment
C. show updated account balances to aid in preparation of the financial statements
D. All of the above answers are correct.

Part 2 of 2 - Lesson 7 Questions

45.0/ 50.0 Points

Question 21 of 40

2.5/ 2.5 Points

Debt management ratios measure __________.

A. how effectively a company is using its cash
B. how well a company is using debt versus equity position
C. a company's ability to earn profit
D. a company's ability to meet payable obligations

Question 22 of 40

2.5/ 2.5 Points

Of the following accounts, which might appear in the adjusted trial balance, but not in the post-closing trial balance?

A. income summary
B. owner's capital
C. accounts payable
D. depreciation expense

Question 23 of 40

2.5/ 2.5 Points

The final step in the accounting cycle is __________.

A. preparing the post-closing trial balance
B. preparing the financial statements
C. journalizing the closing entries
D. journalizing the adjusting entries

Question 24 of 40

2.5/ 2.5 Points

An account in which the balance is not carried over from one accounting period to the next is called a __________.

A. permanent account
B. real account
C. temporary account
D. zero account

Question 25 of 40

2.5/ 2.5 Points

Income Summary __________.

A. is a temporary account
B. is a permanent account
C. summarizes revenue and expenses and transfers the balance to Capital
D. Both A and C are correct.

Question 26 of 40

2.5/ 2.5 Points

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called __________.

A. comparative financial statements
B. common-size statements
C. cash flow analysis
D. horizontal analysis

Question 27 of 40

2.5/ 2.5 Points

Which of the following assets would not be classified as property, plant, and equipment?

A. delivery truck
B. copyright
C. land
D. furniture

Question 28 of 40

2.5/ 2.5 Points

A common-size comparative statement shows __________.

A. percentages
B. dollar increases/decreases
C. whole dollar amounts
D. None of the above answers are correct.

Question 29 of 40

2.5/ 2.5 Points

To close the Withdrawals account __________.

A. debit Withdrawals; credit Capital
B. debit Capital; credit Withdrawals
C. debit Withdrawals; credit Income Summary
D. debit Income Summary; credit Withdrawals

Question 30 of 40

2.5/ 2.5 Points

Closing entries __________.

A. need not be journalized since they appear on the worksheet
B. need not be posted if the financial statements are prepared from the worksheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted

Question 31 of 40

2.5/ 2.5 Points

The current ratio for a company with current assets of $70,000, current liabilities of $50,000, total assets of $150,000, and net sales of $80,000, would be __________.

A. 1.4
B. 0.714
C. 3.0
D. 0.875

Question 32 of 40

2.5/ 2.5 Points

Profitability ratios measure __________.

A. a company's ability to earn profits
B. a company's ability to meet short-term obligations
C. how well a company is using debt versus equity
D. how effectively a company is using its assets

Question 33 of 40

2.5/ 2.5 Points

Which of the following sequence of actions describes the proper order in the accounting cycle?

A. journalize, post, close, prepare financial statements, adjust, and analyze transactions
B. prepare financial statements, journalize, post, adjust, analyze transactions, and close
C. analyze transactions, journalize, post, adjust, prepare financial statements, and close
D. post, close, prepare financial statements, adjust, analyze transactions, and journalize

Question 34 of 40

2.5/ 2.5 Points

If current assets are $75,000 and current liabilities are $15,000, the current ratio is __________.

A. 5:1
B. 0.2:1
C. 0.5:1
D. None of the above answers are correct.

Question 35 of 40

0.0/ 2.5 Points

The balance in the Rent Expense account on the worksheet was $120. The journal entry to close the Rent Expense account is __________.

A.
B.
C.
D.

Question 36 of 40

2.5/ 2.5 Points

If management wishes to know the ability to pay off the upcoming debts of a business, they could use the __________.

A. debt to total assets
B. current ratio
C. inventory turnover ratio
D. times interest earned

Question 37 of 40

2.5/ 2.5 Points

The current ratio determines the ability of a company to __________.

A. pay off all payables
B. pay off current payables
C. manage its ability to earn profit
D. use its equity

Question 38 of 40

2.5/ 2.5 Points

For vertical analysis purposes, a base item on a balance sheet is __________.

A. total assets
B. total equity
C. total liabilities
D. net equity

Question 39 of 40

2.5/ 2.5 Points

Liquidity ratios measure __________.

A. how effectively a company is using its equity
B. how effectively a company is using its liabilities
C. a company's ability to pay shareholders
D. a company's ability to pay off short-term debts

Question 40 of 40

0.0/ 2.5 Points

The income statement debit column of the worksheet showed the following expenses: