Problem 1) When a corporation distributes a dividend the
- most common form of distribution is a cash dividend.
- Dividends account will be increased with a credit.
- Retained Earnings account will be directly increased with a debit.
- Dividends account will be decreased with a debit.
Problem 2. An accounting record that includes a list of accounts and their balances at a given time is called a
- trial balance.
- general journal.
- general ledger.
- chart of accounts.
Problem 3. The purpose of the ledger is to
- record chronologically the day's transactions.
- keep a record of documentation to support each transaction.
- keep in one place all information about changes in specific account balances.
- make sure that all assets, liabilities, etc., have normal balances at all times.
Problem 4. In recording accounting transactions, evidence that a transaction has taken place is obtained from
- source documents.
- the Internal Revenue Service.
- the public relations department.
- the Securities and Exchange Commission.
Problem 5. If total liabilities increased by $5,000, then
- assets must have decreased by $5,000.
- stockholders' equity must have increased by $5,000.
- assets must have increased by $5,000, or stockholders' equity must have decreased by $5,000.
- assets and stockholders' equity each increased by $2,500.
Problem 6. Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies:
- remaining.
- purchased.
- used.
- either used or remaining.
Problem 7. At March 1, I. Repo Inc. reported a balance in Supplies of $200. During March, the company purchased supplies for $950 and consumed supplies of $800. If no adjusting entry is made for supplies:
- stockholders' equity will be overstated by $800.
- expenses will be understated by $950.
- assets will be understated by $350.
- net income will be understated by $800.
Problem 8. The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:
- contra asset.
- prepayment.
- asset.
- accrued.
Problem 9. Unearned revenues are:
- received and recorded as liabilities before they are earned.
- earned and recorded as liabilities before they are received.
- earned but not yet received or recorded.
- earned and already received and recorded.
Problem 10. Adjusting entries affect at least:
- one revenue and one expense account.
- one asset and one liability account.
- one revenue and one balance sheet account.
- one income statement account and one balance sheet account.
Problem 11. At March 1, 2011, Candy Inc. had supplies on hand of $1,500. During the month, Candy purchased supplies of $2,900 and used supplies of $1,800. The March 31 balance sheet should report what balance in the supplies account?
- $1,500
- $2,600
- $1,800
- $2,900
Problem 12. The following accounts show balances on the adjusted trial balance. Which of these account balances will not appear the same on the balance sheet?
- Retained earnings
- Accounts receivable
- Common stock
- Notes payable
Problem 13. American Importers reports net income of $40,000 and cost of goods sold of $360,000. If the company's gross profit rate was 40%, net sales were:
- $600,000.
- $900,000.
- $940,000.
- $660,000.
Problem 14. A merchandiser will earn an operating income of exactly $0 when
- net sales equals cost of goods sold.
- cost of goods sold equals gross margin.
- operating expenses equal net sales.
- gross profit equals operating expenses.