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Bryan Cates Zach Company

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1. After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each accounts should agree with the balance shown on the
a. The general journal
b. Post closing trial balance adjusted trial balance
c. Adjusted trial balance
d. Adjustment column of the worksheet

2. The net income ( or loss ) for the period
a. Cannot be found on the worksheet
b. Is found by computing the difference between the trial balance totals and the adjusted trial balance totals
c. Is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet.
d. Is found by computing the difference between the income statement columns of the worksheet.

3. If income summary has a credit balance after revenues and expenses have been closed into it, the closing entry for income summary will include a
a. debit to the owner’s dividends account
b. debit to the retained earnings account
c. credit to the retained earning account
d. credit to the owner’s dividends account.

4. Revenues $70,000
Expenses
Wages Expense $ 45,000
Rent Expense $ 12,000
Advertising Expense $ 6,000
Supplies Expense $ 6,000
Utilities Expense $ 2,500
Insurance Expense $ 2,000
-----------
Total Expenses $ 73,500
-----------
Net income ( loss ) $ 3,500
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After the revenue and expense accounts have been closed, the balance in income summary will be

a. a debit balance of $ 3,500
b. a credit balance of $ 3,500
c. $0
d. A credit balance of 70,000

5. A post-closing trial balance will show
a. zero balances for the accounts
b. zero balances for balance sheet accounts
c. only balance sheet accounts
d. only income statement accounts

6. Which of the following steps in the accounting cycle would not generally be performed daily
a. Journalize transactions
b. Post to ledger accounts
c. Prepare adjusting entries
d. Analyze business transactions

7. The two optional steps in the accounting cycle are preparing
a. a worksheet and post-closing trial balance
b. a post-closing trial balance and reversing entries
c. reversing entries and a worksheet
d. an adjusted trial balance and a post closing trial balance

8. Speedy Bike Company received a $ 940 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $ 490 and a credit to service revenue $ 490. The correcting entry is
a. debit cash, $ 940; credit account receivable, $ 940
b. debit cash, $ 450 and service revenue, $ 490; credit account receivable, $ 940
c. debit accounts receivable, $ 940; credit cash, $ 450 and service revenue, $ 490
d. debit cash, $ 450 and accounts receivable, $ 490; credit service revenue, $ 940

9. The first item listed under current liabilities is usually
a. taxes payable
b. salaries payable
c. accounts payable
d. notes payable

10. The operating cycle of a company is the average time that is required to go from cash to
a. accounts receivable in producing revenues
b. inventory in producing revenues
c. sales in producing revenues
d. cash in producing revenues

11. On a classified balance sheet, current assets are customarily listed
a. in the order of liquidity
b. in alphabetical order
c. with the largest dollar amounts first
d. in the order of acquisition

12. The most important information needed to determine if companies can pay their current obligations is the
a. relationship between short-term and long-term liabilities
b. relationship between current assets and current liabilities
c. projected net income for next year
d. net income for this year

13. Balance sheet accounts are considered to be
a. temporary owner’s equity accounts
b. permanent accounts
c. nominal accounts
d. capital accounts

14. Correcting entries are made
a. after closing entries
b. whenever an error is discovered
c. at the end of an accounting period
d. at the beginning of an accounting period

15. Goodwill would be reported in the ---------------------section of a classified balance sheet
a. current asset
b. intangible assets
c. long term investments
d. long term liabilities

16. Cost of goods sold is determined only at the end of the accounting period in
a. a periodic inventory system
b. both a perpetual and a periodic inventory system
c. neither a perpetual nor a periodic inventory system
d. a perpetual inventory system

17. Which of the following expressions is incorrect?
a. operating expenses – cost of goods sold = gross profit
b. gross profit – operating expenses = net income
c. sales – cost of goods sold – operating expenses = net income
d. net income + operating expenses = gross profit

18. Bryan company purchases merchandise from Cates Company with freight terms of FOB shipping point. The freight costs will be paid by the
a. Buyer
b. Transportation company
c. Buyer and the seller
d. Seller

19. Zach's Market recorded the following events involving a recent purchase of merchandise:
Received goods for $50,000, terms 2/10, n/30.
Returned $1,000 of the shipment for credit.
Paid $250 freight on the shipment.
Paid the invoice within the discount period.

As a result of the above events, the company’s merchandise inventory
a. increased by $ 48,265
b. increased by $ 48,270
c. increased by $ 49,250
d. increased by $ 48020

20. A sales invoice is a source document that
a. serves only as a customer receipt
b. provide evidence of credit sales
c. provides support for goods purchased for resale
d. provides evidence of incurred operating expenses

21. A credit sale of $900 is made on July 15, terms 2/10, n/30, on which a return of $50 is granted on July 18. What amount is received as payment in full on July 24?
a. $833
b. $882
c. $900
d. $850

22. All of the following are contra revenue accounts except
a. sales
b. sales returns
c. sales discounts
d. sales allowances

23. The operating cycle of a merchandiser is
a. generally longer than it is for a service company
b. about the same as for a service company
c. generally shorter than it is for a service company
d. always one year in length

24. Income from operations appears on
a. a multiple-step income statement
b. neither a multiple-step nor a single-step income statement
c. both a multiple-step and a single step income statement
d. a single-step income statement

25. If a company has net sales of $500,000 and cost of goods sold of $350,000, the gross profit percentage is
a. 70%
b. 30%
c. 15%
d. 100%

26. Gross profit for a merchandiser is net sales minus
a. cost of goods available for sale
b. cost of goods sold
c. sales discounts
d. operating expenses

27. A physical count of inventory is taken at the end of an accounting period under a periodic system in order to
a. determine the amount of inventory purchased during the period
b. determine cost of goods sold for the period
c. calculate property taxes
d. verify the accuracy of the accounting records

28. Which of the following accounts is not closed to income summary
a. cost of goods sold
b. merchandise inventory
c. sales
d. sales discounts

29. Net sales is sales less
a. sales discounts and sales returns and allowances
b. sales discounts
c. sales returns and allowances
d. sales returns

30. Cost of goods available for sale is computed by adding
a. beginning inventory to net purchases
b. beginning inventory to purchases and freight-in
c. beginning inventory to cost of goods purchased
d. freight-in to net purchase

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